The world around us is changing at a swift pace. And in order to build best-in-class finance and accounting for your company, you need to embrace this shift. The global business environment is undergoing a transformation unlike any other point in time, spurred on by political, economic, demographic, regulatory and technological forces. An age of uncertainty is upon us and never has it been more vital for corporations to be nimble and accept this new reality than in these tumultuous times. Modern finance and accounting is a tough job to take care of and accounting executives are looking for more innovative, top-notch efficient strategies to overcome business-growth obstacles.
In this article, we’ll touch on how to cultivate a best-in-class finance and accounting function while also discussing how today’s changing landscape is reshaping the accounting industry.
Changing Role of the CFO - Understanding the Modern Finance & Accounting Departments
This uncertainty is evolving the role of the CFO, and the modern Finance & Accounting function in general. Today, finance only begins to describe the role the C-suite, shareholders and the rest of the organization expect of a finance chief and his or her staff. CFOs are expected to play a more tactical role in the C-suite at the same time that technology and globalization are adding layers of complexity—as well as overwhelming opportunity—to the corporate finance function.
Yes, times have changed for the CFO, who is now seen as a sound partner to the CEO, many of whom see CFOs as their right-hand person. CEOs want to see more big-picture, strategic thinking from their CFOs. Never has there been a greater opportunity for a CFO to impact the value of an organization: contributing to performance and growth, yet many CFOs remain lost in the numbers, consumed in regulatory technicalities, distracted by the daily demands of different compliance, tax, and financial reporting regimes. By and large, today's CFO is accountable for filling the following three roles.
CFO ROLE: Strategic Planner and Decision-Maker
The past decade has shown us that the CFO role is more than just processing data. But to be fully effective, a CFO must grasp the changing dynamics of the big picture, and be able to provide insights into the business, not just examine historical results. The truth is, the success of a company depends largely on how well a CFO can take those numbers and turn them into data-driven decisions. As John Collins, CFO at LivePerson, points out in the 5 Best-Kept Secrets From Today’s Most Successful CFOs: “For the CFO, the ability to leverage more data and be more predictive is ever present.”
CFO ROLE: Financial Community Liaison
CFOs are now responsible for communicating the company’s value, building rapport with analysts and investors, and most importantly, maintaining trust and demonstrating integrity – in the finance and accounting function, the company and its numbers. But as important as this is, timely and accurate reporting has become quintessential for any business.
CFO ROLE: Executive Team Member
This paradigm shift of the accounting function means that CFOs are having to take on more than one role. To be effective, a CFO must partner with CEOs, COOs and other members of the management team. A CFO’s chief job is to relieve the financial worry from a CEO, but developments in technology and tools can enable them to exponentially increase their importance by not only seeing the bigger scope but also by looking into the future by using advanced analytics to both forecast the most likely outcome and prescribe a set of actions to address it.
Navigating Through a New Landscape – Operational Struggles and Goals
Most CFOs would love to do more to contribute to their organization’s strategy, but they’re buried in the day-to-day operational and tactical aspects of their job, unable to put aside the necessary time to think strategically, which ultimately impedes them from ever being a true partner to the CEO and the business in general. Many CFOs deal with the same problems (day-in and day-out), which include lack of real-time visibility into all areas of their business, an inability to scale due to contrasting systems and manual processes, limited insight into customer behavior and limited or no internal controls.
Meanwhile, the benefits of achieving “best-in-class” modern finance and accounting methodologies are profound for an organization. These organizations are typically able to deliver higher-value services at about half the cost of their average peers by redeploying their finance talent, transforming their service delivery model, and leveraging more effective technology capabilities. From an external perspective, these organizations typically enjoy higher customer satisfaction scores due to fewer billing issues. From an internal perspective, they benefit from improved cash flows due to a faster collection of receivables and slower disbursement of payables, they close their books in fewer days, deliver more accurate forecasts in less time resulting in better decisions, and are seen as trusted partners to the business. They have a clear understanding of how their work is connected to the company’s overall strategic goals.
