While spending countless hours manually poring over numbers might once have been time-consuming and inefficient at best, it is fast becoming untenable in today’s changing world, where the responsibilities of the chief financial officer are increasingly extending beyond number crunching to being a strategic partner and adviser.
With this in mind, CFOs will need to adopt data-driven tools to make informed spending decisions and deliver robust financial strategies. Tellingly, a survey by payments technology provider Equals Money found that 63% of companies are prioritising technology investment and 81% plan to upgrade or adopt financial tools to improve their budget oversight.
Yet, while boosting resources is clearly a priority, only 45% currently leverage budgeting software and concerningly, 26% still rely on manual budgeting. While many leaders recognise the need to innovate, overcoming the hurdles of organisational change is not without its challenges.
“It is often not about the data they produce but the fact there is a lack of access to that data and in some cases, a resistance to change” says Steve Paul, deputy CFO at Equals Money. “This is partly due to lack of financial tools and partly due to teams struggling with the time, understanding and expertise to utilise that data.”
CFOs are, by their very nature, prudent creatures, explains Paul.
“There is an element of if it is not broken, why fix it? Finance leaders often view themselves as the custodian of the company budget and it may seem counter-intuitive to spend money on their own systems and processes.”
Traditionally, finance has been viewed as a back-office function with a lower appetite for risk and innovation, but there is a stark difference between being prudent and being overly sceptical, says Paul.
“As the responsibilities of the finance function grow and the landscape becomes more competitive and complex, CFOs need to be brave enough to want to do things differently and recognise that there are vast benefits to embracing change,” he adds.
By utilising data-driven tools, finance teams can gain a considerable advantage. The digitisation of finance allows teams to process larger volumes of data more efficiently. But its benefits extend far beyond automation; AI allows CFOs to gauge how external factors such as changes in interest rates and shifts in the market could impact their business, helping CFOs to better predict trends, challenges and opportunities, all of which can help drive more robust decision-making and strategic planning.
Importantly, financial tools allow finance teams to self-serve, with the ability to access, generate and analyse financial data without relying on input from other teams.
“Legacy systems and the manual collection of information from different parts of the business can be fraught with inefficiencies, human error and blindspots,” says Paul. “Not only do financial tools ensure that the finance team is working with real-time information as and when they need it, but it can bridge the skills gap within teams that may lack the ability to analyse and manipulate data effectively.”
Short-term cost vs long-term value
As with any financial outlay, CFOs need to strike the right balance between financial prudence and embracing new opportunities.
“Leaders need to consider the payback; what value will it bring to the business in the longer term? It is easy to view technology as a short-term cost but in reality, it is a long-term investment strategy that will help teams to perform better,” says Paul.
Paul recommends that CFOs talk to others within their network, from fellow CFOs to business leaders and stakeholders, who have embraced financial tools within their own function and have a deep understanding of the benefits and experience of leading change.
“Forcing change upon teams runs the risk of creating risk and scepticism. For technology to be truly effective, finance leaders need to be part of the journey, championing change within their organisation so that new technologies are integrated effectively and their full potential realised,” explains Paul.
Of course, change can be daunting and those working within finance may fear that the growth of technology poses a threat to jobs. But, on the contrary, it is set to make the role of finance much more interesting, says Paul.
“Progressive leaders understand that it is not about attrition but reinvesting those resources in more strategic, value-adding tasks that will benefit the business’s long-term growth.
“Artificial intelligence is at the very beginning of its growth journey and is only set to become more exciting going forward. Business leaders need to understand that in this day and age, you simply cannot afford to defer these strategies. Those that do risk falling behind the curve.”
Choosing the right tools
With tech evolving at breakneck speed, choosing the right tools can be a minefield.
As a first step, CFOs should have a deep understanding of the problem they are looking to solve before they look at potential vendors.
“Leaders need to ask themselves what their biggest pain points are, what problem they want to solve and what they want to achieve next. When looking at digitising tasks, it’s important to fully understand the issue from start to finish and doing your research on the different tools available is vital,” says Paul.
While it may be tempting to opt for ‘bolt-on’ tools as a quick fix, they run the risk of acting as a sticking plaster in the long run. Instead, leaders should ensure that any new technology they invest in has the agility and flexibility to serve the business going forward, and is capable of handling increases in business volume and data.
“If you have one particular pain point, you could feasibly add a tool that can help with that issue and that might be the right decision at that time. However, the last thing you want to do is invest in bolt-ons that are unable to keep pace with the business goals and growth, potentially costing more money in the long run to remedy,” warns Paul.
As CFOs adapt to a new normal, it is clear that digital innovation and investment in smart technologies and spend management tools will be critical, not only to survive but to thrive well into the future.
To find out how Equals Money helps free up time and resources that leaders can reinvest into growing their business, visit equalsmoney.com
