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The Rise of the Modern CFO: A Leader for the Information Age

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Adam Zoucha, Managing Director, FloQast EMEA

 

Financial management is one of the oldest professions in the world, and for most of that history, it was essentially applied mathematics – number-wizards keeping track of the financial figures and making sure everything tallied up when it was supposed to. However, ever since digital technology made its way out of the world’s laboratories and into its offices, the role of finance teams has been steadily changing.

Number crunching remains the foundation of accounting in the 21st Century, but for senior finance managers and CFOs in particular, job responsibilities — and expectations from within the organization — don’t stop there.

 

Commercial Leadership

As digital technology automates manual processes, CFOs have been freed up to focus on delivering more analytical information and insights. The business landscape is continuing to shift quickly and agile companies need to make strategic decisions that are informed by real financial data to pivot and survive. That means the modern CFO needs to be able to provide commercial leadership, feeding into business development and growth plans from a foundation of rock-solid financial data.

This is a major opportunity for added value. Although most CFOs have years of experience making tough financial decisions after analysing data, few have been working closely with the operational side of the business. Senior leaders across all industries are asking their finance teams to enable truly intelligent, up-to-the-minute decisions – so what skills do they need to make the most of that opportunity?

 

Adam Zoucha

Combining Strategic Leadership with Technological Improvements

Financial leaders are adept at aligning tech smarts with financial know-how however, having the know-how without the tools is counterproductive. To deliver on the promise of data-driven strategic leadership we need to pair this combination with the right technology for optimal results.

As accounting software becomes more sophisticated, automation is being used to eliminate repetitive tasks. This means financial controllers are able to assume responsibilities that were once the domain of the CFO and the CFO can focus on strategic initiatives that drive the business forward, while their teams are unburdened from having to perform highly-manual, time-intensive assignments.

But it’s not enough for CFOs to simply plug in the new, shiny tech, hand the keys to the controller, and wait for the actionable insights to roll in. They need to have an intimate understanding of the systems their teams are using, so they can ensure they’re actually aiding productivity and bringing results. Not all software is created equal, but good automation should reduce stress and friction.

CFOs need to be able to identify tech that’s made by accountants for accountants – not just built by software engineers with no on-the-ground experience. Is it making it easier for teams to organise their workflows? Is it giving them greater visibility into progress and outstanding tasks? Is it helping them standardise paperwork and reduce time spent chasing lost receipts? Or is it simply adding steps to a process that was already burdening staff quite enough, thank you?

A crucial part of financial leadership in 2022 is the ability to ask and answer these questions and to support your team in building a technological foundation for accounting excellence.

 

Reframing Financial Knowledge in an Actionable, Operational Way

Once that foundation is in place, CFOs need strong communication and analytical skills to translate financial data into real-world strategies, collaborating effectively with the CEO, sales and marketing, and other departments.

Put simply, it’s not enough to know how cashflow looked at month-end without broader contextual data about annual and five-year trends, the state of the market, unusual costs or income, and extenuating circumstances (like a global pandemic).

If the company excels in any given month, is that cause for bullish investment? Or a blip to be passed over? If the figures are beginning to sink, is it time to break out the oars, or is the ship likely to right itself in time? These are the kinds of questions CEOs are asking, and if the CFO is to provide confident answers, clean, on-time data is essential.

This brings us back to the question above: Is the technology their team is using designed by accountants who understand the challenges finance teams face? Does it provide the insights they need to answer high-level questions? Does it provide CFOs with the tools they need to cut through the noise and see the underlying story? If they’re to deliver strategic value, those tools are essential.

Finance teams are facing a huge amount of pressure in a fast-changing market, and many accountants are leaving the profession as a result. But with the right combination of intelligent automation, deep visibility, and genuinely people-centric collaboration tools, those stress levels can be brought down – and the CFO can be empowered to confidently advise their C-suite colleagues on overall business strategy.

