Published on: April 23, 2019
How does accounting software fit into the role of the modern CFO? Today’s CFOs are trusted advisors and business experts, well beyond the number crunchers of years past. Where once the CFO was responsible for the finances and bill paying of the company and overseeing the work of one or two accounting clerks, today’s CFO needs to be both manager and leader, finance guy and accounting software expert, and that’s just scratching the surface.
We’d like to invite you to download a free white paper, Top Technology Challenges of the Modern CFO, authored by Acumatica. In this white paper, you’ll get more insight into the new role CFOs take within their companies and how the role has evolved into a position inexorably linked to corporate leadership and decision-making.
The Modern CFO: Leader, Thinker, Doer
Modern CFOs are leaders, thinkers, and doers. They’re equally as likely to recommend new accounting software as they are to prepare the quarterly budget, address shareholders, or answer questions from managers about their accounting practices. In short, modern CFOs are team leaders up to the job of shepherding the company’s finances to the next level.
Let’s look at several facets of the modern CFO and the role they play within the typical manufacturing company.
Establishing and Monitoring KPIs
CFOs work with company managers to develop and monitor key performance indicators (KPIs). Performance indicators measure the success of specific goals. These may be related to production, cost savings, marketing, operations, or other core functions of the company.
Establishing KPIs means working with team leaders across multiple disciplines to determine not only what can be measured, but what value will be obtained from the measurement itself. Just because you can measure an aspect of production does not mean that you should measure it; you can measure the time spent at work of any employee, but time spent at the office does not equal employee productivity.
Getting metrics right takes time and wisdom. Knowing what to measure, how to measure it, and how often to report on progress towards goals should be steered by a seasoned company executive who understands the business, its needs, and the industry’s sales cycles.
Once established, KPI reporting should be conducted on a routine basis. Determining when to report and analyze KPIs is also an essential function of the CFO. Some metrics should be reported frequently while others can be reported less so. A wise CFO knows when and how to communicate metrics.
Managing Risk: Internal Controls
Another critical area the modern CFO guides is risk management and internal controls. Risk management begins by understanding the company’s financial data, sales history, and projects. By knowing the data and understanding the implications of the data, the CFO can then manage around potential marketplace risks and rewards.
CFOs must also establish and enforce internal controls. The term “internal control” refers to a set of policies and procedures that guide company employees on how they handle various financial situations. For example, an internal control or guideline may dictate that petty cash should only be counted out in the presence of two employees. By having one person count and another observe the count, the company prevents someone from succumbing to temptation and pocketing a few dollars here and there.
This set of rules or guidelines is vital to keeping the accounting department running smoothly. Internal controls must be established, written, taught, and enforced.
Another area in which the modern CFO must be fluent is cybersecurity. You may think this is the purview of the IT department, but many companies outsource IT, and the closest thing they have to an IT specialist is the person responsible for the accounting software—the CFO.
The average ransomware attack costs companies $5 million, on average, to correct. One out of every five files in a company is at risk for security breaches. These and other facts about cybersecurity are what keeps a CFO up at night. With so much at risk, companies face enormous challenges in securing their data from criminals.
Cybercrime deterrence begins at the employee level of a company. The biggest threat? Phishing emails, which unwitting employees click on and then disclose secrets like passwords or other security data.
The CFO has a tough job helping to shore up defenses against cybercrime. Perhaps, with the help of IT staff or others in the company, she works to conduct security audits, teach staff about smart cybercrime deterrence. She may also help choose software, such as accounting software, ERP systems, and other systems that offer greater security protection at less cost than older systems.
Cybersecurity is an area that 20, 30, or more years ago, no one could have predicted would fall into the CFO role. But it does, and it’s an important task that must be addressed to keep company files, data, and finances safe and secure.
Understanding the Emerging World of Blockchain, Artificial Intelligence, and Machine Learning
Technology enhancements and improvements shift quickly, with new advances offering many benefits to companies. CFOs are at the forefront of understanding and embracing technology that provides value to their employers.
Blockchain emerged in 2009 as a new method of safe, secure data transfer. Although perhaps best known as the system running cryptocurrencies such as Bitcoin and Ether, blockchain also promises to aid such diverse industries as travel, communication, real estate transactions, supply chain tracking, delivery monitoring, and more.
In addition to the blockchain, CFOs must know the latest advances in machine learning and artificial intelligence, and how these emerging technologies impact their companies. AI systems use data to perform tasks once reserved for humans, applying logic rules to data to make pre-programmed decisions. For example, a manufacturing company using an ERP system with AI capabilities may program it to re-order steel when raw materials fall below a certain threshold.
CFOs must understand the role that AI plays in their business to monitor such activities and adjust budgets and financing around them. AI can also help them with reminders to pay specific invoices on time, notes about receivables overdue, and more.
Machine learning takes this one step further by enabling computers to “learn” as they go. The more data they obtain, the faster they learn, combing history for future predictions and actions.
These three technologies are moving at the speed of light, entering the workplace in surprising ways. New ERP systems, accounting software, warehouse and inventory management, and other systems are all combining one or more of these new technologies to build exciting functionality into existing systems.
The Modern CFO: Download the Free White Paper Now
This is just a glimpse into the role of the modern CFO. She’s like a combination of smart scientist, data analyst, accountant, and Wonder Woman. She’s a key player in the company and someone you can’t do without.
Mindover Software provides accounting software, ERP, and other systems for manufacturing, warehouse management, and more. Please contact us today for more information or call 512-990-3994.