Author: Axel Rebien, CFO, Serrala
If digitization makes a CFO life easier, why on earth are you so darn busy?
When digitization first came up, it was like the beginning of an expedition to promising, yet unknown territory. Since then, we have come a long way and digitization has made inroads into all business areas. But let’s face it: We’re in a rather serious business doing numbers. Getting them right often doesn’t leave any space for creativity needed for any future projects like the digitization of finance. If you as the CFO convey even a hint that you are not in full control of what is going on in your business and how you track the numbers, both your board and your stakeholders will most likely raise more than just an eyebrow. You – backed by your finance team – are the person they trust and rely on. If your CEO can’t trust you, guess who will have sleepless nights?
Read the Serrala fact sheet “Why CFOs never see the sun”:
You’re in a dilemma being the CFO. On the one hand, it’s your job to have the numbers ready for the board to take decisions. That’s the old-fashioned bit, which has stayed unchanged from the days when business became fully professional. On the other hand, you are faced with an increasing efficiency pressure to deliver data ever faster, to predict the future including several sensitivities for whatever scenarios and last you need to ensure always a sufficient and adequate liquidity including working capital management.
Digitization offers the opportunity to initiate a historic upgrade of your finance function, moving from merely juggling numbers to becoming a crucial value creator. It means a quantum leap for the CFO! Why? It’s one thing if can find the answers for the latest payment status reactively, it’s a whole different matter though if your calculations are so fast, accurate, reliable, and intelligently connected to patterns that you know the right answers before anyone asks. Knowing the real-time status of a company’s financials has become a competitive advantage for CFOs. It allows you to invest or withdraw cash quicker than others, to take factual based decisions even faster, and to simplify and broaden your planning. It enables you to allocate working capital in the best possible way to secure funds, optimize liquidity, and increase profitability for the business. That’s the benefit of digitization.
Unfortunately, digitization rhymes with hesitation.
Have the guts to take calculated risks
Let’s get back to that expedition. The reason why you go on expeditions is that the familiar, well-trodden paths don’t hold up to expectations any longer and don’t provide enough for the future. You need to take and allow for calculated risks. If you are too hesitant, you won’t find new lands. However, if you are too adventurous and risk-loving, you might become lost in no man’s land. You need to find the right balance between risk and reward. Transposing the idea of an expedition to the world of CFOs and digitization, you need to find the right balance between running a full-fledged digitization project or not running one at all. Here’s what most companies do when embarking on such an expedition: They send out a patrol first to check and report back. Then, when they know it’s safe, they move ahead. In digital terms: They digitize parts of finance first to explore what is possible. Often, they will do this without a fully formed digitization strategy, because they fear making a mistake. As a consequence, they get stuck, because they don’t know if the territory they are exploring is safe or not. That’s like driving on the Autobahn with your foot on the emergency brake. You can do that, of course, if you are worried about risks or costs, but it doesn’t make a lot of sense. You will miss the potential of driving in the fast lane instead, which is the only lane you should be in when your business is moving at the speed of light.
Of course, exploring new territory is always an adventure. Some are eager and can’t wait, some will prosper quickly, and some will perish because they ran off without a plan. Certainly, you don’t want to be the one who perishes, but here’s the thing when it comes to digitization: We don’t need to embark into unknown territory any longer. The path is well laid out in front of us.
The only real mistake you can make
At the moment, enough companies haven’t fully digitized, so you will be able to enjoy a fairly safe haven – for now. But that is only because the competition is not yet fierce enough to kick you out of the race.
At the end, there’s just one mistake that you can make on this expedition: hesitate. Many companies are struggling with exactly the same questions about digitization. What if you have only digitized separate parts of the financial value chain, which don’t unfold their full potential because of that piecemeal approach and don’t produce sufficient speed, efficiency, or ROI? On top of that, what if you only have a small digitization budget and you are expected to move mountains? This kind of uncertainty and hesitation inevitably leads to the “too little to live and too much to die” outcome. As a CFO, you must have the guts to map out a bold path for digitization that fully considers where your data intersects and where your processes integrate. If you do not, you will end up working tirelessly to connect the dots between your digital and manual processes and you will achieve only a fraction of the benefits you could have achieved with fully integrated data and processes. How will you explain to your CEO and shareholders that further investments are needed then? The truth of the matter is: You will only unfold the true potential of digitization if you apply a 360° digital strategy across all of finance and do not hesitate to act. As the expert on numbers, you are in the prime position to present a business case to the board and shareholders. A modern CFO should be bolder and go for an integrated digitization approach for finance processes from end to end.
Digitization lets you do finance again
The three biggest hurdles that CFOs will face when attempting to digitize are time, complexity, and cost. To overcome these hurdles, CFOs must be ready to explore a world beyond the data that will be presented during the next quarterly results. If you apply a 360° strategy for digitization to finance, nothing will stop you from addressing all your pain points for good in one go. Wouldn’t it be great, if you could finally do finance again – in the way you want it to be – and to help drive exponential growth for your business? But you must be prepared to act on that strategy before you can enjoy the benefits. Now that digitization is no longer a high-risk adventure, you can confidently present your business case to the any addressee and map out the journey ahead. If you do that, you will no longer be the one who is being chased, but the one who’s leading the way; the one who’s become the value creator inside the company and the one who looks ahead to the future.
Interested in finding out more? Download the Serrala Factsheet on “Why CFOs never see the sun”
Author: Axel Rebien, CFO, Serrala
