The toolkit of a modern CFO

The job of a CFO is constantly evolving. Despite the challenges this brings, in the current climate, there is no time for these changes to be eased into. Navigating uncertain economic conditions requires informed action with instinctive urgency.

From data security to strategy, these responsibilities now predominantly lie with CFOs for the very first time. With the added weight of responsibility there also comes a heavier toolkit. This in itself is a challenge for finance leaders who will need to become experts in using unfamiliar tools.

Lack of previous experience with such tools can leave some CFOs unsure of which ones they really need, and of them, which will best suit their individual requirements. Fortunately, we’re here to share with you what CFOs should be looking out for when it comes to selecting their tech stack.

Automated reconciliation

For CFOs to fulfil their new role in leading strategic decisions, they must firstly find ways to reduce time spent on traditional tasks. After all, no matter how good senior finance leaders might be with numbers, they can’t create more time.

Of all the legacy activities which CFOs must attend to, reconciliation is arguably that which holds the most potential to be reduced in terms of time. This might sound like a challenge to some given reconciliation’s notorious reputation for being a time-consuming process; however, there is a way in which upgrading reconciliation can make room for everything else being landed on the plate of the modern CFO.

Automated reconciliation software such as Aurum Solutions’ handles millions of transactions to reconcile them and flag exceptions in seconds. Along with saving time through the actual action of reconciliation which can take days, Aurum possesses workflow management, enabling exceptions to be investigated in a more productive manner between colleagues.

As with any advanced piece of FinTech, adoption of automated reconciliation delivers more than just one benefit for those in financial leadership positions. For example, through Aurum making reconciliation a process which no longer takes up masses of time and is put off until month-end, it can instead be done weekly or even daily. As a result, CFOs are delivered a more accurate illustration of their cash position, allowing them to forecast with greater confidence.

In addition, reconciliation plays an extremely important role in what being a modern CFO is all about – strategising through informative data. It achieves this by collecting data from various sources and validating it, sifting out any instances of fraud. Without reconciliation, none of the added value which CFOs are now delivering for companies would be valid.

Within the modern CFO’s toolbox, automated reconciliation therefore really is the unsung hero. Despite on the face of it only achieving one result (a quicker reconciliation process), it impacts the work of those leading business’ finances in many additional ways from the creation of better forecasting, to laying the groundwork for data to provide the insights which will set CFOs and their companies apart.

Data warehouses and dashboarding & analytics

“Data is the new oil” was coined by British mathematician Clive Humby in 2006 and is continuing to hold true in every sense. On one hand it is driving huge change across numerous industries, on the other, it is causing emissions due to the vast amount of storage it acquires. Any collection of data therefore should create a positive impact to offset any negative emissions which they will automatically create.

CFOs are in a position of power to deliver exactly that. This is true not only because data quite literally turns everything – from customer demographics, churn rate, headcount etc. – into numbers (the bread and butter of finance leaders) but also because whether numbers go up or down nearly always comes back to what is spent. These factors, along with the growth or Big Data, are the biggest drivers behind CFOs being looked to as strategic leaders within companies.

Given CFOs’ numerical expertise, it is important that they are given tools which not only enable the collection of data but also create intuitive dashboarding for analysis to take place. With tools for data warehousing and data visualisation, CFOs can be armed with the insights they are expected to bring to senior management meetings.

When considering what data warehouse and dashboarding & analytics software tools to acquire, budget is always front of mind considering their expense, so as always, experienced financial professionals will have to do their well-rehearsed balancing act, considering factors such as:

• Compatibility – the worst nightmare of a CFO is to find that their newly adopted dashboarding software is unable to visualise data which is found in their data warehouse. Depending on a company’s budget, sometimes navigating around this risk becomes too costly and complicated in terms of both time and money. A workaround which works equally well is to source reconciliation software which includes dashboarding.

Due to how all data should move through a reconciliation process to ensure it is valid, the inclusion of dashboards in reconciliation software is a natural match. This becomes even more conducive when considering that software such as Aurum is capable of extracting, transforming and loading data from any format. Plus, due to taking a partnership approach with all clients, Aurum also offers a bespoke dashboard creation service so that CFOs can clearly discover the insights which are important to them.

Tim Andrews, Chief Solutions Architect

• Aesthetics – data visualisation can make or break the perception of data insights, making them especially useful for CFOs who will be aiming to convince their peers that their strategies will lead to commercial benefits.

