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Digital Transformation for CFOs

February 28, 2019
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Today, the role of the CFO continues to evolve, internally and externally. From navigating economic changes driven by digital technologies, ensuring financial viability for exit planning and managing increased investor scrutiny in reviewing financial information, CFOs are forced to be front and center to co-lead organizations to grow faster, quicker and be financially sustainable in the future.

Keeping this in mind, we present two roles that the CFO is playing in Digital Transformation that will help you think about your finance organization and roadmap for your business.

  1. Being a catalyst for innovation
  2. Driving operational excellence throughout the business

Being a catalyst for innovation

CFOs have started shifting their views and their thinking towards innovation and adoption of new ideas. As part of Digital Transformation, every piece of the business has a symbiotic relationship to finance. When considering their role in Digital Transformation, most CFOs focus on streamlining finance processes and operations. This is where most start. For example, performing balance sheet account reconciliations is a typical manual process that needs to be documented and completed every month. We have observed that accounting resources dedicate almost 30% of their time performing activities for documentation purposes or processes that do not require much analytical work. 

Robotics Process Automation technology is ideal for manual, data-structured and highly repetitive activities; in this case, by automating balance sheet account reconciliations, especially when the general ledger matches the subledger balance or any other source system for documentation purposes. This specific accounting process can help your team focus on more analytical work or resolve any discrepancies. Typically, we see accounting resources focusing more time on variance analysis from previous periods to detect any trends or spikes in account balances helping comprehend any budget planning or forecasting analysis. 

Finally, to become truly intelligent about the business and the industry, successful CFOs leverage digital technologies similar to the example above, going from finance and accounting back-office operations to business’s customer experience processes, leading us to the next CFO role as an Operator. 

Driving operational excellence throughout the business

CFOs strive to operate an efficient and effective finance organization, providing a variety of services to the business such as financial planning and analysis, management reporting, tax, and other business operations.

Robotics Process Automation is one of the digital technologies that we are discussing today and can take a large portion of highly repetitive, data-structured and manual processes away from your resources and not only make it easier for them but also timesaving for your finance team. We have noticed that by having more time, CFOs have started performing additional financial analytical work.

For example, inventory turnover is a key metric for finance to understand how the number of times inventory is sold or used in a period. CFOs need to explain to operations and marketing resources how fast a company sells inventory so they can understand that having low turnover translates to weak sales and possibly excess inventory; such circumstances may require additional marketing ideas and concepts to accelerate the inventory turnover. On the other hand, a high turnover ratio will imply either strong sales or insufficient inventory, which can lead to loss of business opportunities. This is how the CFO can collaborate with other functions of the business and be a true business operator.

One of the things that we know today is that the CFO plays different roles and will need to become more digitally sophisticated in order to utilize technology tools — from robotics process automation, data analytics, and refining the typical month-end close process — to support the business operations’ growth and help the business flourish in the future.

Citrin Cooperman’s Finance Transformation service offering helps bring the latest digital technologies and sophisticated finance processes for you to lead the finance organization and help the overall business to grow. Please do not hesitate to contact a member of the team with any queries you might have. In addition, please see the following reading resources to better understand our services: 

In our next edition, we discuss the Strategist Role for the CFO in the Digital Transformation World and more. We also explore technology-driven trends that helps CFOs succeed in the marketplace.

To read last month’s article, The Age of Digital Finance has Arrived for the Middle Market, click here.

Please visit our Strategy & Business Transformation Practice website by clicking this link.