AI-Driven CFOs and Optimizing Net Cash Flows

March 14, 2024 Theresa Rex

CFO and accounting VP amidst net cash flow optimization

Net cash flow optimization is key for an organization to stay financially healthy and achieve sustainable growth. Cash flow management involves monitoring, analyzing, and optimizing the inflow and outflow of cash within the company. Traditionally, this responsibility has fallen on the CFO. However, with the rise of AI, CFOs can now leverage new tools and algorithms to enhance their role in optimizing cash flows. Let's speak with Max Dame to learn how to do that.

Max is an experienced finance and accounting leader with a strong background in SaaS and marketing technology and expertise in financial planning and analysis, financial reporting, and accounting. Currently, he serves as the Vice President Of Finance And Operations at Tesorio. Before that, Max was the Vice President of Finance at Formation, Director of Finance and Accounting at Kenandy, as well as Director of Finance and Senior Consultant at Meritus.

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Megan - 00:00:18: Today, my guest is Max Dame. Based in San Francisco, Megan is a seasoned financial leader who currently spearheads finance and operations at Tesorio, the leading cash flow performance platform. Megan, thank you very much for being my guest on today's episode of CFO Weekly.

Max - 00:01:08: Thank you, Max. I appreciate it. Happy to be here. Super excited about this.

Megan - 00:01:11: Yeah, today our discussion focuses on the AI-driven CFO and how that relates to net cash flow and the three pillars of financial health. Megan, I'm looking forward to hearing your perspective on this topic and learning from your experience. So let's jump right in.

Max - 00:01:27: Sounds great.

Megan - 00:01:28: First, let's just start with a little bit about you and your background and how you got to where you are today.

Max - 00:01:35: Yeah, absolutely. My background is mostly in FP&A. So I, quote unquote, grew up in FP&A at large corporations, including QVC, which was part of Liberty Media, and then moved to a large multinational, Schneider Electric, a French company. And then about seven years ago or so, I moved to smaller startups and led finance functions there, including Tesorio, where I'm at today. And why did I do that? The work at startups to me is a lot more exciting than big corporate, which also has its excitement. But working in these kind of faster moving environments fits my style pretty well. So yeah, that's how I got to where I'm at.

Megan - 00:02:15: That's awesome. I was going to ask you what you liked about working for startups.

Max - 00:02:19: It's the fast pace and some of it is also the unpredictability. It definitely keeps you on your toes.

Megan - 00:02:24: Yeah. So Tesorio was named as one of the Fast 500 winners and is one of the fastest growing companies in America. Is this because the company is doing something different from anything being provided before? Or do you guys just do it better than anyone else?

Max - 00:02:42: Yeah, we're very flattered by this award. So thank you very much. I think it's a little bit of both. One, we definitely do something that's very different that hasn't been done before. We help CFOs and finance leaders optimize their cash flows. That's all the way from their cash collections to their accounts payable and also help them with bank forecasting. That's something that hasn't been done before. And we're doing that a little bit differently. We're focusing on short-term cash flow performance, we call it, versus kind of the standard FP&A, kind of longer ranging tools that you see out there in the marketplace. So very different, something brand new, or it was brand new when we released it. And we continue to innovate and we have a lot of exciting stuff coming out this year as well.

Megan - 00:03:31: I'm just curious, who's the ideal customer for this product?

Max - 00:03:35: The ideal customer is anyone in the finance leadership position, anyone in charge of short-term cash forecasting. In addition to that, our collections automation tool helps AR, directors and accounts receivable professionals collect faster. So it's really any finance leader in a medium to large company.

Megan - 00:03:58: And looking back at your time with Tesorio, which I believe you started 2022.

Max - 00:04:06: That's right. Yeah. It's been almost two years.

Megan - 00:04:08: So what's been the decision that you've made during this time that you're most proud of and that you think contributed most to Tesorio's remarkable success?

