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Episode 21: Future-Proofing the CFO’s Office with Skill Reassessment

Ilana Esterrich Ilana Esterrich

CFO

American Coatings Association

Madhurima Gupta Madhurima Gupta

Senior Product Marketing Manager

HighRadius

Available on

Synopsis:

In this episode, join Ilana Esterrich, Chief Financial Officer at American Coatings Association as she discusses how CFOs can future-proof their offices with skill reassessment and shift their focus from resource management to process improvement.

Transcript:

Madhurima Gupta:
Hey, Ilana, how are you doing today?

Ilana Esterrich:
Good. Well, thank you.

Madhurima Gupta:
It’s so good to have you back on CFO circle. And I do have some quick questions for you to answer and we are gonna talk about why do AR teams or CFO office teams need to keep themselves upskilling and reskilling. So on that note I’m gonna start with the very first question, Alana. How has the current workforce in CFO’s office been subject to change during pandemic?

Ilana Esterrich:
Well, we are now being asked to do more with less. We are also being required to find new ways to work, especially as we move to hybrid environments where some are in the office and some are in working from home, and we are also learning that we have to do provide a lot more service to our business partners. I think the aspect of financial finance and accounting that has been missing to date and now becomes more obvious and we have to do some upskilling to make sure that we can provide the best value to our organizations. So it’s not just enough to close the books and provide financial statements and do variance analysis. We, as professional as finance professionals need to not just look through the rearview, we need to start looking forward and providing our business teams with decision metrics numbers analysis that will help the organizations make the right decisions with data analytics, with financial numbers. So we are not just making decisions by the seat of our pants or because it feels good or we think, or research has told us that we actually have the numbers to support the investments that we’re making. For some organizations, the pandemic means that we’ve had to rely on cash reserves or we’ve had to raise prices or we’ve had supply chain issues. And so we need to be more attuned to the cost of doing business. And so it’s been it’s raised the relevance of finance and accounting. And so we, we need to provide our business partners with the right information to, to move the business forward when resources are tight when finances are constrained and those kinds of things.

Madhurima Gupta:
Talking about analysts and analytics does the belief of analysts around the lines of addition of new technology like AI, et cetera, I mean, do they think, or do they believe that AI can actually complicate their day-to-day processes? Does that have any truth to

Ilana Esterrich:
It? I, I think it really depends on the culture within the organization. I think as finance professionals, where we’re used to the calculators and the Excel spreadsheets and the formulas, I think the concept of AI is very scary. We, we think about it as the robots. We think it about it as it’s gonna replace a human being. And that’s not the case. I think we need to educate ourselves on, on what does AI really mean for the finance and accounting function and what it means is to operationalize or automate processes that are time consuming and tedious for the average finance organization, repetitive standardized transactional work that can be automated so that the humans can actually spend more of their time on value added functions on the analytics, on decision making. And so in the pandemic, what we realized was we needed to one automate a lot more. We needed to move from desktop to cloud. We needed better systems. We needed more advanced financial solutions that would allow us to focus on value added work. And once we understand that AI is here to support us, to make our lives easier, and we educate ourselves on that, I think we will see more prevalence of AI, RPA, new automated AR AP systems upgraded financial reporting systems, automated budgeting, those kinds of things that really allows the human brain to add value by focusing on the right things at the right time for the right reasons.

Madhurima Gupta:
I totally agree with that. And to add to that, I think one of the things that even the workforce need to understand is that the right kind of intersection between both human and technology can help provide better quality of life work balance. Is that something that you’ll agree

Ilana Esterrich:
With? I do agree. During the pandemic we implemented a new financial system. We have automated accounts payable. We have automated customer resource management. We have tried to automate as much as possible. We’ve tried to automate all of our reporting. Why, because we now have more demand on the back end on the analytics on being at the table to make decisions. And so we have less time to spend doing the traditional debits and credits and balancing and reconciliations. The more we can automate those functions, the more time we have to adding value into working with our departments to make the right decisions.

Madhurima Gupta:
You mentioned account payable, have you considered automating account receivables as well?

