This article was first published on raconteur.net
A Covid-induced acceleration of digitisation provides a once-in-a-lifetime opportunity for CFOs to redefine finance from transactional function to strategic advisor to the business.
The Covid-19 pandemic may have slowed down many industries, but in the area of digital transformation it’s had an enormously accelerating effect. According to research by McKinsey, companies have sped up digitisation of internal operations and customer and supply-chain interactions by three to four years. In the finance function, which has historically lagged behind in the technology stakes, it is helping redefine the CFO’s role.
From bean counter to strategic advisor to the CEO, the elevation of the CFO’s role, and indeed the entire finance department, has been a long time coming – but it can only happen if the digital foundations are in place. In a study by Accenture, 43% of CFO respondents said technology was the biggest barrier to achieving the kind of real-time insights they needed to improve strategic decision making.
“The pandemic has amplified the importance of digitisation, starting with invoices,” says Raphael Bres, Chief Product Officer at Tradeshift. “Clearly, there are more aspects of digital transformation, but when half of all invoices are still paper-based, and we hear of invoices not reaching people because they’re stuck in the post, the lack of connectivity is a significant barrier to CFOs and the finance function as they look to expand their role."
“Manual processes breed inefficiency, prevent collaborative working and take focus away from strategic thinking. Fortunately, we have definitely seen an acceleration of digitisation projects, which can reduce accounts payable processing costs by 80 per cent and streamline the approval process. Meanwhile, we see that the finance department is now at the core of driving wider digital transformation in the business. As soon as you have CFOs and their team driving the adoption, this is where we see the most success.”
Improving success rates is crucial when, according to McKinsey, 70 per cent of digital transformation efforts fail. While a lack of flexibility in previous technologies has played a part, other challenges have emerged. When it comes to digitising end-to-end payables processes, specifically, poor take-up among sellers, who felt perhaps forced to join a digital platform with little incentive to them, has contributed to failures. Tradeshift is tackling this by creating a specific value proposition for sellers and enticing them to self-register to its platform, the largest global business network for buying and selling.
The Tradeshift platform, which processes over $500bn in transaction value, helps companies digitise all their trade transactions and collaborate on every process. Thanks to partnerships with the likes of FRDM, Normative and SiSid, meanwhile, it also allows CFOs to maintain proactive control over a range of risks, including modern slavery, ESG performance and fraud. Its Automation Dashboard enables companies to dial up their automation of finance processes in a gradual fashion tailored to their needs, and its real-time data and analytics capabilities facilitate the CFO’s new role as core business leader.
“In a world of constant change, where forecasts and strategies have to be frequently revisited with new assumptions, CFOs have a huge role to play as some sort of super consultant for the CEO,” says Bres. “To be able to focus on those strategic projects, they need to be liberated from the mundane, manual transactional tasks that have traditionally dominated their time, especially when you have large number of suppliers and invoices globally. Artificial intelligence and machine learning are central to this.
“The finance department has to put a clear stake in the ground when it comes to automation. We actually see CFOs taking over some of the CIO responsibilities in this area. Before the pandemic, CFOs didn't have really a strong view of advanced technologies. Now, having seen the value in key areas like accounts payable automation, they are not only adopting new innovation but leading the digital transformation charge. They are embracing the opportunity to reconfigure finance for the future.”
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