Managing risk and future-proofing finance loom large in modernizing Office of the CFO

It used to be CMOs, but now it’s the CFO who occupies the hot seat. According to Datarails today’s CFO has the highest turnover in the C-suite at 3.5 years, compared to 4.6 years for CTOs and CMOs. Among 2,000 companies surveyed nearly half had been through two CFOs over the past five years. In 2021, CFO turnover reached its highest level since 2017 at 21%. 

It is no surprise given the changing nature of finance.  Their terrain is made rougher by an economy emerging from the pandemic and caught in geo-political turmoil. The CFO today contends with interest rate issues, inflation, regulation and, still, the demand to drive the business forward, managing risks at every turn.   

We recently surveyed more than 400 CFOs in the United States and United Kingdom to get a sense of how they are navigating today’s environment. The results shed light on their aspirations and areas of focus, including clear agreement (75% of respondents) that revolutionizing their payments infrastructures is a priority. The notion of “modernizing” their payments systems is a strategic priority for more than half of respondents over the next 12 to 18 months. 

Fraud and financial risks to liquidity and investments were seen as the biggest challenges for CFOs.  Pile on top of those their concerns about cash visibility, a lack of control amid marketplace complexity, a mosh pit of available technology and the absence of a reliable, trusted partner to help them achieve clarity. 

The findings of this survey – as well as other recent research - has significant implications for CFOs and presents some solutions in the process. I’d like to discuss three of them:

Payments modernization: The most fundamental aspect of the CFOs role is managing financial health, including optimized payment processes. Today, that means reducing the paper and manual, and boosting the digital. Our respondents see an opportunity for payments to be a strategic enabler that can address two more priorities mentioned in the research: Cost management (34% of respondents chose this) and financial performance (45%). 

This finding is reinforced by the Datarails research. It found manual work as an ongoing pain point in the CFOs day-to-day job. “US finance chiefs consider themselves to have the most painful manual processes within the entire C-Suite. Taken together with this new study, we find a correlation,” the report says. “The least automated and most manual position in the C-Suite, the CFO, is also the most likely to leave, or be asked to leave. In such a challenging environment technology which allows better insights into numbers, forecasting and strategic impact is unsurprisingly high on the CFO’s wish list.”

Business payments challenges: As we alluded to earlier, fraud is the biggest challenge named by 65% of respondents, followed closely by financial risks to liquidity (64%). Fraud can be mitigated by picking a business payments network partner that has a proven track record in detecting and defending against it. But look at the other responses that hovered right around the 50% mark and you start to get a sense of what CFOs need to overcome to achieve digital transformation and payments modernization. Among them: cash visibility, using multiple payments systems, predominance of paper-based payment methods and paying suppliers digitally. 

A good example of how these challenges can be overcome can be seen in the underrated ability of accounts payable (AP) and accounts receivable (AR) automation solutions to complement cash flow management. One of the key benefits of AP automation is the enhanced visibility it provides into cash flow. With real-time data and analytics, businesses can gain a comprehensive understanding of their cash flow position at any given time. This visibility allows for better financial planning and decision-making, as organizations can proactively manage cash flow gaps and surpluses. By having a clear picture of incoming and outgoing cash, businesses can optimize their cash flow and minimize the risk of cash flow shortages. 

As well as the visibility into the cash position, both AP and AR can be accretive to EBITDA. By paying suppliers digitally CFOs can lower their operating costs and generate rebates on their payments. By automating AR CFOs can further expand their margins by lowering their total cost of payment acceptance. Even a $3-9 dollars per transaction can result in significantly lower operating costs for companies being paid digitally.

Lack of a comprehensive partner: What attributes define the ideal partner among our survey respondents? Surprisingly, it’s not simply experience, sheer size and scale, or transaction volume. It's a fusion of proven market leadership and offering the best products and services which help future-proof and defend against disruptive changes. Almost 50% of our respondents said product quality was the most important factor in picking a partner. This envisioned partner must display agility, growing in tandem with evolving needs, while adhering to ethical and visionary business practices. 

As the financial landscape evolves, today’s CFO seeks partnerships that transcend experience, scale and transaction volumes. Their partners must enable, in fact embolden, their journey toward a financially resilient, agile, and adaptive future. It’s a journey that includes insulating against disruptive changes and de-risking across finance functions.  This survey underscores the imperative for a seismic shift in payment methodologies, emphasizing the pivotal role of an empathetic, forward-thinking partner in this ongoing narrative of financial evolution.