Ilana Esterrich:
So we do have a modified accounts receivable, automated accounts receivable system, keeping in mind that as an association, we collect dues from our members. And so we do, and our membership is based on what kind of, how big you are as a member. And so we have our members report their, their sales and based on their sales reported is how we generate the invoices for their membership dues. And so that part is automated. We still have some parts of it that are manual, but we are working to automate as much as possible again. We, the more repetitive systems, the more the day-to-day repetitive work we are finding great value in having that automated and then retraining our staff to work on, the wants, the wishlist items of things that we want our finance and accounting team to work on.

Madhurima Gupta:
Absolutely. And, you know there was this research Alana that we did highradius did with CFO type organization where we wanted to assess what our CFOs doing today. What are their priorities? So like you said, right, invoicing is one AR function that a lot of, I think 40% of respondents said that they’re already automated, right. And the next thing that they wanna prioritize is collections, but there are a lot of other processes that people are not thinking about yet, for example, credit management, or maybe managing disputes, better-applying cash, right? So these things, or these processes are still at a backseat. Is that something that you’ve heard from your peers as well, or you’ve experienced firsthand?

Ilana Esterrich:
Yes. And I think it’s because we are creatures of habit and we are also creatures of control. And I think for those organizations who are struggling with automating AR or automating repetitive processes, part of the reason is I can’t trust the systems or I can’t trust automation. I really need human eyeballs on things. I think there’s also a hesitancy to remove work from someone’s desk. If I automate this, then what is this person going to do? And it’s an either-or looked at as an either, or it isn’t looked at as let’s automate so that we can retrain this individual to do value-added work, to do the work that really adds value to the organization. And so it is perceived as a loss of control. It is perceived as I may be adding error into a process because I have this unknown entity, if you automate it appropriately if you do the due diligence of making sure that you’re automating the right process and not just automating the way we do stuff right. But automating it in a way that is the right way to do it. Eliminating a lot of those non value added touch points like inspection verification, validation. Those things are, are adding time to a process. They’re not, if they’re done right, they don’t add value, right. If you’re doing the right things from the get go inspection, evaluation, reconciliation, those kinds of things don’t add any value. They’re just fixing a human error. So if we avoid automating bad processes, if we implement AI in the right way to do the right things, and we look at upskilling or repurposing the resources that we have, we are adding value back to the organization, not two fold, but multifold because that person is not only going to be retrained to do something that adds value to the organization. They are more likely gonna have much better career satisfaction. They’re gonna be much happier with you as an employer. They’re gonna add more value over the long term for the money that they’re being paid. And, and you’re going to see your business skyrocket. So these repetitive processes that can be automated, you’re illuminating anything that didn’t work in the BA in the old days. Now it’s operating the way it’s supposed to and your human resources are now going to be happier, more productive, better trained. And I think one of the other fears is if I do that with my human resources and retrain them and upskill them, I’m gonna lose them. They’re gonna go somewhere else. And I think that’s a false equivalency. I think that is the wrong way to look at it. And I think it was Richard Branson, who said, if, you know, if we he was asked, well, if we train them, they’ll leave. And, and I think he was the one that said, well, if we don’t retrain them and they stay, we are gonna have problems. And I think that we should look at it as adding value to our employees. They feel like they’re, they have importance in the organization that they’re valued and you’re more likely gonna have them retained for the long haul. So there’s a value of investing in automation, and then there’s a value of reinvesting in our human resources.

Madhurima Gupta:
That’s a great advice, I think especially with great resignation happening you know, and I think it’s gonna stay for a while unless, you know, things go for a to and inflation comes into picture and you know, all the things that are happening on the site.

Ilana Esterrich:
Well, we have to evolve. And if we wanna keep our staff and avoid getting into the great migration and try to find capable resources, which by the way, the expectation on income or salaries going up 20 to 30%, at least that’s what I’m seeing in my marketplace. And in my industry, I would rather retain my staff, give them the bump that they deserve, but invest in them and give them a motivation to put down roots and stay in my organization, then have to go to the marketplace and replace them at a serious inflation rate.

