Ngetha Waithaka, General Partner at tech growth fund, Norrsken22
The role of the Chief Financial Officer is changing. Due to the advancement in the technology solutions that CFOs use (‘The CFO Stack’), they now have a huge amount of data and tech tools at their fingertips, which enables them to have a strategic overview of companies finances than ever before.
The modern CFO is better able to step away from the day-to-day tasks of chasing details on individual payments and focus on the bigger picture, and companies receive the most value from their CFOs when they are able to spend their time on strategic decision making.
This is true globally, but there is always local nuance. For African businesses, there are numerous considerations that affect how a CFO operates: varying local payment methods, considerations relating to local currency, and the access or use of the foreign exchange across the continent. Also, the majority of businesses in Africa are SMEs, which means they have to go without expensive accounting software. But, this creates a huge opportunity. The fintechs that are able to harness their knowledge of local markets, and help CFOs overcome these particular challenges, will be able to build the CFO stack of the future.
The role of CFO in Africa
Currently, many CFOs in businesses across Africa are still spending most of their time and resources on transactions and reporting tasks. They will have an army of accountants who collect data to determine the status of each area of the company’s finances at a given time, which is of course, in constant flux, made even more unpredictable by the methods of payment used. Whilst in the West, there is wide use of card and cheque – easily traceable payment methods – across Africa, the prevalent payment methods are in cash and via mobile transfers. In addition, when making payments across borders, very often businesses are required to convert currency through USD, an additional step which is expensive, needs tracking, but also may bring considerations around liquidity into play.
With such a broad range of payment types, the tools at a CFO’s disposal may exist in singular areas – but are all pretty siloed and unreconciled – with information handled using archaic methods like email and spreadsheets, allowing for massive mistakes across finance. Not only is this open to error, but makes it easier to fall under malicious attack.
The new CFO stack
With the technology now available as part of the CFO stack, there is the possibility to streamline much of the CFO’s work. Many regular tasks can be automated and integrated into a singular dashboard that a CFO can look at and make strategic decisions about the business’ direction. In Africa in particular, the platforms built with local nuance in mind will see the best uptake.
On the African continent, each country has an individual preference for how payments are made and a stack which is able to reconcile payments and view a company’s accurate financial position at a glance will be of huge benefit to CFOs. With more transactions, CFOs get a greater view of the various payment flows and can see more potential attacks – further securing the business. The same applies to regulation – platforms which integrate local financial regulations support both compliance and help manage risk when it comes to making payments.
The benefits
African businesses working across currencies and numerous payment methods will benefit from the adoption of the many tools now available which offer the modern CFO very organised, reconcilable and usable data across different functions like Payroll & HR, Accounts receivable & payables management, Treasury management & Payment reconciliation among others. We are seeing an uptick in businesses adopting a tech-enabled, cloud-based and automated approach, which give them a far greater degree of control. It improves efficiency, accuracy and importantly, compliance.
