Becoming A Digital CFO To Navigate Through The New Economy

What you’ll learn


  • We move towards a future where companies are applying digital technologies to finance processes in ways that will create more efficiencies, insights, and value over the long term.
  • This blog talks about how CFOs are well-positioned to become critical drivers of digital transformation.

Introduction

Digital transformation was never optional. It was there in dribs and drabs, but digital transformation in the finance industry has now become a part of a successful business strategy. It adds the “extra” value to the current finance function that improves an organization’s agility and adaptability. In this blog, we take you on a journey where we weigh in all the contributing factors for your path to “Becoming the Digital CFO”. Below are some of the questions that will be answered in this blog-

  • Is the digital transformation of finance a trend or is it there to stay in the long run?
  • Is digital transformation actually the only answer to transform my finance function?
  • Are the results worth the hype/risk?
  • What does this transformation mean to you as a finance leader?

And only when you are convinced that digital transformation is “THE” answer for all your financial problems, we will help you understand your role in this age of digital revolution.

The ‘Age’ of Digital Transformation or The ‘Phase’ of Digital Transformation?

According to The Hackett Group’s Covid-19 Response Poll (April 2020), despite the recession, almost all finance organizations are powering ahead with digital transformation initiatives, and some are even accelerating them. Even more encouraging, 64% are launching select new digital projects.

52% of Global finance leaders as per a recent SSON survey are looking to digitize to improve in the aftermath of the COVID crisis.

The driver behind it? The rapidly changing financial services landscape.

Disruption is Useful:

In this moment of clarity, finance leaders have started to perceive the potential of digital for not only engaging customers externally, but also for streamlining internal processes. They realize these resources have been essential to adapt to extreme volatility. To say the least, digital transformation has stood the test of time and is here to stay!

Are The Results Worth The Resources?

It’s no secret that many finance organizations are drifting towards automation. But what are the actual benefits associated with automating your company’s finance function? Is it really worth the time and effort?

75% + Respondents, in a recent HighRadius survey, identified working capital optimization is a top priority.

So how does that happen? Finance leaders have taken a lax approach to liquidity management and are harvesting already-available cash. Let us see how.

Accounts Receivables and Digital Transformation

Receivables management has been an essential function for finance departments for decades. An automated receivables management directly contributes to a company’s profit because it improves days sales outstanding (DSO) and working capital and builds customer trust and relationships, to name a few advantages.

The company also has better cash flow and higher available liquidity for use in investments or acquisitions.

Did you know, as per a Hackett report,

Using publicly available financial data for the top 1,000 U.S. companies, it was seen that they were sitting on $1.3 trillion in unused working capital at the end of 2019, including nearly $4 billion in accounts receivables.

As a result, CFOs are increasingly focused on automating the accounts receivable process to shorten the cash conversion cycle and track the health of the receivables portfolio.

Furthermore, it saves time and improves overall productivity. Now let’s get specific and see how Highradius created a working capital impact with accounts receivables automation.

Click here to read the full Hackett report on How Accounts Receivable Moves to the Top of the CFO Agenda.

The Role of an Executive in the Digital Age is to be a Change Agent

Companies are still in the early stages of applying digital technologies to finance processes in ways that will create more efficiencies, insights, and value over the long term.

So what are the expectations from this new role of Digital CFO? How could you lead that change within your organization?

According to a Forbes survey, 80% of finance tasks would be automated in the next few years and 73% of CFOs agree that the company will be a laggard if it will not start adopting the latest technological advancements in finance and will fail to exist in future.

There is a clear mandate for you to take the lead. It is expected you should leverage emerging technologies and play a key role in transforming your business function over the next few years and act as a pivot in digital transformation.

Three Prime Functions of The CFO To Aid The Digital Transformation

1. Have A Strategic Vision Of The Change:

Here are a few questions that you need to ask yourself, right now that will help you get a clearer vision of what your role is, in this revolution.

  • What are the potentially disruptive technologies coming to your company’s way?
  • How will these impact your current business model and future business?
  • How will industry drivers shape your market needs?
  • Do you have the capabilities to manage your technology base strategically?

2. Build A Culture Fostering The “Disrupt Or Be Disrupted” Mentality

For any business shift to happen smoothly, it must be understood and believed by its functional teams. Prove that change is the only constant. Here’s how!

  • Help your team understand how technology is imperative for process improvement
  • Change Management: Work on making your people comfortable with the new system
  • Face, and not avoid, “Fear of the Unknown” associated with new technologies

3. Keep an Eye on the Execution

Executives need to be biased towards execution, Here’s how!

  • Define measurable KPIs and success metrics for each milestone
  • Ensure that you are achieving the desired goals within the stipulated time frame
  • Always be ready with a contingency plan. Be prepared for the worst at all times
  • Incorporate suggestions and feedback from all stakeholders, beginning day one

Also Read: Four Point Plan For CFOs Looking To Thrive In 2021

Ensuring A Successful Transformation Initiative

Now that we have established that it is the age of digital transformation, Highradius recommends that finance leaders don’t lose this opportunity to transform and lay the foundations for a stronger future.

But what most leaders don’t know is that according to McKinsey, IT projects run 45% over budget and deliver 56% less value than predicted. As staggering as these findings are, most companies survive the pain of cost and schedule overruns.

A successful A/R transformation initiative requires a partner that not only deploys technology but also commits to deliver real business value.

The Right “Partner” For Your Transformation Journey

If you do have to automate, how do you and compare all the vendors and their solution offerings?

We here provide you with a five-step guide to select the right vendor for your digital transformation journey-

  1. Initiate an RFP Process: To assess the vendor’s understanding of the O2C domain
  2. Shortlist vendor for solution demos: Based on references and ability to address your pain-points
  3. Combined Evaluation: On the basis of RFP response and demos to pick your top choices
  4. Introduce Custom Requirements: To check who would be able to provide you the best service
  5. Make The Final Decision: Communicate the decision to initiate the next steps

Read how HFS Research Names HighRadius as Hot Vendor 2020

Conclusion

Digital Transformation is happening, and it’s essential to prepare for a digital future. For business leaders and CFOs – more than ever before – cash is king. Transforming accounts receivable (A/R) is the key to making business move faster in this slow economy. Digitizing your A/R process cannot only save you money, but it can also speed up your collections, reduce late payments, and reduce 70% of the repetitive tasks taking up your team’s time.

Click here to access your guide on-
Digital Transformation In A Slow Economy: Mistakes That Set You Up For Failure

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HighRadius Integrated Receivables Software Platform is the world's only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway - covering the entire gamut of credit-to-cash.