Madhurima Gupta:
Absolutely. And you know, there is this research by Mackenzie and company wherein 87% of executives said that they are experiencing a skill gap in their B2B force, right? The B2B workforce. And I think till the time people have these concerns, this is bound to happen unless you upscale or promote new technology, that’s gonna help your employees be upskilled. This particular gap is still gonna be there. So why do you think reskilling and upskilling of existing employees is the need of the hour? You know, how does it differ from maybe hiring new talent from outside market that are already reskilled and Upskilled?

Ilana Esterrich:
I think the cost of upskilling and reskilling existing resources is going to be more economical over the long term than potentially losing them because they’re dissatisfied and they go off to someone who will value them. Because replacing that resource is going to come with a 20 to 30% inflation factor. I know we talk about inflation being five to 7%, but the reality is with the internet and with networking, people are asking for more money for the work that is currently being done in an organization. So if you look at that differential between what the market wants and what you’re currently paying, there’s an opportunity for investment there. And I think in the long run, that’s more economical. And the thing is, it is doesn’t really take a lot of money. It means potentially sending your staff to be re-certified in a new skill set. It means sending them to your technology vendors, annual conference or convention. It means paying for dues at things like CFO leadership conference or CFO leadership council or the local networking organization it could mean something like giving them a chance to go back to school and getting their MBA, or recertifying as a CPA. There are low-cost options to reskill and upskill existing staff that will in the long run, be more economical, build loyalty to your organization, build loyalty to the team. And if they decide to leave yes you would’ve invested in them and they’re going off, but the expectation is what, whoever replaces them needs to have the same, the same skill set. So I think we need to think about the differential in replacement cost versus investment in a resource that we already have in hands.

Madhurima Gupta:
I can’t talk three more. I actually did a very similar article recently where, where it essentially talked about, Hey, if you, if you wanna hire people from outside, go ahead, do it, but it’ll come at a higher cost. But if you train your internal people, they stay, they stay happy and they’re already trained on whatever you do. So the investment as a company that you do want an existing employees any day less, and it will give you a better productivity at the end of the

Ilana Esterrich:
Day and not just a productivity, but the opportunity for additional resourcing. What I mean by that is if you give someone ownership of learning a new skill set, they come back to you with, guess what I learned, or I had a great idea, or I met a peer at another organization who’s doing X, Y, or Z. And I think that would be great at our organization. And you allow them to take ownership. Chances are, you’ll lose them, but you’ll lose them within your organization as they go off to do things that add value to the overall entity, not just for the finance and accounting department. So that’s a risk, but what you’re doing is you’re increasing the value of your overall organization. And you send a signal to others, not just in the finance and accounting department, but across other departments that the organization is willing to do new, better, faster, more efficient, more effective, they’re willing to give credit to the individuals. They’re willing to give leadership opportunities. And so the organization as a whole gets better. And so I would rather lose a team member to another department or create a new team and lose that resource inside my company with the expectation that we’re all going to win. I think there’s a saying that says a rising tide lifts all boats, and I want that tide to stay within my organization. And so, yeah, that’s, that’s the other thing is they’re going to come back and say, I learned something new. I think we can do something better. And they’re gonna come with those ideas to your table, and they’re not gonna go to somebody else to give them that idea,

Madhurima Gupta:
You know, before we wrap up this session, I have one last question and I’ll you know, go back to the accounts receivable example that we were talking about, you know, given that I’m from high is that’s one area that is the most easiest for me to talk about. So that’s the example that I’m gonna take. Yeah. So when we talk about accounts receivables you know, you know, we’ve seen on the client calls that we get on the prospects and existing customers, both that that still, and especially this is more for prospects that we still have to convince that, Hey, AI enabled future is what is gonna make you, or is gonna help you make a difference why or how can AR teams and the CFOs directors, VPs that are leading these teams build in a culture that, that helps, you know, shift focus from people and productivity management to an AI enabled software implementation for process improvement.