But how does a CFO get from where they are today to what will be required tomorrow? How do they move the financial function along the capability spectrum in order to not only keep up with their high-performing competitors but possibly catapult them into the future? Many organizations are still struggling with a month-end close that resembles a fire drill, reports that are too late, too difficult to understand and often done in outdated systems, limited capacity or ability to track business metrics and perform root cause analysis and financial systems that are disparate and disconnected, oftentimes requiring manual rekeying of data. This sort of chaotic exercise puts unnecessary stress on finance and accounting employees (that are already hard to attract and retain) and calls into question the reliability of the end product.
The Next Wave of Accounting Talent
With the next generation of finance and accounting professionals arriving in droves, companies small to large are facing the same issue: adaptability. The past few years have shown that the accounting function is becoming increasingly more reliant on technology and with the rise of digital innovations, there’s been more of a demand for talent that can keep up with these advancements. But it’s not enough to revert to the conventional ways of hiring top employees. Steve Gale, Head of Audit at Crowe, touches on this subject: “We have a traditional way of how we recruit people. But what about the young adults that are not academic driven but are good with numbers? The new challenge for us, as professionals, is about how we get these new skills for an old profession because we keep evolving.” Consider this: a Karbon’s talent survey found that 77 percent of those surveyed disagreed with the traditional definition of an accountant. So what does that mean for CFOs and accounting executives going forward? Leaders are beginning to recognize the need for professionals who have the ability to operate accounting software, interpret data analytics and forecast for the upcoming quarter (or year).
Adopting a Digital-First Mindset
It’s not a matter of if technology will change the accounting space but when and how. CFOs must adopt a ‘cloud-first’ mindset that seeps into the rest of the business. The cherry on top? The marrying of a niche accounting outsourcing provider with a cloud-based platform can allow SMBs and mid-market organizations to not only achieve unparalleled modern finance & accounting processes with very little investment but also allows for critical real-time reporting capabilities that enable a CFO to visualize what’s going on with the business at any given time, resulting in an understanding of the desired objective. In other words, these types of outsourcing relationships can create an atmosphere in which the CFO is able to deliver strategic insights to the company, securing his or her place as a trusted advisor to the CEO and an indispensable partner to the business.
Meeting the Needs of Finance and Accounting Teams with Outsourcing
This is where a third-party service provider, or outsourcer, can be instrumental. A third-party service provider can help an organization achieve these benefits in a fast-tracked way. However, reaping the full benefit requires that an organization seeking to partner with service providers that are both capable and willing to engage and invest in a meaningful partnership. This crucial partnership relationship can be challenging for SMBs and mid-market organizations to achieve, as they are likely to feel like small fish in a big sea with the large outsourcing providers. A well-suited provider will offer these companies a level of familiarity that they simply will not experience elsewhere. With a niche provider, these companies will experience more flexibility and have more control over the direction their services take (a top-tier provider knows not to run the whole show).
Additionally, finance and accounting outsourcing is an established offering and there are many providers to choose from. On the surface, it may be hard to distinguish one provider’s ability from another, but there are some capabilities that differentiate the most proficient. Many are combining digital capabilities with domain expertise to create business outcomes and drive value for their clients. Some of these leading service providers are partnering with technology providers to bring their client’s best-in-class practices without costly upfront transformations and implementations.
Suggested Reading: How Personiv’s Outsourced Accounting Works
We’ve talked - in-depth - about how to build best-in-class finance and accounting in today’s ever-changing climate – from the evolving CFO role and overcoming operational toils to the next generation of accounting talent, becoming technology-dependent and making outsourcing a part of your business strategy. But what’s next? If you’re looking to hire top talent or simply need assistance figuring out your next hiring move, get in touch with Personiv’s team of experts today. For over 35+ years, we’ve been helping clients build a better accounting team – and we can help you too.