• Licensing numbers – presenting information to others in an engaging, clear manner helps convey the importance of insights. However, a more empowering way is for senior financial leaders to give peers their own means to explore data through direct access to their data tools.

• Accuracy levels – paramount to data is accuracy, especially when informing strategy for senior management. With the job of reconciliation being that of accuracy, some CFOs might find reconciliation software with dashboarding capabilities their most secure bet.

Data is undoubtedly the fuel behind CFOs’ unofficial rise to Chief Strategy Officers within the corporate world. To fulfil their new remit, CFOs therefore require data software which is comprehensive and clear, providing collated insights from all departments. Only through having a holistic view of a company’s performance will finance leaders be able to transform the collection of data into actionable insights for the benefit of their businesses.

Data security

The rise of data which CFOs are responsible for only increases the risk of cyber security threats. As a result, data security is yet another duty which now lies with more financial leaders. Understandably, CFOs are by no means experts in this field which is traditionally handled by IT. Both guidance (which can be found here!) and the right tools are therefore needed to help finance experts with this very important duty.

This issue is often exasperated by the fact that an increasing amount of software which handles data is based in the cloud or online, heightening the risk of security threats. One way to overcome this is by using locally hosted software like Aurum which can still handle infinite amounts of data with significantly reduced hacking risks. For security conscious CFOs, this could be the perfect workaround for them.

Alternatively, CFOs are lumbered with finding yet another piece of software to protect them from cyberthreats. A prime example of these are Security as a Service (SEaS) tools. Adopting yet another piece of online software might sound like adding fuel to the “cybercrime” fire, but some SEaS tools are especially good at what they do. It’s just a matter of knowing what to look for in one. Narrowing down the choice of SEaS is made easier when the following are considered:

• Availability – generation of new data never stops. Making sure that this continues to flow, and that access is never denied, is paramount for a data-driven CFO. When selecting a SEaS, support team availability should always be 24/7 and have a quick average response time.

• Compatibility – just like how data never stops, it also comes at you from infinite directions. No source of data should ever be viewed as less valuable than another. As a result, CFOs should make sure that their data is equally secured from every angle. To achieve this, SEaS must be able to work with the various cloud-based pieces of software which finance teams use.

Ultimately, as mentioned earlier when discussing reconciliation – data is invalid unless it is correct. With data being both invaluable and a highly sensitive asset, finance leaders can therefore not risk it being tampered with by outsiders. In a world where malware is rife along with other cyber threats, data security cannot be overlooked by any CFO who is looking to data to inform strategy (which is every CFO!).

Payroll and HR

Along with keeping the data of a company safe, another equally important asset to any company, which CFOs are finding themselves increasingly in charge of, are their people. Traditionally, this was designated solely to Human Resources (HR). However, despite the big clue in the name of HR, it has become apparent that finance plays a larger role in every employee at a company than first thought.

Payroll, expenses, taxes, and recruitment all are financial activities which are linked to people, and the list goes on. Whether those leading company finances consider it or not, assisting and even taken ownership of elements of Human Resources are therefore understandably now part of their remit.

With 1 in 4 CFOs stating that they’re becoming more involved in HR in recent years, in their toolkit they therefore require a form of software which allows them to assess people related activities through a financial lens. Software which can deliver this must meet a wide criterion:

• Payroll – a regular outgoing of any company is that of renumeration for their employees. However, it is anything bt regular in reality. With expenses, benefits, taxes, pensions, loans, and more all coming into play, payroll can be a fiddly activity for HR. Software which can reduce the headaches HR have with the more financial aspects of their jobs will allow them to spend more time on initiatives which make a big difference to employees such as professional development, ESG policies, and team building events. This is a benefit for CFOs too because it should reduce employee turnover and aid business growth. In fact, it has been found that increased employee engagement boosts profitability by up to 23%.

• Recruitment – every company is in the business of talent recruitment; it is people which set businesses apart. Recruitment does however come with a cost. Not only when it comes to salary negotiations but the actual process too. Whilst an instinct of those in finance might be to reduce spending, they know that HR are usually right when it comes to investing in the right people and not having to regularly re-hire. To optimise the finances related to recruitment, the best HR software should therefore allow CFOs to uncover a spending sweet spot so that hiring becomes an activity which values quality over quantity. This way CFOs don’t risk facing the cost of a bad hire which PWC estimate can on average be between 50 – 150% of a hire’s salary.

