How CFOs Leverage Data to Play Both Offense and Defense

Where you spend your money, there’s your business strategy. 

And that’s large part why the role of the chief financial officer (CFO) has undergone a transformation in recent years, expanding beyond traditional finance functions to become a driver of strategy and value creation within organizations.

“The CFO role gives you the chance to combine finance and strategy and helps you think about how financial strategy supports business strategy,” Ken Brause, CFO at DailyPay, told PYMNTS for the series: “A Day In The Life of a CFO.”

Brause explained that finance chiefs are increasingly involved in shaping long-term business strategy through optimal resource allocation and leveraging advanced data analytics.

“It’s about putting the organization’s resources against the things that are impactful, both for us and all of our stakeholders,” he said. 

One illustrative example is DailyPay’s expansion of its credit facility by adding Citibank to its existing lenders, Barclays and TPG Angelo Gordon. This strategic move, driven by the company’s growth, provided an additional $100 million in capacity, ensuring sufficient liquidity to support over a million users. Such financial maneuvers underscore the CFO’s role in aligning financial strategies with broader business goals.

Risk Management and Scenario Planning

The blended responsibilities of the modern CFO require supporting business objectives while also controlling for what’s controllable — and predicting the A, B and C scenarios of what might not be controllable. 

“CFOs are always playing offense, but you’re also playing defense,” Brause said. “And that plays into risk management.” 

Navigating a complex risk landscape is a core aspect of the CFO’s responsibilities, and in today’s volatile environment, scenario planning has evolved to address modern threats like cybersecurity breaches and geopolitical risks. 

Brause noted the importance of focusing on the impacts of various risks rather than trying to predict every possible scenario. This approach simplifies risk management, making it more digestible and actionable.

Effective risk management involves not only embracing proactive strategies to mitigate potential impacts. For instance, at DailyPay, credit risk is managed through rigorous credit policies and client evaluation.

“You can’t underestimate the importance of liquidity and having good policies, procedures, and practices around managing liquidity risk, for any company. And then, it’s good old-fashioned financial controls and making sure you have visibility and insight into what’s happening,” Brause said. 

The Power of Data and Technology

The integration of technology and data analytics has revolutionized the finance function, providing unprecedented visibility into business processes and decision-making. 

Brause highlighted how data permeates every aspect of DailyPay’s operations, from user behavior analysis to optimizing experiences through data science and artificial intelligence (AI) tools. Business intelligence (BI) tools further enhance this by democratizing data, enabling real-time sharing of results and metrics.

This data-driven approach fosters collaboration across executive teams, while the ability to work with real-time data allows for immediate insights and decision-making, making the CFO role more collaborative and impactful.

“The fact that we’re spending less time creating data and creating ways to share the data gives us more time to look at the data,” Brause said. “Everything is real time”

But it’s not just technology — people play a huge, and leading, role in delivering business value. 

Building a capable and motivated finance team is crucial for any CFO. Brause underscored the importance of hiring mission-driven individuals who are curious, willing to learn, and possess diverse experiences. He explained that he values team players who can engage in rigorous debates, challenge each other’s perspectives, and arrive at better solutions collectively.

“It’s crucial to have people realize the value of a finance person by their side as they begin their journey … as opposed to going to finance at the end and asking, ‘Is it profitable?’” Brause said, stressing the importance of creating an environment where people realize that everybody has a better outcome when finance is brought in early rather than late in the process.

Looking ahead, Brause advises aspiring CFOs to embrace opportunities and remain flexible in their career paths. He emphasizes the value of diverse experiences and the importance of staying current with industry trends and developments. Professional development, through continuous learning and participation in peer groups, is essential for keeping pace with the evolving demands of the CFO role.