Finance

Is your business ready for finance automation?

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Mari-Frances Bentvelzen, Business Head and General Manager of Global SMB at SAP Concur

 

As managers continue to drive their businesses through these uncertain economic times, it is important for them to properly equip and guide their organisations. Small to medium-sized businesses (SMBs) are looking to save money during this inflation crisis. By looking carefully into different areas, there are many hidden costs that can be found to combat rising expenses and interest rates.

With 2023 approaching, it’s time for businesses to be more proactive towards improving their processes. Automating administratively heavy tasks can be hugely beneficial in saving time and resources, both of which can have a big impact on the bottom line.

Although travel logistics, expense tracking and invoice processing can sound like a lot of background noise, these processes can all be optimised through automation. This offers more visibility for finance leaders and helps free up valuable time and resources for employees within the organisation.

Identify which key areas need automation

The first step to adopting automation is highlighting which areas can be improved with specific technology. This includes auditing the business and identifying which areas are outdated. From this point, businesses need to determine which processes and procedures may benefit from digital transformation. High on the list are manual processes and data input — two areas that often are riddled with mistakes and delays. Automating these areas proves to be useful for both the organisation and its employees.

Another common issue that finance leaders face is lack of access into full spend visibility. To improve decision making, managers must be confident about the trusted insights, transparency and perspectives in their business. Reporting tools and automated processes can help verify expenses through integration with other vendors and systems.

Without automation, it is difficult for finance departments to ensure all data has been inputted and centralised. This can make it difficult to determine the most appropriate and potentially effective areas to target cost-saving measures. Spend management solutions can, however, provide finance leaders with full visibility into where their money is being spend, enabling any spend that does not correlate with policy to be flagged. This can help businesses to reduce non-compliant spend and increase policy and regulatory compliance.

Find the best solution for both business and employees

Once these areas are identified, the business must adjust for compliance requirements, infrastructure changes and spend changes. Finance leaders should select the best solution to streamline current processes, whilst also improving budgetary controls and employee safety and satisfaction.

It is important for companies to place employee experience and innovation at the forefront of decision making, with training and ongoing employee support. Expenses — the reimbursement process, specifically — often have an under-appreciated role in employee engagement.

In fact, the new SAP Concur Employee Experience study reveals that 70% of employees in the UK are concerned about the impact of cost-of-living increases on their personal finances. And it’s late reimbursements for expenses that are causing employees to worry, with 56% worried about delayed reimbursements impacting their personal finances. This is why it is crucial for organisations to adopt automation to help accelerate processes and relieve reimbursement worry.

We worked with Brother UK (Printing and technology solutions) to automate their processes within their internal finance department. Brother has many employees who have worked for the company for more than two decades, with many processes identical to the day they started. Unsurprisingly, these employees were reluctant to making big changes, as they were used to carrying out their work in very specific ways. And with the obvious talent crisis, Brother realised that it was more important than ever to focus on the employee experience.

Brother put their employees first, ensuring communication remained transparent during the entire project. The company also brought staff directly into the decision-making process, elevating buy-in and a sense of ownership over forthcoming changes.

Now that Bother has automated many financial tasks, employees within the finance department are able to spend more time on strategic and rewarding work, rather than menial and time-consuming tasks. This improvement has been a positive experience for all. It has also helped employees to progress further in their careers.

Plan for the unpredictable future

Do you work for an SMB considering such changes? Don’t hesitate — now is the time to take the proactive step to streamline and grow your business. Overall, SMBs are being faced with the unknown and are being forced to adapt or pivot their business models. Finance automation will help futureproof your business during these uncertain times, bringing a level of stability to your organisation. This will allow employees to focus on future growth ambitions and make more informed decisions without having to worry about laborious tasks.

It’s important to remember a key part of running any business is relationship management — both with customers and employees. It’s important to choose solutions that will help drive profit margins whilst also acknowledging employee needs. For small businesses, maintaining clear communication with employees will not only help to ensure solution implementation is successful, but will also help to soften any resistance to automation.