Max - 00:04:19: That's a great question. I laugh because I'm not one to toot my own horn, but I think it's a combination. It's a few decisions that I made or I helped the team make. In a relatively small company like ours, venture-backed startup, there's a lot of initiatives that the team wants to move forward with. And one of my biggest accomplishments in my role was helping the team focus. Focus on our mission and making sure that we deliver on our mission. Again, there's always 15,000 different initiatives, whether it's product, engineering, sales, everyone has great ideas. And I see it as my role to make sure that we move forward with our mission and stay true to that. And that's been a struggle at times, but I think I've been pretty successful at it. And the results are in the pudding. We've had a fantastic 2023. We ended the year on a really good note and things are going very well.

Megan - 00:05:16: I like how you give credit to the team. It's a good leader. And recently I've heard CFO referred to as chief future officer, among other things. So what responsibilities do CFOs have now that maybe they wouldn't have had five to 10 years ago?

Max - 00:05:34: Yeah, I think that's interesting. I think the CFO or finance leader moving to a more strategic role, quote unquote, that's been going on for 10, 15, 20 years, probably. So that's nothing new. Over the past five years, what has changed? To me, it's the demands on the job and the demands on the position have changed. Where in the past you could say, hey, you know, we're closing the books. You need to wait for an answer to a request until we're done with the numbers. There's a long process. You don't really have that luxury anymore. You have to move fast and you have to have the answers at your fingertips. And that's something that's really changed. Another thing that has changed, I feel there's a lot more responsibilities in the job than there were in the past. Many finance leaders and CFOs today have a lot of operational responsibilities that were in other departments or had other leaders previously. Example for that would be human resources, legal, deal desk potentially. Those types of roles in the whole scheme of simplification moved under the office of the CFO in many cases. So many CFOs are de facto COOs at this point, and that comes with a lot of additional responsibility and also risk.

Megan - 00:06:48: And in addition to more responsibilities, it seems like CFOs are constantly being asked to do more with less. So do you think there comes a point where you can't squeeze blood from a stone? Or is there always room for improvement, especially now that we have tools like automation and AI?

Max - 00:07:07: I laugh because I love that question and the way you phrased it. I don't feel like we are necessarily being asked to do more with less. We are asking the organization to do more with less. And in turn, we kind of force ourselves to do the same and lead by example, which we're really tough on ourselves. And in some cases, definitely to a fault where, hey, we want to lead by example. We don't necessarily want to spend incremental dollars where there are instances where we just have to invest. We have to invest in new systems, new processes, and sometimes people as well. But many finance leaders are very shy about that because, again, they want to lead by example, lead a very lean team. But that can be to a fault where you're missing out on improvements that you could make if you were to invest a few dollars. So to make a long story short, I don't necessarily feel that we're always being forced to more with less, but we're imposing that on ourselves. Which I wish people wouldn't always do.

Megan - 00:08:10: And with such a large focus on technology these days within finance and accounting, do CFOs need to be experts in technology and AI?

Max - 00:08:22: I don't think there's anyone who can claim to be an expert in AI at this stage, quite honestly. Do CFOs need to be experts in technology? In some instances, what I would say is folks need to be aware and very curious, no matter if you're leading a very large organization at a large corporation or you're leading a lean and mean team at a startup. I would want leaders always to be very curious as to what's out there, what's new, and not be shy trying out new things. And I think that's something that's become a requirement, especially over these past five years, where technology is moving very, very quickly. Us as leaders, we need to be there and understand what's out there and spend a good amount of time testing new things and not be too risk averse trying new things out. Of course, in our jobs, we always have to be careful and balance risk versus potential ROI of cost saving, but it's absolutely up to us to be part of the sea change that I see coming. So definitely be aware of things and not be shy trying new things out.

Megan - 00:09:31: And do you have any advice or maybe sources that you look to to stay ahead of the technology curve?

