Over the last few years, we have seenawave ofdevelopmentsthathavehad an impacton executivedecision-making.CFOs have been at the center ofthisdisruption,as theirrole in the last five to 10 yearshaschanged dramaticallyasmore and more responsibility has been put on their plate.Today’s finance leaders not only need to arrive at recommendationsat critical junctures for theorganization, they also need to show how they arrived at those recommendations.
COVID19 has thrown a huge curveball at CFOs who were already concerned about the health of the business due to political instabilities, trade wars, and other micro-or macroeconomic trends. Infact,according toPwC CFO Pulse Survey,71% of CFOs are concerned about liquidity and cash management, and 86% are implementing cost controls during this crisis.
In the early days of the pandemic, companies moved quickly to cut costsand right-size resourcesto weather the firstwaveof thecrisis.They alsorecognizedthe importance of automation and intelligence tobe able tomake faster decisions based on data insights.And althoughmany CFOshad toleratedmanual and redundant processesin the past,the pandemic pointed up the liabilities ofnot having accurate data and well-defined standardsnecessaryto make confident, potentiallybusiness-or life-saving decisions.
I have always been very curious about finance, so I have regularcatch-up meetingswith the financial analysts and data scientists in my company.Duringone pre-pandemiclunchwith my colleague in finance,one livelydiscussion spanned riskmitigation andcompliance reporting,along withinternal quarterly and yearly planning. One thing that he saidstuck with me:“Themostvaluable datawe need for financial analysisresidesallacross the business. It’s a battle to find out who has the best data across CRM, HR, marketing, customer service departments,and our own finance systems.”At the end of that lunch, itwas clear to me that as a financial analyst, he struggled to derive meaningful insights from datathat includedexpenditures, revenue, sales, assets, and liabilities. Heand his team would spend enormous amount of time manually crunching data to gain insights intothe financial health of the company.
Theseare thekinds ofchallengesthatexist everywhere. Some of the common ones we come across are:
- Delayedbusiness-criticaldecisionsdue to manual and repetitive work involved in aggregating data
- Days to weeks in closing the book for the month-end, quarter-end, and year-end financial reporting,both for internal stakeholders and external compliance requirements
- Inaccurate reporting due to multiple ERPs and heterogeneous IT ecosystems spanning countries and geos
- Duplicated, inconsistent, and mis-aligned chart of account hierarchieswhich makeit hard to perform both routine changes as well as business transformation initiatives
- High cost to financialdata and ability to quickly adjust forecasts and plans in response to changes in demand and supply due to discrepancies in mapping issues and human errors
- Proposed organizational events such as mergers andacquisitions or restructuring drive the needto perform what-if analysis onthematerialimpactto thebusiness
Many would arguethatthefinance function waslargelyonautopilot in the lead-up to the COVID-19 crisis.Tomeaningfullyaddress thechallengesI’ve described above (and more), theCFOand finance teamsmustnow be able toregain control of and reimagine financial plans and processes.
Over the last several months, I’ve had the opportunity to be involved inmanydiscussions relating to finance functions in the modern organization. I wanted to specifically understand what CFOs are dealing with the impact of the pandemic.Let me summarize the threekey themes that consistently surfaced inthesediscussions.
- Operational efficiency
CFOs must focus on ensuring business continuity and building operational agility. Some of the important benefits here include faster financial close; shifting the time spent on analysis as against preparing the data,making better cash management decisions;increasing billing accuracy;decreasing invoice disputes; and much more.These steps will help in gaining greater transparencyforcost and growth drivers and help improve allocation of resources.
- Risk Reduction
My discussionswith my colleagueshelped me to understand just howCFOs need to gain greater visibility into material impact on financial statements, including the best waytoreducedays sales outstandinganddayssales ofinventory,increased forecast accuracy,fewer write-offs, andreducedrevenue cannibalization.
- Financial Gains
Financial gains can come in many forms. By focusing on reducing thecost of finance as a percentage of revenue, companies can save millions of dollars. The benefit also comes in the form offewer non-compliance penalties, increased cash flow,decreased interest expense,increased capture of discount rates, increased profit margins,lower opportunity costs, andincreased market capitalization.
What You’re DoingIsn’t Easy. We Can Help Make It Better
Here’s some good news for CFOs:Technology comes to the rescue. We now have anability toautomate reconciliation and validation of data across local and regional systems to improve the record to report process. Solutions such asInformatica’sFinance 360 can consolidate, cleanse,and harmonizeto improve every financial analysis task. The solution can helpgovern and managean enterprise view of financial chart of accounts, cost centers and legal entitiesand create aconsistent definition of financial and reporting structures across general ledger systems, financial consolidation, planning,and budgeting systems.
Finance360 solution isindustry's firstcloud-native financedata management solution builton Informatica’s AI powered Intelligent Data Platform. The solution is designed to help you:
- setting multiple flight paths (or business scenarios)
- building flexibility into planning and forecasting cycles
- adopting contingency-based resource reallocation (or “contingent resourcing”)
- improving performance reporting
- accelerating decision making
- securing senior leadership’s commitment to bold, strategic moves
We’ve designed Finance 360 so you can manage liquidity and cash flow through strict discipline around costs and collecting receivables, as well as helping manage and consolidate financial and operational data to support forecasting and scenario modeling. To learn how you can get faster results with AI-powered, financial data management, download our solution brief and register for our Finance 360 Summit.