The COVID-19 crisis has highlighted something finance leaders have long understood: we are overdue for a new wave of digital transformation in the Office of the CFO.

Finance leaders today are working tirelessly to help navigate unprecedented and rapid shifts in customer demand, exogenous shocks to the supply chain and the challenges of a global economic downturn – all while managing a suddenly remote team. We believe the need for digitalization has never been more acute.

For decades, businesses have chronically underinvested in technologies that support the Office of the CFO. Historically viewed as a “back office” function, finance and accounting has not benefited from the same digitalization initiatives that have transformed more “front line” customer-facing or revenue-generating business areas like sales, customer service, marketing, and supply chain management. Today, we are seeing significant investment and innovation in solutions focused on digital transformation in the Office of the CFO, and we believe several key trends and technologies that are driving this focus.

6.2

Average number of functional areas reporting to the CFO, up from 4.5 in 2016

66%

Finance tasks that not currently automated

30%

Reduction in time spent when automation is introduced in financial close process

Moving Beyond the Back Office

The role of the CFO has evolved and expanded materially in recent years. Their purview now often extends far beyond the traditional core finance function to include business planning, corporate development, risk management and compliance, procurement and sourcing, real estate and investor relations. With many CFOs at the forefront of their organizations’ crisis response, the COVID-19 pandemic has further underscored the importance of a strategic finance leader. The CFO office has led scenario planning and cash forecasting, played a central role in legal and lender negotiations, and served as the face of the organization to assuage nervous investors and collaborate with suppliers and customers who may be overwhelmed with uncertainties in their own businesses. Organizations are increasingly looking to the Office of the CFO to deliver more meaningful, actionable insights that are mission-critical to their ability to weather sustained economic headwinds, drive innovation, maximize financial performance, stay ahead of the competition and, ultimately, fuel growth.

Increasing Data Volumes and Regulatory Pressure

An effective, expanded CFO function requires rapid, strategic decision-making, which in turn necessitates the aggregation and integration of ever-expanding volumes of financial and operational data across functional departments, business units and geographies. We believe this is particularly true in the current crisis, as companies scramble to gain a single-pane view of their operations (not to mention those of their customers, suppliers and partners) against the backdrop of wide-ranging levels of public health impact and economy re-opening around the world. The data to drive these faster, more intelligent decisions – and to integrate information across the enterprise – often reside in siloed and disparate software systems. As a business scales, the volume and complexity of this data only grow. Constantly evolving regulatory guidelines – such as the ASC 606 revenue recognition standard and tax law changes across international jurisdictions – increase operational complexity, further complicate the challenge of data aggregation and elevate the financial costs and reputational risks of non-compliance. Yet, we see a surprising majority of companies continue to rely on manual, Excel-based processes – typically inefficient and error-prone – to complete core finance activities. As the landscape becomes more complex, more virtual and the stakes ever higher, we are seeing a growing commitment to automation and an increasing investment in the digital tools required to support the strategic nature of the finance function.

Automating the Close

So where should organizations begin?

At a baseline, we believe that a more strategic Office of the CFO must be built on the foundation of a financial close process that is quick, efficient and accurate – and automation is key to achieving this goal. A faster close enables a more real-time view of the organization, allowing companies to respond to market and competitive forces in a nimble, timely manner and freeing the finance function to make a meaningful impact across many other areas of the business, from M&A strategy and execution, to competitive benchmarking, to forward-looking integrated business planning. Just as important, an automated financial close – particularly one in the COVID-19 induced work-from-home environment – is both transparent and auditable. The right automation solution enhances compliance and ensures that organizations are meeting reporting obligations.

Summit-backed Trintech is at the forefront of the next-generation solutions that are bringing automation and efficiency to the Office of the CFO. Trintech offers a full, end-to-end Record to Report solution, and the company is a pioneer in Risk Intelligent Robotic Process Automation technology that is designed to optimize key financial processes. Our work with Trintech underscores the efficiencies, reliability and critical intelligence that an automated financial close can bring to organizations both large and small.

 

Navigating the “New Normal”:
What’s next?

We believe the Office of the CFO is in the early stages of digital transformation. In a function still dominated by antiquated spreadsheet-based workflows, the COVID-19 pandemic has only served to make this need more acute. We see the ongoing shift to the cloud continuing to facilitate the development and adoption of more flexible, affordable and easy-to-use integrated tools. Emerging technology solution providers that simplify and automate long-standing core finance workflows – close management, account reconciliation, performance management, reporting and analytics, governance, risk and compliance (“GRC”), planning and forecasting, and more – stand to emerge from this global crisis from a position of strength with the opportunity to empower CFOs to shape the strategic direction of the organization and capture the tremendous market opportunity ahead.

“The Office of the CFO by and large has not been invested in. The efficiencies that are needed today to be able to have data at your fingertips to make strategic decisions, in many organizations just isn’t there. We need to be able to speed up the financial close process, making sure that the controls are still in place to ensure the integrity and accuracy of the data.”

Teresa Mackintosh

CEO, Trintech

“In the growth-stage companies with which we work and across the enterprise landscape more broadly, we are seeing significant investment and innovation in solutions focused on digitizing the Office of the CFO. We believe we are still in the early innings of this shift.”

Peter Rottier

Managing Director, Summit Partners

“The CFO role is an evolving one. Over the years, it’s gotten more technical, more complex, and yet we’re trying to be more strategic all at the same time. So that means taking on some of the detailed aspects of the role, whether that’s detailed accounting requirements or the ever-evolving compliance landscape, but also trying to stay focused on that overall strategic objective of the company.”

Lori Sherwood

CFO, Parts Town

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