4 ways CFOs can prepare for the future of finance

“Survival is the key to existence.”


This quote applies to rigid and arduous business environments where finance organizations strive hard to make their mark.


With the market's changing needs, companies need to evolve their master plan with state-of-the-art approaches and align them with the existing trends. 


Here’s where the finance department comes into the picture.


Finance departments are not limited to undertaking and implementing finance-based decisions but expand to accelerating business objectives and putting together the financial resources required to scale the growth trajectories. 


The Chief Financial Officer (CFO) is the key decision-maker of the finance operations alongside the Chief Executive Officer (CEO).


CFO's responsibilities is not just limited to managing company's fiscal health, they are also responsible for overseeing the financial planning and analysis, crafts the finance budget, builds a team for the future of finance and communicates the final blueprint to the CEO. 


With deliberate discussions and consulting, the CFO and CEO come together to agree on a common approach to achieving financial goals. 


This article actively guides readers through the intricacies of finance and how modern managers can upskill their workforce with the help of finance automation.

Essential skills every modern CFO should have

To match the ever-changing business environment and scope of finance operations, the CFOs need to align their skillsets in accordance with the current trends.


Their existing skills are still critical to finance organizations, but with a shift in customer expectations and workforce expertise, new skills need to be honed by them. 


Apart from their fundamental skills of civic-mindedness, communication, and collaboration, there are a few mandatory skills that are paramount for a company’s road ahead. 


Business leadership

It goes without saying a CFO must possess leadership skills to guide and direct the personnel under his command.


He must be able to identify the employees' expectations, resolve their hurdles and be a source of motivation for them.


He must communicate the forthcoming projects, plans, and goals clearly and concisely.


As a leader, he is required to provide information and resources to the employees under him and take prompt action. 


Strategy

Having a strategic and practical approach is imperative for finance leaders.


The CFO does not only help in building financial strategies but also works on non-financial aspects of the company to understand the impact of the strategies adopted.


CFOs must break down the strategic objectives into achievable goals for employees and address loopholes. 


Tech savvy

The CFOs need to be adaptive and open while operating in a world of technology-driven resources.


CFOs need to be aware of the importance of automation and the SaaS software, which unloads the employee and provides a high-efficiency rate in getting tasks done.


Moreover, they must be able to deploy the technology-based software and tools for themselves and the workforce.


Problem-solving and analytical skills

The finance department needs to be on its toes to take immediate action on unplanned events.


To prepare the team for such circumstances, the CFOs problem solving, visualizing, and critical thinking skills are crucial to understanding the situation and being ready for action.


The CFOs must be quick to choose between the less wrong option among the others. 

4 ways to prepare for the future of the finance

To thrive in the future of finance, CFOs need to reduce the friction between business processes and automated software.


But this isn’t an overnight task; it requires stringent efforts by the CFOs and the finance department. 


Following are the four ways through which you and your team can prepare for the future of finance.


Automate your finance process

Companies no longer depend on traditional ERP systems where manual entry was the foundation of accounting.


With the digitization of accounting and finance, companies have shifted to more robust systems. 


The traditional ERP systems unnecessarily made the accounting workflows prolonged and inefficient in reporting.


Not to mention — they had no system in place to identify and report any accounting errors, omissions, or duplicity. 


On the flip side, an automated accounting system with the right balance of flexibility and reporting in real-time facilitates decision-making. It makes the workflows more efficient, thereby spurring finance automation. 


Finance automation is adopting technology-based tools and software to empower the financial activities of a company.


This means companies deploy SaaS tools to accomplish finance-based objectives with minimal human intervention. 


With the advancement in financial technology, Artificial Intelligence (AI) and Machine learning (ML) can be applied to complex financial processes and make them more achievable without flaws or human requirements. 



Impact of finance automation on businesses


By enabling automation, finance functions like financial planning and analysis, tax planning, investment decisions, auditing, and financial risk management were positively impacted.


They led to better accuracy in decision-making and productivity. 


The automated reports displayed data-driven insights about the company’s financial performance and paved the way for predictive analysis.


Based on these reports, CFOs and finance leaders make future predictions and trend analyses for the company’s upcoming financial performance. 


Through automation in finance, companies can significantly reduce their operations costs and stretch their profit margins.


Higher the efficiency, lower the costs. With more streamlined and cost-centric software, companies can optimize their cost structures and work on the cost-reduction. 



Four finance processes improved through automation



1. Accounts payable


Accounts payable automation (AP Automation) is a technology-driven system that automates accounts payable processes. AP automation streamlines the tasks of invoice capturing and invoice payment through the use of OCR technology and invoice scheduling software, respectively. 



2. Accounts receivable


Accounts receivable automation (AR automation) automates repetitive invoices and receipts, tracking unpaid invoices, and estimates the amount due to be received.


The software can predict the incoming payment advice invoice amount, which can convert into bad debts, and gain an understanding of the cash flow for a specific period. 



3. Financial reporting


Financial reporting is the core of the future of finance. The automation in finance has allowed businesses to access company-wide information and visibility with high accuracy in financial numbers. 



4. Payroll automation


Companies use payroll automation to streamline the employee monthly salary process and manage the benefits and bonuses.


With the help of payroll automation, companies need not create a salary channel for each employee on a monthly basis. Instead, they can set triggers for employee salary and all of them with a single click. 