Max - 00:09:39: Absolutely. Obviously, the typical thing, read up on things as much as you can. But for me personally, I actually like to try trial new tools, watch demos myself rather than asking my team to do it. When ChatGPT came out, I played with it a lot and I actually use it almost every day in my job for certain things. And I would encourage leaders, no matter what your organization looks like or how large your organization is, to do the same. I think trying things yourself educates you the best rather than just reading up on it and watching webinars and doing things of that nature. Try it out and see if it works for you all.

Megan - 00:10:16: And Tesorio is a cash flow performance platform. So why is cash flow so important, especially right now? And given its importance, how is it that so many companies seem to lose sight or control of their cash flow?

Max - 00:10:31: That's a great question. Why is it so important right now? I think it's always been important, but especially since what happened in 2023, the banking crisis, venture funding landscape changing pretty dramatically. We haven't seen that change like this probably in the past 10 years. So this is something a lot of folks have experienced for the first time in their careers. So cash is not easy to get or not as easy to get as it was in the past. So having visibility, predictability, and control over your cash flow is incredibly important and much more important than it was just two or three years ago. And with that comes, you really need to have a very good understanding of where you stand in terms of cash, your cash burn, your cash ins and outs at any given time. You can't wait for the books to be closed or for quarter end or these day-driven milestones. Even as the most senior finance leader, you almost need to have a daily view of where you're standing. And that's become incredibly important, especially these past 18 to 24 months.

Megan - 00:11:39: And how can AI help with cash flow and give CFOs back some control over forecasting?

Max - 00:11:46: Yeah, absolutely. I can give an example. Short-term forecasting, for example, a 13-week, a quarter cash sources and uses forecast is one of the most tedious, time-consuming, and labor-intensive things that a finance department is working on at any given time. And that is a fact. We've done some research and some surveys, and it is a very manual process in 90% of organizations today. And the reason for that is, especially short-term cash forecasting, is there's huge variability when our customer's paying you. Do you have control over when they pay you? What bills are becoming due? When do payments terms change? When are you paying those bills? It is quite complex, and there's a lot of different sources for the data. What we're trying to do is we're trying to simplify that. And an example would be, hey, if you have a few thousand customers and there's one customer in there that always pays you 20 days late, there's another customer in there that always pays you five days early. Trying to forecast that in the thousands is a very convoluted process. Try to do that in a spreadsheet. It's possible, but it takes a long time and it's very complicated. AI can do that in seconds and provide you the most accurate and up-to-date cash in forecast that you can imagine. And that's something AI can do. And we're there today, which is pretty exciting. This is a process that would have taken you probably a week, and now you can do it in seconds.

Megan - 00:13:19: And are there metrics that AI considers that are difficult for human analysts to take into account? In other words, are there external factors that people will likely miss that AI takes into account?

Max - 00:13:36: Yeah, that's an interesting question. So one thing I would say, AI cannot predict, at least not yet, when the next recession is going to come, when the next banking crisis is going to come. I wish it could. That would be fantastic. We're not quite there yet. And I don't expect that to happen anytime soon. But what AI and ML power tools can help you with is no matter what crisis comes around the corner, you are ready. You're ready with visibility, predictability, and control. And that's what AI can help you with. You don't have to wait for your treasurer and or your FP&A team to come back to you with a forecast in five days or two weeks because they have to "rework the model". You can get that information by the click of a button. And you can action it as well. So while you can't necessarily predict exactly what's happening in the economy, at least you can be ready for anything that comes in.

Megan - 00:14:32: And you mentioned three pillars of financial health. So what are the other pillars beyond cash flow?

Max - 00:14:40: Absolutely. What we've been talking about quite a bit, and again, this comes from a lot of research we've done with CFOs, what's really important, especially this year, is visibility. So removing some of those blind spots, not having to wait for the books to close, etc. Then I mentioned the second one as well, predictability, being able to see around the corner, not be blindsided, and then control, really being able to take action. It's somewhat self-explanatory. Financier's always want to be in control, and they think they're in control, but they're not always in control. So really giving them the tools and having the tools in place so you can take fast action in case something happens that you couldn't see. And those are the three things that we're focusing on and we here at Finance Leaders will focus on in 2024.

