Why CFOs Sit in the Middle of Effective Process Modernization

finance team discussion

When CFOs can capture new efficiencies while lowering legacy costs, that’s an easy organizational win.

Faced with ongoing macro headwinds, and despite a somewhat softening environment, today’s finance teams are increasingly reprioritizing their efforts away from a growth-at-all-costs mindset to a firmer focus on financial fundamentals and sustainable profitability.

And more often than not, modernizing bottlenecked processes with digital solutions is helping businesses fine-tune their operations and strike that enticingly durable balance between right-now growth and long-term success.

Every senior finance professional who successfully navigated the pandemic came out of that challenging economic cycle with a renewed understanding of the importance of being able to make nimble decisions while protecting the basics.

Now, as chief financial officers face increased scrutiny and expectations around financials and performance, they are constantly seeking ways to effectively leverage the growing use of data and technology to accelerate their organization’s go-forward trajectory.

Still, it requires people and investment to make machines work. Small and medium-sized enterprises may not have the bandwidth or resources to take game-changing leaps in their operational workflows, leaving them vulnerable to manual processes that can be time-consuming and error-prone.

CFOs have got a “real challenge on their hands, balancing the day-to-day working capital needs with continuing to invest in the business,” Ed Chandler, SVP and head of Commercial and Money Movement Solutions for Europe at Visa, told PYMNTS.

That is why it is crucial for internal finance leaders to apply intentionality and discipline to their firm’s technology investments — ensuring that future-fit integrations offer both a clear ROI (return on investment) and solve for a real business problem, rather than chase a trend.

Read also: 21st Century Enterprise Technology Is Entering Its Third Act

Determining a Go-Forward Strategy for Digitizing Outdated Workflows

While bringing areas like liquidity management, working capital management, cybersecurity and fraud prevention, compliance and more into the 21st century all represent best-practice investments, it is incumbent on finance leaders to work with other department heads to recognize opportunity areas where investment in innovation can pay off.

“From a CFO perspective, we need to engage and partner with our counterparts in the organization, such as the CIO, to align around how to deploy technologies, how much to spend on technologies, what’s the pace of change around that … because there is this benefit that you may not see for the first 12, 24, 36 months, but it’s the right thing to do,” Angela Floyd, CFO at DPR Construction, told PYMNTS.

Vikas Mehta, CFO at Komodo Health, told PYMNTS that while “[An important] trend is leveraging new technology … the number one thing is driving through the organization that growth initiatives need to come both with a high return on investment and create sustainable value over the long-term.

“With every downturn, the importance of productivity gains is high. There’s been a greater adoption of AI [artificial intelligence], machine learning and other tools at the highest level, which has been a drastic change, and I’ve been in the industry for more than 20 to 25 years,” Mehta added.

As cutting-edge tools become more prevalent, more cost-effective, and easier to implement, they are having a downstream impact on the finance department itself by helping CFOs and their team automate execution of the role’s basics and increase their sphere of influence to become more business partner than bean counter.

As Jeffrey Noto, CFO at global communications infrastructure provider Zayo Group, told PYMNTS, “it’s becoming a very blurred line [for CFOs] between where you need to have finance acumen and skills on one side, and where you need to have more technical capability on the other side to really balance the two out.”

Read more: Death by Paper Cut: The Hidden Costs of Checks

The Stakes Are Getting Higher for Keeping Internal Operations Status Quo

The CFO role is continuing to evolve to a more forward-looking point of view that encompasses high-level growth strategies, but that doesn’t mean there aren’t holdouts still wedded to the old way of doing things.

And the tipping point for investing in innovation may not be a technical one, but a generational one.

“The general managers, decision makers, these folks are usually within a few years of their retirement and they don’t want a lot of change because they want to finish out and let somebody else take on the next effort,” Jake Joraanstad, CEO at Bushel, told PYMNTS.

“Digitization is table stakes now … Some of the newer generations rising up in organizations just won’t accept some of the things that have been taken for granted as status quo for decades — they’ll say this is too difficult, this needs to change,” Corcentric CEO Matt Clark told PYMNTS.

But as emergent firms boasting all the bells and whistles increasingly enter the landscape full steam ahead, incumbent enterprises both large and small need to be sure they are keeping their innovation strategies sharp.

“On the technology side, if you’re in a place now where your in-house system looks like it did 20 or 30 years ago, this is a chance to make a huge leap forward,” Ben Lamm, COO at Capital One Trade Credit, told PYMNTS.

“If you can even save some eight- or 10-people’s worth of work at the end of the quarter and finish and close the books within 24 to 48 hours, that is priceless,” Karandeep Anand, chief product officer at Brex, told PYMNTS.

Still, as Marc Greenberg, CFO at Altruist, said, “You can’t spend money on everything, and you have to take a long-term view … it is important for finance leaders to be ruthless in their prioritization when it comes to making digital investments.”