Ilana Esterrich:
So a lot of that happens, I think, at the front end. And I, when, you know, in implementing systems at my organization currently, or in past, I think the number one thing is to really understand what are the existing pain points. I often hear people complaining, oh, this takes too long, or I hate doing this, or, oh, no, it’s a new month, a new month-end close. Or it’s a new this. And I see a lot of eye-rolling and I ask a lot of questions. Having started my career in management consulting, I learned a technique called the five whys where you ask, why, why is that a pain point and why and why? And you know, once you get to the fifth, why you finally get to the root cause. And a lot of it is well, something that we started a long time ago, and then we’d had to do it because of X, Y, Z reason. And over time, we’re still doing it, but it’s an old process, but we’re still expected to, you know, and, and I, I ask, well, why do we keep on doing it well, because, you know, and I think a lot of the hesitancy comes from this idea of control. That’s not how we do things. It would never work here. We have a lot of uniqueness that this automation could never resolve, but when you get down to the very last why, and the very last, why do we do that? We realize we don’t actually have to do some of the things that we’ve been doing, and all of a sudden the light bulbs go off, like maybe, maybe there is a better way to do it, or, you know, if we stop doing something, would anyone even notice? And so when you start asking the questions, when you start going into the root cause analysis when you start understanding why people are hesitant and, and look for the root cause of this, you realize there’s nothing there.And once they come to the realization, those light bulbs go off, then they become more open to the aspect of, we could automate it. This AI solution could add value, and I would have more time to do some of the things that I would really like to do or more time to do the things that the organization is asking of me. So I think there’s a lot of front end work that has to go into organizations that are hesitant. So organizations like high radius when they do their sales calls, you know, using the five wise, going to root cause finding out at what point in history did this effective process go skew and all of a sudden become inefficient and what’s driving the pain point and, and really asking the people who are doing the day to day work, what would you do differently if you were in control for a day? And I think it would be very surprising to senior management to hear that truth it’s painful because it does indicate that there are issues in the culture that there are processes that are cost in the organization. And I think once that comes to light, it becomes much easier for companies like high radius to make the case that the investment in, in software or systems is, is worthwhile. And that the payback is very quick and it goes beyond just the payback on the investment to non-financial things like employee satisfaction, team, team cohesion and overall company values.

Madhurima Gupta:
Absolutely. Thank you for sharing those advice. And the last question for today is you know, what are your top tips for CFO teams to future proof themselves with skill reassessment.

Ilana Esterrich:
I think we need to let go of what’s worked to date is how we should work going forward. I think really listening to the teams all the way down to the most clerical of members of the team and asking them what would be one or two changes that you would make in order to make us faster, more efficient, more effective and really listening and, and giving those individuals ownership to implement those changes. I think making sure that our staff are not just coming into the office or starting their Workday to do ized things, I, I, you know, really understanding why we are doing the work that we’re doing. And then also realizing that we need to set aside budgets for skills make sure your CPAs are getting their continuing education credits sending staff to conferences of the systems that we have implemented being able to pay dues, membership dues for networking, providing a lot of the free resources that are out there to the team and, and, and, and giving them time to read those resources, give you feedback on what they’ve learned. You know, use that opportunity to, to find ways to do things you know, better. I even skills that are outside of the finance and domain and accounting domain such as marketing or communication skills effective presentation skills creating financial reports that actually make sense to non-financial readers advanced Excel skills. Even though we talk about a lot of the financial technologies about removing our reliance on Excel at the end of the day, we, we still talk fluid, Excel, fluid PowerPoint, so upskilling on those critical skills being able to create messaging and reports for non-financial managers. So it’s, it’s, it’s critical to not just look at at financial skills or accounting skills, but looking at broad set of skills that add value across the organization. And that’s, what’s really going to keep our workforce happy, whether we’re in a remote environment or back to office or a hybrid and then letting them tell you what they need or they feel they need in order to, to stay relevant and, and add adding value to the organization.

Madhurima Gupta:
Thank you so much, Alana, for sharing those steps. And I’m hoping that listeners here will be able to pick few advice and implement for their teams and see great results. So thank you for taking time and sharing your experiences.

Ilana Esterrich:
Pleasure.

Madhurima Gupta:
Great. I look forward to connecting with you again sometime soon.

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