Episode 8: Accounts Receivables Strategies to Swear By in 2022 and Beyond

Bruce Braviroff Bruce Braviroff

Fractional CFO , Interim CFO

Your CFO

Madhurima Gupta Madhurima Gupta

Senior Product Marketing Manager

HighRadius

Available on

Synopsis:

In this episode, join Bruce Braviroff, Interim CFO at Your CFO, as he discusses what CFO offices should set priorities on and drills down key strategies they need to swear by in 2022 and beyond.

Transcript:

Madhurima Gupta:
Hi! Welcome to the Mid-Market CFO Circle -podcast powered by RadiusOne. I’m your host, Madhurima Gupta. We hear you mid-market CFOs, and we understand your challenges. On this podcast, we bring your conversations with the CFO community to help you solve the problems that you face at work every day. Today we have with us, Bruce. Hi, Bruce, how are you doing?

Bruce Braviroff:
Doing great. How are you? Thank you.

Madhurima Gupta:
I’m doing well. Thank you so much. So I’d like to quickly introduce Bruce. Bruce Braviroff has been providing fractional CFO services to a variety of companies of varying sizes, each with their own unique needs, challenges since 1994. He is currently the interim CFO at Your CFO, and he helps businesses to mend their old and establish new relationships that are essential to the natural business growth and development. He also helps businesses identify their exact pain points, find solutions and create a path towards greater success and market share. Thank you so much for taking the time to connect with us today, Bruce. So, today for our discussion, we want to talk about the top priorities that CFOs have in 2022. And these should be the priorities that should work beyond 2022 as well. So Bruce, according to you, what are the top five strategies you’d swear by for CFO offices in 2022 and beyond?

Bruce Braviroff:
Well, I think this year, one of the things that we’re going to have to chase real hard is margins. Margins are going to be really depressed because of the backlog. And I mean a container cost $2,500 to get here now across 35,000, that makes a little bit of a difference. So you’re gonna be really hard-pressed to keep margins under control as a company this year. You also need to automate and find ways to save money, which to me automating the AP side of the company is an easy thing to do. And it does a lot to save money, you know, focus on growth. That’s a standard, everybody says we need to grow. And I think the other thing we need to do is get much better at our internal controls. And I mean, I don’t care how good you are. There’s always room to improve your internal controls. And a lot of companies that are in the mid-market are finally getting to the point where they’re realizing we need a more robust accounting system. We need things to do a better job than interfacing and automate well. And so a better accounting, ERP and then in that account, automate your accounts payable as much as possible because it’s just, those are where you’re gonna save money.
Madhurima Gupta:
Understood. So would you also recommend companies to maybe have accounts receivable automation set in place, um, you know, specifically for managing invoices, applying cash, uh, cash efficiently and without having to go through a lot of invoices and even collections to that point, do you think that’s an area that CFOs should consider?

Bruce Braviroff:
I think everybody needs to be looking at that. The better job you can do on controlling your accounts receivable and your returns, the better off you’re gonna be. And these automation programs help you keep a control and they shorten it, how you get paid, they improve your income. And they also give you a little bit better view of what’s going on, a little bit more granular view.

Madhurima Gupta:
So, um, you know, according to you, Bruce, what would you say are the specific areas in, uh, finance function that can be accelerated with the help of technological innovations?

Bruce Braviroff:
Right now? We’re at, you know, I’ve been doing this forever and when I started this, we didn’t have any of the systems we have today. And the systems are just getting more and more automated, better interchange with each other. And I think it’s, you know, if you did something three years ago and it’s working great, that doesn’t mean you’re still doing the best thing you can be doing. You need to be looking at this pretty much annually to make sure that you’re keeping up with technology and finding ways to save your money. Because a lot of it is just people get lazy or complacent. You know, the phone systems worked great for 25 years. Oh, what do you mean I’m spending a $1000 on something I can get for $25? You know, those are the issues that you have to look at. How do I cost save, how do I get more efficient? And really technology is getting better and better. I mean, I’ve got, I know a couple of people with smaller companies running out of these things, you know, their entire company, they run out of their cell phone and it’s a smaller company, but they’re doing a great job and it’s, but they’ve automated. They use as much automation as they can, and that will save them with people too.

Madhurima Gupta:
So, you know, with digitization becoming the new mandate, um, you know, like you rightly pointed out, there is a dilemma, whether you should focus on the growth that you hope to have and manage it with digital initiatives or you restore organizations’ financial health in terms of cutting cost. So how should, uh, CFOs balance it off?

Bruce Braviroff:
I think the CFO should be focused more on the internal controls and the things like that and assisting in sales growth, but that’s not, you know, to me, the CFO, I think of it as a structure and the facade is the sales and all of the stuff that faces out that the client sees where what the CFO does is the structure keeps that facade standing. And I think that as a CFO, you should be reviewing all of this stuff. You should be focusing on it annually. It’s not, you know, we sit down every year, we re-shopping our insurances, well, why are we not re-shopping our services at the same time? And I think that it’s just staying with technology or even a little bit behind is still going to improve 90% of the companies.