Megan - 00:15:29: And what role does AI play in measuring these other pillars and aiding CFOs in keeping everything looking healthy?

Max - 00:15:37: Yeah, absolutely. I think all three of those that I mentioned are definitely helped by AI and ML quite tremendously. So when you think about visibility, AI can see patterns, right? So you can very quickly get insights into your financial data that in the past would take an analyst or data analyst hours to build dashboards, analyze those dashboards. AI can give you insights very, very quickly. That's a sea change. That's happening today. Predictability is the other one I mentioned. This is, again, this is being able to see around the corner. And that's where that pattern recognition comes into play. An example of what that would be, if you have a large customer base, let's say you have 20,000 customers and a subset, let's say 25% of those customers are in a certain segment, industry segment. And you see that those customers are starting to pay late. Very quickly, AI can see a pattern like that and alert you like, hey, this industry is potentially in trouble or this customer subsegment is potentially in trouble. Make sure you remind them, you run a campaign against them to make sure that they pay you on time. In addition to that, you could alert your sales team that is in charge of the segment to say, hey, you might want to do something different with these people and or focus on something else because there could be trouble ahead. This is something with the old school kind of legacy tools you would not have been able to do without building complicated dashboards and honestly having an army of analysts poring over data for a number of days and then doing a PowerPoint presentation to share the results. So this is very different. And then last but not least, it's what I mentioned earlier, it's control, being able to act on something. So again, for example, back to the example where a subsegment of your customers started paying you slow, what you could immediately do, you can run a campaign against those customers and send out thousands of emails to click of a button and remind them to pay on time, to improve cash in from those customers. And having that type of control, again, it's real time, it's super fast. It's not something that you have to wait weeks and months for somebody to action.

Megan - 00:17:47: And I'm sure you just touched on it, but can AI tools provide CFOs with more than just figures and quantitative data? In other words, can they make recommendations for what action should be taken based on insights that have been gathered?

Max - 00:18:05: Yeah, absolutely. I think two things on here. One, these large language models, they're really great at predictive text. So they're really great at writing. So I'm just thinking of a classic example would be an MD&A (Management Discussion and Analysis) that a lot of us have to write every quarter. AI can absolutely do really, really well with this and help compose summaries with insights it gets from the data and make that process a lot easier. Of course, with the caveat, human checks are always necessary. You always have to check the work and make sure that it's all proper and there's no hallucinating going on. But that's already possible today. But more interestingly, I feel dashboards and data visualizations and all those things have been around for many years. Surfacing data has been around for a long time. They've gotten better, of course, easier to produce, etc. But what finance leaders are always stuck with, is with a so what. What do I do with this data? I have all these stats, all these metrics, all these dashboards. What do I do with that? Again, that's where the pattern recognition really comes in. AI can really help pinpoint focus areas. This is, again, a subsegment of your customer base that is potentially having issues. That's something you should focus on. Those are things that took analysts a long time. And AI can go through the data in seconds and provide you with those insights and actionable recommendations. And that's new. That wasn't available just a few years ago. I'm pretty excited about this. People always ask, hey, will this replace humans? Will this replace analysts or accountants? Whatever it might be. I don't think so. I think it will change jobs for sure. And jobs will become more interesting, actually, as a result of this. Because again, you can take a lot more strategic action rather than just producing numbers, which, yeah, I think it's quite exciting. It's a very exciting time to be in finance.

Megan - 00:20:10: Yeah, it definitely is. I can't wait to see where we are three to five years from now.

Max - 00:20:17: Absolutely. It's going to be a different world.

