Why automation matters for modern CFOs
As the role of the CFO continues to evolve, CFOs are no longer just financial gatekeepers—they’re strategic leaders tasked with driving business growth and steering their organization through the complexities of digital transformation. As organizations are pressured to do more with less, automation isn’t just a tool, but a critical component of efficiency and strategic decision-making.
This blog explores how modern CFOs can use automation to uncover business potential and lead their organization to sustainable growth.
Key takeaways
- The CFO role is evolving from traditional financial oversight to being a key component in shaping business strategy, requiring a stronger focus on data-driven decision-making and cross-departmental collaboration.
- With increasing pressure to do more with less, CFOs need to prioritize efficiency.
- Automation helps streamline processes and frees up resources allowing CFOs to focus on strategic initiatives that drive business growth.
The skills needed for today’s CFO
Modern CFOs need to go beyond traditional financial management, embracing a diverse skill set that’s essential to driving growth and efficiency across the organization. Critical skills include:
- Leadership
- Strategy
- Collaboration
- Technology
Let’s take a deeper dive into each skill below.
Leadership
Ankur Agrawal from McKinsey noted that “CFOs have influence on more and more functions.“ As a result, it’s important for modern CFOs to have the skills necessary to lead not only their teams but the organization.
Strategy
Data-driven decision-making is becoming increasingly important for organizations across industry sectors. As the leaders of the finance department, CFOs are increasingly tasked with leveraging and interpreting data to drive a more strategic direction for the business.
Collaboration
As the role of the CFO extends beyond finance, it’s increasingly important that they collaborate with IT and data science and security teams in addition to other stakeholders. This collaboration is essential for not only funding digital transformation initiatives, but also for shaping the overall strategy and ensuring that technology investments align with the organization’s broader goals and initiatives.
Technology
Digitization has become more important for companies looking to increase efficiency. For the financial department, this is especially important and CFOs are responsible for leading digital transformation efforts across their organizations.
What is automation?
Automation is the act of leveraging technology to eliminate repetitive tasks. As a result, businesses can focus on more strategic initiatives while improving productivity across their teams. Several financial functions, including accounts payable and accounts receivable (AR), can be automated.
Why does automation matter for CFOs?
Automation has become more than just a tool—it’s a strategic necessity for modern CFOs and a cornerstone of digital transformation initiatives. As financial leaders face increasing pressure to boost efficiency, reduce costs, and make more informed decisions, they’re turning to automation as a solution. CFOs should consider software tools such as MineralTree to automate accounts payable processes and technology to digitize vendor management, accounts receivable, and analytics.
The top three reasons automation matters for CFOs are:
- Increased efficiency
- Focus on strategy
- Mitigate fraud risk
Let’s take a closer look at each one below.
1. Increased efficiency
Many companies have increased efficiency across back office operations and transactional functions by 39% or more. These back-office functions often include departments such as accounts payable, which has been the number one priority for financial leaders to automate for the last several years. Additionally, about 6 out of 10 CFOs noted that strategically cutting costs is a main priority for their organization and 52% of CFOs are using software and technology to reduce expenses.
Efficiency across the financial department has become a core issue for CFOs, especially with the accounting shortage. About 60% of organizations are feeling the pressure to do more with fewer resources, making automation a vital investment for modern finance leaders.
2. Focus on strategy
CFOs and financial leaders are increasingly focused on the company’s overall direction. As a result, CFOs and controllers need easy access to the financial and operational data needed to make informed decisions. According to research, 74% of financial leaders noted that the pandemic highlighted the need for more accurate cash forecasting and 50% of CFOs want to enhance the accuracy of this data through advanced analytics. However, only 12% of the companies surveyed have automated AP and AR functions.
AP automation makes it easy to access invoice data before it is posted to the ERP system, allowing companies to have a more accurate view of the impact of accounts payable on cash flow. Additionally, advanced AP reporting and analytics tools can help companies optimize payment options or see the impact of changing their DPO on the bottom line. This technology can also help CFOs view important metrics while streamlining their KPI tracking.