Madhurima Gupta:
How about analytics, right. Do you think that, uh, mid-market CFOs also need to enable advanced analytics so that they’re able to make insightful decisions?

Bruce Braviroff:
I think analytics are incredible. Um, today there are so many different ways to get information that if you’re not taking advantage of it, I think you’re passing up. You know that I tell my clients is if you don’t think you’re drowning in information, you don’t have enough. You have to filter through how much information you can get today. And if you focus on that and use that information properly, your company’s gonna do a better job and it’s sitting down and I mean, the analytics are great, but somebody’s got to sit down and read them and talk about them. And I know in my personal experience, I’ll get the analytics all done and then spend a week to two weeks chasing the CEO, sit down and have a conversation about these analytics that they’ve gotten for. So it’s timing, but staying on top of it’s important.

Madhurima Gupta:
And, um, how about, uh, you know, from your experience, what are the different, uh, solutions that mid-market CFOs are opting for, uh, for analytics, right? To analyze the data that they have to probably know which customers to follow up from so that the payments are not delayed, etc. So what do you see people adopting at the moment?

Bruce Braviroff:
I’ve seen a lot of different processes. Uh, I’m still working to get the AR piece working on one of my clients, and we haven’t made the decision of which way to go on it. There are about, you know, there are a lot of really good programs out there. A lot of really good applications out there to do this. And part of it, you know, you can have a great program, but it has to be easy to use. And ease of use is one of the things that I really look at because we don’t wanna have to spend a week a month retraining somebody on how to use this stuff. It has to be pretty simple. It’s gotta give really good timely reports, which is what I expect from everything today. And the reports have to be pretty much customizable to what you wanna see because everybody looks at, you know, everybody follows something different, it’s, everybody thinks that every company runs the same and accounting, accounting know, everybody chases a particular raw material or piece of information that they feel is necessary to track.

Madhurima Gupta:
So post-pandemic, right. Are most of the CFOs increasing, um, I mean, do you see a trend where CFOs are now opting for automating their, let’s say AR or AP processes, or, um, do you think that has been an ongoing effort and pandemic hasn’t really made a difference?

Bruce Braviroff:
I actually think it’s, we are looking more and more at automation. Since the pandemic, we discovered we can send people home and they get absolute, you know, I’ve seen most of my people get more work done at home, be more efficient. So that allows me to spend a little bit more time doing these things that makes the whole system efficient. And I think that over the next year or so, focusing on automation in everywhere in your business is going to be not just, um, something you need to do, but it’s going to change the way business runs.

Madhurima Gupta:
And, uh, you know, when the pandemic hit in your experience and based on whatever you’ve been hearing from your, uh, you know, clients, what kind of problems did they face when they did not have an automated solution? So basically when they needed manpower to be in the office to, you know, collect the checks and apply those against invoices, all of that. So how, how difficult was it and how did they overcome it?

Bruce Braviroff:
A lot of people had somebody had to go to the office every week and get all the checks, which is crazy. The idea of handling a check today seems crazy to me. Uh, so what we’re seeing is let’s find a place that we can manage this, that all of it comes in electronically. I don’t need to have my person sitting there at once a day, scanning all the, or once a week, scanning all the checks. It should be automatic. I mean, I do a lot of work with, uh, ABL lines. And the nice thing about an ABL line is it all goes into a lockbox, whether you want it to or not. So somebody doesn’t have to go in and deal with it. And the more you can automate, you know, it going into a lockbox is great, but now let’s figure out how to get it into our accounting system properly accounted for and all of that without having somebody to touch it. And that’s what I’m working on is getting the information to come clear through without it ever being touched. One of the things I learned a long time ago is if somebody touches something every time somebody has to reenter the information, they have a 5% chance of them screwing it up, whereas if the machine does it, you don’t have that chance. It comes through. Now, if it gets screwed up the way it got in there, then it’s gonna get screwed up, but you don’t have, oh, look it. I did this wrong. I mean, I know that I’m working here on something and I was working on a great, good report, and I got it all done and then realized somewhere during the way I had sorted it and scrambled it. So I have to start over where if I had that ability for it to just suck in, then I wouldn’t have to deal with that. And that’s, that’s the big thing. The cleaner you can get it, the quicker you can get it. I mean, I really want to look at my business on a daily view. What did we do today where were we supposed to be all of that? And we’re working to get down to that daily view for, and I mean, one of the companies is, we’ll lose 60 million this year, and we’re gonna look at our sales every bloody day. And you know, if you are looking at your sales and looking at everything correctly, that’s great. I know that a lot of companies I come into are running 30, 60, 90 days behind on their account. Well, by the time they find the problem, it’s too late, wherewith all of this automation, it should, you know, you should get great big red lights, something’s wrong here. And that’s one of the things you wanna look for.

Madhurima Gupta:
Absolutely. I can’t agree more. Um, would you also say with all the automation and new products that midmarket CFOs are now implementing, that’s also giving a chance to their teams to upscale?