Get proper data for the finance team

The finance department requires a comprehensive and vigorous data management strategy to direct the collection, storage, analysis, and reporting of the financial data extracted from various sources. 


Generally, companies do not store all the financial data in one place. They procure it from various departments, stakeholders, and third parties, converge it in one place and continue financial analysis and forecasting.


Such significant disparity between the data obtained results in miscommunication, leading to data inconsistency and unreliability. 


With a high degree of flawed financial data, it’s pretty difficult to forecast the company's future performance, hampers the visibility and analytical skills of a data analyst, leads the company away from its genuine concerns, and disrupts the entire company ecosystem. 


Adopting an intelligent database management system — can manage and manipulate all the data generated from the sources, whether internal or external, optimizing it to make it more readable and easy to comprehend. 


To rationalize, simplify, and consolidate all the company-wide data generated, finance organizations can implement the below-mentioned practices:



1. Organized data quality 


The first step in managing the company data is organizing it into a common and consistent method, creating a degree of standardization among all the data sets.


After doing so, collect all the data according to the set standards ensuring no data set is out of the described range.


A harmonious system to identify, record, store, analyze, and protect the data structure leads to high-quality data analysis with error-free results.

  


2. Collaborate with the other department for quality data


The finance department alone is not the provider and consumer of the data generated across the company.


Various departments use financial data to predict sales trends, cost of operations, determine marketing costs, etc.


Each department has its own data set that needs to be analyzed and processed before referring to it. Therefore, all the departments must be on the same page regarding data consistency in a company.  

 


3. Clean the data with the help of finance members


Every data set generated cannot be simply entered into a database management system.


If any part of the data calls for rectification or changes, it becomes very messy and complicated to account for.


To prevent this, the finance team needs to scrutinize and check for any errors at the point of entry. In parallel, the finance department can address and resolve all the errors simultaneously rather than going back and changing the whole data format by editing one of the data sets. 


 

4. Make use of automation for better quality data


Automation makes everything more efficient and simpler to ingest.


Through database management software, companies can easily store and analyze all data inserted in no time with utmost precision.


The manual work unnecessarily makes the employee less productive and lethargic by repeating the same outcome. 


Refining the decision-making process

Decisions related to finance operations are not based on instincts and random thought-process.


It involves a series of steps right from examining the past performance of findings to their current implementation and impact on the company’s goodwill. 


Through advanced analytics, finance leaders can accelerate the decision-making process backed up with sufficient information and unwrap the company’s overlooked opportunities and threats. 


One of the critical aspects of the future of finance is constantly improving the decision-making quality, allowing seamless implementation of the policies, and providing enough room to amend the changes.


Based on these points, a final decision will be stamped and communicated across the organization, and resources will be allocated.


Therefore, it’s significant for major or high-dollar decision-makers to factor in all possible data available before concluding any concrete. 


An upright and evaluated decision-making technique is based on the following factors:



1. Better insights into the data

 

Simply by communicating the decisions, the company cannot successfully reap the benefits.


Finance leaders must be more proactive in communicating the granular details of the process, address any hindrances, constantly compare the actual result with the expected results, and bridge the gap between understanding and implementation. 



2. Faster analytics 


With easily approachable and on-the-go analytics, companies can go back and refer to the insights anytime to improve their decision quality.


Organizations can analyze past performance and trends and, based on them, implement quick decisions. 



3. Strategic planning


The adopted decisions should be backed by sources like past performances, consultation with the advisory committee, and financial reports and statements.


Based on such references, the strategic planning of goals, financial decisions, and resource allocation should be done. 


Transforming the finance operating model with new abilities

Finance organizations are shifting their finance operating model to a more robust and interactive one, allowing the employees to maximize their potential outcomes and focus on the company’s pressing problems.


Adopting a model like this pushes the organization to uncover new opportunities and put a foot forward in the future of finance and investment. 


However, implementing the new finance operating model is taxing for the finance leaders and the finance team.


The transitional model begins right from the core of the finance department — with enhanced reporting capabilities, database management system, finance automation, accurate risk management practices, and integration with a vast pool of SaaS technologies. 


Highlighted below are some of the changes companies need to adopt in order to implement the finance operating model successfully:



1. Need to improve digital skills

 

The world has explored digitization capabilities in almost every sphere of business.


Embedding finance with the right digital tools significantly impacts the employees' digital skills.


The result can be witnessed in an uninterrupted flow of information, better workflow, enhanced accountability, and identifying bottlenecks in the processes. 



2. Build a strong finance team

 

A team is your greatest shield against every odd. 


The finance department needs to guard the company’s goodwill and financial assets.


But it’s equally essential for the CFO to guide and direct them in the right direction, address their issues, resolve them in a timely manner and be a constant source of inspiration. 



3. Company culture 


Healthy company culture is not only limited to formal gatherings and discussions but also needs to be expanded to informal means.


A tremendous and fulfilling company culture exuberates qualities like meaningful collaboration and interaction, shared values, constructive criticism, healthy communication, opportunities to connect in an informal meeting, integrity, and so on. 



4. Employee capacity and capability

 

Finance leaders should focus on the skill-building capabilities of the team members.


They should bolster employees’ finance and digital skills with a transparent model that focuses on overall employee development and enables career progression. Top officials can play a significant role in this process.


They can guide and mentor the employees on skill development by spending reasonable time observing and learning from their day-to-day activities. 

Empower your finance team with efficient accounting automation