Business changes at the speed of competition. Less nimble are the ways that business roles change to track that innovation, particularly when it comes to finance professionals who must look beyond spreadsheets and quarterly reports.
Against this backdrop, the role of chief financial officer (CFO) is becoming more fluid as well. Data plays a key part in this evolution, and can be a boon to everything from cost/revenue analysis to setting up payment terms with suppliers that can boost cash flow. By necessity, if not design, the CFO’s purview is moving into the realm of the strategic, rather than just the numeric — to the proactive mindset, rather than reactive.
In an interview with PYMNTS, Donna Wilczek, vice president of product strategy and innovation at Coupa, said the “performance aspect” of the CFO is becoming a bit clearer in an age where they need to maximize shareholder performance, and where all companies and their captains seek a competitive edge.
Wilczek told PYMNTS that a “competitive edge can come by cleaning up the house internally, and by that, I mean streamlining processes using best-in-class technology — and striking down silos within that company.”
Beyond the competitive edge, CFOs must contend with compliance and risk mitigation.
“In very plain language, the CFO’s role in overseeing compliance is to prevent financial statement mishaps and catastrophic regulatory or audit incidents,” Wilczek said.
That is getting harder amid a more difficult regulatory environment — marked by the organic nature of the regulations themselves — where everything can change with haste, and with the shifting landscape in Washington and elsewhere. The silo effect that stymies real innovation, and limits the visibility of individual employees beyond the confines of their job titles, comes amid the corporate culture, Wilczek said. That may especially prove true when it comes to cash flow management and strategically crafting supplier relationships.
The accounts receivable and payables functions, Wilczek told PYMNTS, “tend to be looked at as back-office functions and not necessarily strategic to the business.”
Yet, it is cash flow, and its prudent management, that eventually leads to shareholder returns. Information, not surprisingly, is key to cash flow, with understanding of how, when and why some departments are running well — firing on all cylinders — and others are … not.
Wilczek said, “Often in companies, there are multiple sources of data.”
The data may be collected and warehoused in disparate platforms and information systems — those systems may never talk to one another. With information moving at the proverbial speed of molasses, data is stale, and sometimes less than optimally actionable.
The result? When faced with closing the books each quarter or each month, or navigating compliance challenges, CFOs wind up “throwing bodies at the problem,” according to Wilczek.
“There is a lot of offline analysis because data is not captured in one place,” she said. Consolidating data, and examining it with artificial intelligence, means that a holistic view of what is going on — and what should be done — becomes a bit easier. This is especially true with managing AP and AR functions, Wilczek added.
She noted to PYMNTS that, in general, companies want to pay suppliers as late as possible, without incurring fees. The company that negotiates 60-day payment terms has a window of cash flow management that can be leagues better than 45-day payment terms. However, firms without robust information systems in place for data collection, synthesis and dissemination may wind up paying well before due dates and not getting that benefit.
Conversely, if discounts are in place with early payment terms, but without clear lines of communication and payment actions (even of the automated kind), then cash flow, again, is less robust than it could be. Wilczek said that benchmarking plays a key role in finding and fixing what is less than ideal from a performance perspective.
For example, with massive amounts of data available across her own firm’s customer base, she said that companies are able to work with what she called the “concept of community intelligence … with AI you can take all that data and create … a guidance function.” Thus, a supplier can be scored against their interaction with the “community at large” based on actual transactions and interaction.
The process may be a simple one, writ large, Wilczek said, but the steps are crucial: Collect the data, make sure it is clean and, above all, make sure everyone is on the same page when using that data — thus, turning real-time visibility into real-time strategy.
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