Bruce Braviroff:
I think, yeah. I think it’s really interesting because you used to have an AP and an AR clerk. Okay. Those people, all they did was input. Now the machine does that. So these people are now working at a higher level on more support of the overall accounting. So I’ve taken my accounting department and are accomplishing a lot more, but they’re not doing this work down below because the machine’s doing it. And it’s just, that’s one of the things of better use of your manpower because you freed them up from something that’s just, you know, sitting there. I mean, I remember watching my AR person years ago, sit there and each day, you know, every day, they gotta go through and do it all manually. And that’s all they did, eight hours a day. And if you can free an employee up from doing that, now, what can you use that employee to do in the way of reporting, in the way of projections, and all of those other things. You free up your employees and now you can use them for things you didn’t have time to use them for before.

Madhurima Gupta:
Right? Absolutely. And you know, when we started off the conversation, you did mention about how, uh, growing companies need to, uh, while they’re planning their transformation journeys, they also need to give weightage to the expected business growth, right? So while they’re upskilling and they’re using their manpower more efficiently, right, what would you say should be the weightage that they should give to the business growth while they’re planning a roadmap?

Bruce Braviroff:
Well, that’s a hard question to answer because, uh, I’ve got, you know, all of these clients that I’m dealing with, and one’s growth is here and one’s growth is here and you have to look at what your growth is. I mean, I’ve got one company that’s grown 50% year over year, uh, astronomical growth. And we, we have a lot of time spent trying to make sure we’re doing everything right. I’ve got others that if we get 4%, they’re thrilled. So it just depends on the company’s growth. You know, you’re either going up, you’re going down as far as I’m concerned. So growth is something you need to have at what level that’s up to you. It’s, you know, you have to determine. The guy that’s grown at 50%, he lives eats drinks, this stuff, 24 hours a day. The guy that’s growing at 4%, goes to the river every weekend to play in his boat. What’s important to you, where do uh, what growth do you want?

Madhurima Gupta:
So let’s say I’m talking about a company which is hoping to grow, let’s say 10 times in another three years. Right? So with this expectation or with this goal set, what, uh, what would you say would be the right digital transformation journey that they should be taking? And hypothetically speaking, let’s say that they’re currently using an ERP solution, like a NetSuite or a Sage Intact, and maybe they’re at 50 million of ARR at the moment. Then what would you say should their digital transformation will roadmap look like?

Bruce Braviroff:
There are programs like the one that’s hosting this, that they should be looking at to get that information into their accounting program, more on their ERP more directly, and simply they should be looking at ways to control the flow of data into their accounting system. And then they should be looking at ways to save costs on those two things. That’s my side of the business. The other side of the business is, making sure I have enough money to keep enough inventory in for the people to sell, pretty simple. The growth of how they’re gonna sell and get to where that is, that’s the sales department’s problem. Not mine. I will work with them closely, but if they want 4% growth or 10% growth, I can support that. I need to know what it is they want and then bring all of the systems in to get it done as easily for them. But it is, you know, that’s their issue to the growth. My issue is to be prepared and make sure we’re able to grow. And using this automation using more granular information that you’re gonna get out of a better accounting system by moving this information more efficiently, these are all the things that I focus on.

Madhurima Gupta:
Um, Bruce, you know, since we are coming to, you know, the end of this interview, I want to understand that if I had to ask for your parting recommendations for CFOs to rethink their AR function in 2022 and beyond then, what would you say for, uh, what would you recommend?

Bruce Braviroff:
Well, I have a friend who sells to CFOs, and his quote about all of us is we’re the last people in the world to adapt to new technology. And I’m not that guy, I want to be the first guy or the, not the first, maybe the third. Uh, but I think that adapting technology and being prepared for change is, is the biggest thing a CFO needs to be doing right now. And if you, if you’re saying, Hey, our accounting works well. Yeah, it works, but is it right? Can you do a better job? Are you getting the growth information or the accounting information or whatever information you need, out of the system, the way you need it? Are you doing it as efficiently and as cheaply as possible? You know, handling a check to me and I, I love this. I, I try never to touch a check cause it’s just like, it’s a cost that I don’t need. And it’s so much more efficient to use an electronic system that’s managed properly than, gee. I have to go deposit a check. I, I mean, I don’t even have a checkbook anymore
Madhurima Gupta:
That’s so cool. So you are all for e-payments today, is it? I mean, of course, as a B2C consumer ourselves, I think the amount of usage that we do for, um, you know, everything electronic is just too high. But when it comes to, uh, B2B business, is that something that you see companies implementing and their buyers accepting?

Bruce Braviroff:
Uh, yeah. Well, they’re, they’re gonna have to, uh, the big boys are already pushing this and you know, when you’ve got the great big people in your industry saying, we’re gonna do this, it becomes where everybody has to go and to, you know, if you still want to do this, the old fashioned way have at it, but I don’t think you’re going to get to where you wanna be. If you don’t make some changes and learn how to do these things more efficiently.

Madhurima Gupta:
Absolutely can’t agree more. Perfect, so on that note, we’ll end this particular episode of the CFO Circle where, you know, we started with understanding priorities, we drill down on how AR priorities should be set and why technology is the road that CFOs need to take today. So we thank our speaker for the day, Bruce for taking the time and sharing his thoughts with us, And for our listeners out there, stay tuned. We’ll be back with more.

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