The world around us is changing at a rapid pace. 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 important for corporations to be nimble and embrace change than in these tumultuous times. Modern finance & accounting is a tough job to take care of and CFOs are looking for newer efficient strategies to overcome challenges.
Changing Role of the CFO - Understanding the Modern Finance & Accounting Departments
This uncertainty is changing 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 business expect of a finance chief and his or her staff. CFOs are expected to play a more strategic 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 strategic partner to the CEO, many of whom see CFOs as their second-in-command. 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, mired in regulatory minutiae, distracted by the daily demands of different compliance, tax, and financial reporting regimes. In general, today's CFO is responsible for filling the following three roles.
CFO ROLE: Strategic Planner and Decision-maker
But to be fully effective, a CFO must understand the changing dynamics of the big picture, and be able to provide insights into the business, not just report historical results.
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 F&A function, the company, and its numbers. But as important as this is, timely and accurate reporting has become table stakes for any business.
CFO ROLE: Executive Team Member
In order to be effective, a CFO must partner with CEOs, COOs and other members of the management team. A CFO’s main job is to take away the financial worry from a CEO, but technology and tools can enable them to significantly increase their value by not only seeing the horizon but also by looking into the future by using advanced analytics to both predict the most likely outcome and prescribe a set of actions to address it.
Operational Struggles & Goals
Most CFOs would love to do more to contribute to their organization’s strategy, but they’re buried in the operational and tactical aspects of their job, unable to put aside the necessary time to think strategically, which ultimately precludes them from ever being a true partner to the CEO and the business at large. Many CFOs deal with the same issues, which include lack of real-time visibility into all areas of their business, an inability to scale due to disparate 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 processes 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 continuum in order to not only keep up with their high performing competitors but possibly leap-frog 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 excel, 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 undue stress on F&A employees (that are already hard to attract and retain) and calls into question the reliability of the end product.
The Accounting Outsourcing Solution - A Modern Finance Approach
This is where a third-party service provider, or outsourcer, can be invaluable. A third-party service provider can help an organization achieve these benefits in an accelerated 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 difficult 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 niche provider will provide these companies a level of intimacy 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.
Additionally, Finance & Accounting Outsourcing, or FAO, is a mature offering and there are many providers to choose from. On the surface, it may be difficult 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. And the growing popularity of cloud computing has made outsourcing a viable option for even the smallest of companies. Cloud-based platforms, such as NetSuite, allow companies of all sizes to benefit from best-in-class processes, workflows, KPIs, and dashboards right out of the box.
Outsourced Accounting + The Cloud - Modern Finance & Accounting
The marrying of a niche accounting outsourcing provider with a cloud-based platform can allow SMBs and mid-market organizations to not only achieve best-in-class 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 ‘big picture’. In other words, these types of outsourcing relationships can create an environment in which the CFO is able to deliver strategic insights to the business, ensuring his or her place as a trusted advisor to the CEO and a strategic partner to the business.
To see how Personiv can help with your FAO needs, contact us for more information.
About the AuthorFollow on Linkedin More Content by Megan Weis, CPA, MBA