3. Mitigate fraud risk
This function is particularly susceptible to fraud risk since money leaves the organization via the accounts payable department. By leveraging automation, CFOs can mitigate this risk across their teams. Fraud risk is highly prevalent across industries, with 65% of companies noting they have experienced check fraud attacks in 2023. Even electronic payments are at risk, with 47% of BEC attacks related to ACH wires. Additionally, 30% of companies that fell victim to fraud couldn’t recover the funds lost.
According to research from MineralTree’s 9th Annual State of AP survey, phishing attacks are also on the rise.* Fifty-nine percent of respondents reported phishing attacks in their organization related to AP, and 61% said phishing attacks increased over the past year.
For organizations without a centralized workflow, it’s easier for bad actors to infiltrate the AP process. Automation allows teams to create a centralized AP workflow making reviewing and paying invoices easier while flagging suspicious activity.
The right AP automation tool will automatically scan invoices to determine if the details match what’s on file. If payment details or a company’s address are different, the system will flag the invoice for further review.
*The MineralTree team is busy analyzing data from its 9th Annual State of AP survey. Check back soon for the 9th Annual State of AP Report, scheduled to launch in October 2024.
How CFOs can get started with automation
CFOs may need help determining where to start when embracing a digital transformation strategy. When beginning this process, it’s essential to understand the current state of an organization’s financial processes. CFOs can then use this data to create a roadmap for transformation.
When creating this plan, it’s often easiest to focus on one area of the business at a time and prioritize the list based on business needs. Once a financial function is fully automated, CFOs should move on to the next priority.
Implementing automation: Common pitfalls and how to avoid them
CFOs looking to implement automation in their organizations may encounter the following challenges:
Resistance to change
All changes require that employees be trained and adapt to new workflows. Other executives may also believe that current processes work fine. Even if other executives are open to automation, they may view it as a low priority. When executives and other team members voice these concerns, it’s necessary to highlight the benefits of automation and how these changes will make workflows easier.
Integration issues
The ERP is the company’s system of record. However, integrations aren’t all created equally. When looking for an integration partner, it’s crucial to consider if the system can sync well with current tools. By choosing the right partner, CFOs can avoid integration issues that can stem from implementing a new system.
Check out the blog, How CFOs Can Prepare for Financial Digital Transformation, for a deeper dive into why financial digital transformation is important and the steps CFOs can take to prepare.
Did you know? MineralTree has a two-way sync with many ERP solutions, including NetSuite, Sage Intacct, and QuickBooks.
Final thoughts
As McKinsey’s Ankur Agrawal noted, “the time for digitization in finance is now.” Modern CFOs benefit from automated processes, since it allows them to better leverage internal resources while increasing their ability to make more data-driven decisions. To learn more about how MineralTree can help CFOs on their digital transformation journey, request a demo.
Modern CFO FAQs
Tl;dr? If you’re short on time the frequently asked questions below provide a quick snapshot of what you need to know about the modern CFO.
1. How is the role of the CFO changing?
Over the past several years, the CFO’s role has continued to evolve. CFOs previously were responsible for financial compliance and reporting and steering the business strategy. They are also responsible for managing risk, and leveraging analytics to drive better decision-making across the C-Suite.
2. What makes a modern CFO?
A modern CFO is able to balance multiple responsibilities, including data-driven decision-making, strategic analysis, talent acquisition, and risk.
3. What does a good CFO look like?
Good CFOs combine important qualities such as technological oversight, business acumen, and strategic problem-solving to steer the business. They also collaborate well with key stakeholders and other members of the C-Suite to drive better decisions.
4. How can CFOs convince their teams to embrace automation?
CFOs should highlight the benefits of automation, including better workflows, increased efficiency, and reduced risk. They should also work to ensure that team members’ concerns are directly addressed when discussing issues they may raise.
5. What are the most critical first steps for CFOs looking to automate their finance department?
For CFOs looking to embrace digital transformation, it’s important to focus on one aspect at a time. Once automation has been implemented, they can focus on another component. For example, due to the amount of manual tasks associated with accounts payable, most team leaders ranked AP as the number one priority to automate. CFOs can concentrate on automating this function first and then focus on the next division (for example, vendor management or accounts receivable).