• Process efficiencies – the actions which employees take every day not only have an impact on the company they work for but also themselves. For HR, reviewing these processes is therefore important to understand whether employees are overworked. For a CFO, this is vital too. By giving CFOs an insight into the processes which other departments take, HR software enables them to spot where efficiencies can be introduced, potentially cutting costs, saving time, and boosting employee morale all at once.

• Safety and regulatory compliance – being responsible for a company’s people, HR must ensure that they are safe and that they in turn keep the business safe. At a basic level this means informing employees about health & safety guidance along with regulations. Advanced HR software will not only store literature on such topics but also include portals for interactive training which will store employees’ records of completion. From a finance leader’s perspective, ensuring the uptake of such training is more than just a box ticking activity. Failure of colleagues to be well versed in safety and regulations related to their company could be costly. CFOs should therefore work with HR to find software which delivers effective teaching of recommendations to their peers so that no unexpected and avoidable costs crop up.

Whilst every investment which a company makes is no doubt very important, how they invest in their human capital is arguably the most important. The collective expertise which HR and CFOs have regarding people and finance respectively means that through consulting one another, selection of an optimal payroll and HR package will have far reaching benefits for everyone involved.

Spend management

Despite all the other areas which CFOs attend to being very important, it all amounts to them being able to initiate impactful spending. After all, having regained precious time from repetitive tasks, unearthed and presented data insights to drive strategic business decisions, ensured the security of their treasure trove of data, and kept their companies' people operating smoothly, CFOs and their peers will be wanting to push things forward. For that, they turn to money.

However, as everyone ever responsible for money well knows, temptation and impulses can easily derail the best of spending intentions. Senior finance leaders therefore require tools to ensure that discipline which is announced by them in budget meetings are executed in real life too. This is where spend management tools step in. A good example of such a tool should have:

• Payment options – nowadays there is no end of ways which goods and services can be acquired. Each of these methods have their own pros and cons for certain suppliers, so much so that some even often discounts for using their preferred payment method. With CFOs being in the business of making money go further, they should make sure that they have a spend management system which is compatible with as many payment methods as possible to not miss out on any of these money saving schemes.

• Expansion – just like how finance teams would want their reconciliation software to grow with them considering the number of transactions they are hoping it will have to handle in the future, the same goes for their spend management software of choice. The expansion of licenses, where the software can be used should businesses open up offices in new countries, and the amount of management seats within the software should therefore all be considered.

• Controls – saying “no” time and time again isn’t the nicest of ways to spend your day but those in finance do need to keep a tight rein on spending. Spend management software should handle this for CFOs in a way which reflects their own logic through customisable automation rules. How many automated rules which will be needed depends on the needs of a business but software which offers the most flexibility is usually best.

Through their investment in tools which gather them the means to advise upon business strategy, CFOs will be equally keen as other departments for insights to be enacted with the most impact. Whereas other parts of a business might interpret this as a wish to spend extravagantly, CFOs know that reason is required and a good spend management tool which will ensure that this is the case.

The time to tool up is now

CFOs have always been engaged with the handling of data; however, the modern CFO has become increasingly geared towards making data an impactful resource for companies. The crucial components within a CFO’s toolkit therefore aim to do more than just collect data – they elevate, protect, frame, and allow data to be applied in new ways.

Expected to make decisions which affect all areas of the company, the resources which finance leaders place in their toolkit must also be able to handle data from every department and transform it into a universal format so that comprehensive analysis can take place. This is a familiar challenge which CFOs will experience as they steer their companies onto a data-oriented path.

With the collection of data only growing by the second, and other areas within businesses not being as data-savvy as finance, CFOs need tools which are easy to set up and operate swiftly. In reality, no amount of manpower would ever be able to manually interact with data in a way which would fulfil the requirements of a modern CFO. Plus, even if it was possible, we’re not sure if any finance leaders would want the managerial headaches it would come with! To reap the benefits of data, and to stop being the bad workman who blames their tools, investing in contemporary software solutions is the way forward for CFOs leading their businesses.

If you're ready to evolve your CFO toolkit, take a read of the original blog post, amongst others, over at aurum.solutions and get the foundation for your data in place today, by booking your Aurum demo.