The world is going through an unprecedented scenario and companies across industries are gearing up to maintain the health of their business. During such crucial times, finance leaders will have to take important business decisions that are far beyond mere finance. They would need to provide real-time, data-enabled decision support to various business and functional units to better manage their plans and spend priorities.
The role of a CFO has been ever evolving. According to a Dec 2018 survey by McKinsey & Co, the CFO’s role has become significantly broader and more complex than it was even two years ago. For instance, the number of functional areas reporting to CFOs has increased from 4.5 in 2016 to an average of 6.2 today. The share of CFOs saying they are responsible for board-engagement activities has increased from 24% in 2016 to 42% today. Imagine now with the current disruption, businesses would expect even more from their CFOs and finance functions.
CFOs driving organisation growth
Finance leaders are becoming more involved in their firm’s growth strategy for one simple reason − growth isn’t as easy as it used to be. According to the International Monetary Fund’s (IMF) recent World Economic Outlook Update, global expansion across the board is under threat due to international trade pressures and a plateau in global growth that began more than two years ago.
The CFO is also the second-most-common leader, after the CEO, identified as initiating a transformation. 44% of CFO respondents say that the leaders of a transformation − whether it takes place within finance or across the organisation − report directly to them.
While CFOs play a critical role in driving organisational growth through strategic decisions, inefficient manual processes and systems can hinder their efficiency and prevent businesses from keeping up with demand. Another key challenge is that most finance leaders don’t have the necessary data to do their jobs. Neither do they have the time. Currently, a large chunk of finance teams’ time is taken up with day-to-day tasks, and not strategy and looking forward – resulting in them not being able to support growth. And the larger a business grows, the harder it is to share data and collaborate. Technology must step in to automate areas like travel, expense and invoice management.
Improving efficiency in managing expenses
Employee expenses are the second largest internal expense for an organisation. No employee likes to spend time filling out expense reports, and no manager likes to spend time reviewing and approving them especially with the current WFH environment. An integrated spend management solution can help firms intelligently automate manual tasks, which both frees up time for more meaningful work and improves experience for staff when submitting claims.
And instead of chasing after late expense reports, auditing reports to uncover compliance issues and manually reconciling invoices, intelligent automation frees up the finance team to spend more time diving into spending data trends so that they can understand how staff are spending, and seek new ways to trim costs.
Strategic decisions by CFOs powered by intelligent expense analysis
As per a research by SAP with Vanson Bourne, 81% of finance leaders lack total visibility into expense and invoices. In addition to this, 68% of finance leaders don’t think their employees comply with the travel and expense policies. Automation provides the much-needed visibility in policy making. With transparency into spend, finance leaders can better inform and educate the business on how to spend the right way. And instead of imposing policies from the top down which may lead to staff resistance, leaders can use data to listen and develop policies from the ground up making employees a part of solving the problem.
By interconnecting spend data like itineraries, credit card transactions and taxi rides, intelligent automation can help give firms a unified view of where money is going and where employees are located around the globe, and help the company fulfil its obligations to manage the safety and security of its staff as they travel for work. In an AMI Partners study, 73% finance leaders mentioned integration with other software as a key benefit of effective expense management solutions.
The key to effective spend management is to let automation provide controls without impeding employee choices. Staff should retain the freedom to select their flights, hotel and transportation – ideally using consumer apps like those they are already accustomed to in daily life – but then have the tools on the backend to provide oversight around compliance, fraud and duty of care.
CFOs’ say in technology deployment
The last thing finance leaders need to work towards is to secure their IT department’s buy-in when deploying technology. According to Forrester, 75% of companies with a unified finance and IT strategy report much higher levels of satisfaction with travel, expense and invoice management tools than those without one. The more the finance and IT teams can work together to standardise, simplify, connect and automate systems and processes, the more they can help drive the transparency and control needed for organisations to succeed today.
Cloud-based tools provide several advantages, including the ability to upgrade automatically with the latest tax and government regulations, ensuring the company is always working with the latest information. Cloud solutions also don’t require upfront investment in costly hardware or expensive upgrades down the road.
Overall, the role of the finance leader is undergoing a rapid transformation as they are now responsible to deliver new levels of business acumen across their organisations – big or small. Utilizing advanced technologies in monitoring and managing expenses along with robust policies goes a long way in enabling the CFO in taking charge of the growth trajectory of the company.
The author of this article is Mankiran Chowhan, Managing Director – Indian Subcontinent, SAP Concur
The views and opinions expressed are not of IIFL Securities, indiainfoline.com