And there’s so much more beyond basic finance automation. By taking an even deeper dive into invoices and expenses, businesses can find key data to help underpin certain goals such as reducing carbon emissions for business travel or enabling employees to submit expenses from anywhere at any time.

In the long run, digitising tired manual processes makes it more affordable for all businesses, no matter the size, to offer a competitive advantage during this era of change.

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Finance

Cost of living: How to identify vulnerable customers

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Ellie Engley is account director at REaD Group

 

In the current climate, the cost of living crisis is a real challenge for financial services companies who need to be able to support their vulnerable customers. One in six (17%) of UK households (4.4 million) are now in ‘serious financial difficulties’, compared to one in ten (2.8 million) in October 2021 – an additional 1.6 million households – according to research from Bristol University, while it was recently reported that one in five adults across the UK – nearly 11 million people – have fallen behind with at least one household bill payment.

As a financial services provider, it has never been more important to be able to identify and communicate appropriately with vulnerable customers; those who, due to their personal circumstances, are especially susceptible to detriment. Not only that, but there are three different levels of poverty to be aware of: ranging from income below minimum income standard, not enough income and destitution.

As a financial service provider, then, it has never been more important to communicate sensitively to customers, price products appropriately and protect customers from fraud.

Identifying vulnerable customers

As a responsible brand, the first step is to proactively identify vulnerable customers to exclude from particular direct marketing campaigns, where additional credit or non-essential purchases could increase the pressure on their personal circumstances. This is an ethical approach to direct marketing which also sees companies increase ROI and improve campaign success.

Using both internal first party and third party data, it is possible to build up a detailed picture of customers in order to identify the existing vulnerable groups, as well as the emerging vulnerable groups within your customer base.

This data can identify vulnerable and potentially vulnerable segments of consumers, including self-declared vulnerability or that shared by a first party, such as a bank, on behalf of the consumer, along with high-cost short term credit applications; houses of multiple occupation (HMO data); and consumer vulnerability metrics. This latter employs a segmentation model which takes into account census data to provide information on demographics, such as age, income, housing, education, financial products, affluence measures; transient states such as health; market forces acting on the consumer and their susceptibility to those forces; and the individual’s market preferences.

Taken together this data will provide a rich and detailed understanding or levels and types of vulnerability so brands are able to work with their customers responsibly. Gaining a better understanding of differing vulnerable segments in a customer base helps drive effective communication strategies, while simultaneously ensuring fair treatment.

Other warning signs

Changes in transactions and behaviour are another way to identify vulnerability in customers. It may be necessary to identify different segments or groups of customers who are classed as vulnerable for different reasons. Those consumers who were once deemed ‘financially stable’ now feel financially stretched and are at greater risk of financial vulnerability through increased cost of living and rise in inflation.

The use of third party datasets can also support the identification of these groups which provide information on changes in personal circumstances, short-term finance requirements, loss of income or employment and changes to relationship or residential status.

Using external data variables helps companies make data-driven decisions on how to price products, reduce fraud, identify vulnerable customers and ultimately make more personalised decisions using data. Data can be used across different teams, including marketing, fraud and pricing, for multiple purposes and projects.

Being able to supplement the data they hold on a customer can help marketing teams to not only help identify risk but help define what their need state actually is, whether that’s saving, moving house or having children. Enhancing customer data helps companies make better informed decisions.

Keep it clean

On top of this, every financial services provider should be keeping their consumer data clean and accurate. Data that is up to date will help businesses make more informed and responsible decisions about how they communicate with customers and prospects.

Above all, financial service providers should be mindful of the many more people who are now vulnerable, and communicating with care should be a brand’s mantra for the foreseeable future.

 

Ellie Engley is account director at REaD Group, a Sagacity company, which uses its data products, insight and expertise to help its clients get closer to their customers.

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