Technology has been a major catalyst in the way C-suite roles are changing. Now it’s not a matter of “if” a company will digitize its financial processes, but “when.” And the CFO is expected to lead the charge.
Companies are under greater pressure than ever to reduce costs while increasing profitability and productivity. That challenge requires, among other things, a clear vision of where the company’s spend is allocated and real-time visibility into payables and receivables. What has made that possible is the digitization and automation of both functions.
CFOs understand this and that’s why they’re becoming the primary advocates for the transformation of all transaction processes from POs to payments. A recent CGMA article noted that CFOs are indeed becoming digital apostles. Back-office processes which were once considered to be cost centers and simply “a cost of doing business” are now being considered as sources of data that can be utilized for strategic decisions to achieve the company’s finance goals. CGMA cites an Accenture study which shows that, when it comes to acknowledging the value of implementing digital initiatives, “67% (of CFO respondents) have improved their forecast accuracy, according to the report, and 66% report better decision-making.”
Greater savings – Initially, companies looked to automation as a way to reduce the inefficiencies, inaccuracies, and excess costs inherent in paper-based manual processes. All of that is still true and still important; however, most P2P cloud-based digital solutions on the market today offer a great deal more. Automating these processes compresses the approval cycle often leads to on-time or early payment, giving companies the ability to capture discounts that otherwise might be lost.
Greater visibility – Visibility, as mentioned above, is one of the most valuable benefits companies realize through digitization. The real-time visibility into all steps in the transaction process gives finance a full, accurate view into their spend, both direct and indirect. Cloud-based solutions also give access to all stakeholders in the transaction, including suppliers. When suppliers can actually see that their payments are made on time or ahead of the payment schedule, they also are better able to manage their working capital. This can, in turn, engender much better relationships between procurement and their suppliers to the benefit of both parties.
Greater accuracy – The best solutions also utilize transaction data to provide dashboards and reports, giving CFOs and senior finance executives the information necessary to produce accurate cash flow forecasts, enabling the company to meet its goals. In addition, the data received can lead to better decision making when it comes to a whole host of issues: procurement can better predict in-time inventory needs; AP can create more advantageous payment schedules; product development can assess what new or additional products/services should be explored.
CFOs are coming to the realization that not implementing these digital solutions will put them at a great disadvantage when it comes to competing in the market. As the CGMA article concludes, CFOs are “no longer defined by how well they close the books…the value is in their ability to glean insight from the marketplace and the internal operation that translates that into a financial story that makes it easier for the leadership team to make a decision.”