Megan - 00:20:19: So last question, but as you look into the future, is there anything that keeps you up at night? Are you worried at all about what's around the corner?

Max - 00:20:29: Oh, that's a great question. You know what, Max? Sleep is very important to me.

Megan - 00:20:33: For me too.

Max - 00:20:34: I sleep most nights, very well at night. So that's the answer to that. But is there anything worrying? Honestly, I'm an optimist. I'm super excited of what's ahead, what some of these tools can do, how jobs will change. I'm not super worried about things going away. I just think things will become more interesting and more efficient. So yeah, it's an exciting time. I don't think we've seen a sea change in technology like this in our lifetimes. Spreadsheets have been around since before most of us were born. But this type of intelligence, quote unquote, has never been available to us. So I just think it's exciting.

Megan - 00:21:14: I agree. Megan, thank you so much for being my guest today.

Max - 00:21:17: Of course, my pleasure. And thank you so much for having me.

Megan - 00:21:20: Yeah, I've really enjoyed speaking with you. And thank you for finding the time to be here with us today to share your experience and knowledge. And I wish you and Tesorio all the best.

Max - 00:21:30: Thank you so much. And same to you.

Megan - 00:21:31: And to all of our listeners, please tune in next week. And until then, take care.

In this episode, we discuss:

  • The role of AI-driven CFOs in net cash flow optimization

  • Why CFOs should embrace technology and AI

  • The three pillars for successfully transforming financial health

  • Cash flow optimization strategies in the current economic landscape

  • AI's impact on the future of finance

Key Takeaways:

How Today's CFOs Are Redefining Leadership

The role of the CFO has evolved dramatically, transitioning from traditional financial management to embodying the strategic partner and operational leader within organizations. Nowadays, CFOs are expected to have instant answers, make quick decisions, and take on a wide array of operational responsibilities. Additionally, the pressure to do more with less is a common challenge. However, it's often self-imposed as finance leaders strive to set an example of efficiency and common sense.

how CFOs are optimizing cash flow

“Many finance leaders and CFOs today have a lot of operational responsibilities that were in other departments or had other leaders previously.” Dame claims. - 05:20 - 08:10

How CFOs Can Lead Through Curiosity and Hands-On Tech Exploration

CFOs shouldn't aim to become experts in AI or any other technology. Instead, they should cultivate a deep sense of curiosity and willingness to experiment with new tools and innovations. Whether you're steering a massive corporation or a small startup, the key is to actively explore and test new technologies yourself rather than relying on your team or second-hand information. By staying hands-on and open to experimentation, you can lead your team through technological changes confidently and effectively.

Max Dame Vice President of Finance and Operations at Tesorio Quote

“I would want leaders to always be curious as to what's out there and what's new and not be shy about trying out new things.” Dame said. - 08:10 - 10:15

How AI Revolutionizes Net Cash Flow Management

Tesoro's platform highlights the importance of having real-time visibility, predictability, and control over your cash flow, which is essential for businesses to navigate times when cash is harder to come by. AI plays a key role in transforming cash flow management by offering accurate and instant forecasts, even considering the payment habits of thousands of customers. Thus, embracing AI allows CFOs to regain control and quickly adapt to any market changes without the traditional delay in financial forecasting.

Net cash flow optimization Quote

“What AI and ML power tools can help you with is that no matter what crisis comes around the corner, you are ready with visibility, predictability, and control.” According to Dame. - 10:16 - 14:31

Improving Financial Health & Net Cash Flow

The three pillars of financial health for CFOs are visibility, predictability, and control. Max highlights how leveraging AI and ML can enhance these aspects by quickly providing insights, recognizing patterns for better forecasting, and enabling quick actions to manage finances effectively.

improving financial health and net cash flow quote

As Dame said, “Finance leaders always want to be in control, and they think they're in control. But they're not always in control. So, giving them the tools and having them in place so you can take fast action in case something happens that you couldn't see.” - 14:32 - 17:46

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