Building the business of tomorrow

Chief financial officers (CFOs) have always been integral to the success of dynamic businesses. However, their role is now more crucial than ever before.

Technological shifts such as the increased adoption of automation, cloud computing and artificial intelligence (AI) are changing the game. The CFO is expected to be abreast of all these changes and able to interpret how thematic shifts will impact every division of an organisation.

It’s little surprise then that tomorrow’s chief executive is increasingly today’s CFO. Research published by the Bearingpoint Institute found that 26 per cent of European CFOs have secured a chief executive role of some sort in the past decade.

“A CFO is no longer a number cruncher or manual processor,” explains Sabby Gill,  managing director of Sage UK and Ireland. “They are strategists, visionaries and one of the most important commodities to a business.”

As Britain’s largest listed technology company with more than three million customers worldwide, Sage is well aware of the changing role of the CFO. Technological changes, notably automation, are freeing up CFOs from the burden of paperwork, allowing them to get a bird’s eye view of organisational behaviours.

“As soon as you hear about automation or AI, there is an automatic assumption that this means job losses or a reduction in staff,” says Mr Gill. “But, in fact, these technologies will likely bring about more jobs in specialist areas. CFOs are perfectly placed to use automation to save costs and reinvest that money.

“Automation, AI and machine-learning take admin-intensive processes and allow you to be able to get a higher level of return and use resources in a more productive way. If you take away the things that are a burden from a time perspective, the CFO can become more strategic, looking at practical ideas to solve bigger issues.”

Absolute proof

There have been various studies to underscore the value of automation. A recent study by McKinsey concluded that it can “enable businesses to improve performance, by reducing errors, improving quality and speed, and in some cases achieving outcomes that go beyond human capabilities”.

A 2019 report entitled The Practice of Now, conducted among 3,000 accountants, found that more than half of respondents (58 per cent) will use some form of AI to automate tasks and improve business efficiency in the next three years. However, this still leaves 42 per cent who are not using technology in this way.

“It is surprising that businesses have the ability to do something about their admin burden and yet many have yet to do so,” says Mr Gill. “There is a huge potential opportunity. CFOs are telling us that where organisations have adopted this technology, it has had a significantly positive impact on growth.”

In the 2019 research, pollsters found that the majority of accountants (56 per cent) cited increased productivity as the main benefit of technology, with a further 27 per cent viewing the timesaving aspect as its most important value.

The ability to have information, data and financial information at your fingertips is crucial

Historically, administration tasks have slowed the finance office down. Research commissioned by Sage exposed some startling findings. A survey of 3,000 small and medium-sized enterprises (SMEs) around the world found on average they were spending some 146 days a year on admin tasks, with 71 days a year lost to admin in the UK.

The research found that processing invoices and payments by UK businesses can soak up 16 per cent of the CFO’s time. Given the increased demands on CFOs, it’s becoming clear the benefits of automation can no longer be ignored.

“These reports indicate where the opportunity is and the size of the prize,” says Mr Gill.

Enhanced freedom

By allowing automation to take on some of these more menial tasks, CFOs can spend their valuable time focusing on what’s important: their customers and the business. Automation can eliminate many data-entry and routine communication tasks. One of the most common issues identified in the Sage research was payments.

Most small businesses struggle with cash flow and invoicing. It is a slow and burdensome task for many. Yet invoice generation and reconciliation is a vital part of any SME operation.

Automating this process from the outset could allow the system to interpret datasets and process payment information, giving the CFO a full reconciliation report.

“Imagine a system that allows you to capture an invoice, to process an invoice or to automatically send an invoice to a supplier,” says Mr Gill. “An established system could mean clients pay that invoice automatically, because of an automation agreement to pay within net zero days. Business becomes instantaneous; very different to a manual process.”

Beyond the burden

Of course, automation is not just about relieving CFOs of the menial day-to-day tasks. Automation brings larger benefits too and hidden opportunities. It can enable businesses to identify key trends which will act as a map for where the business should be operating in the future.

Sage stats

“Companies want CFOs who can help guide and provide strategic direction,” Mr Gill explains. “These are the biggest things that company boards are looking for.”

Travel expenses is a good example. Historically a CFO might look at data relating to travel to better understand where people have been spending: the airlines, countries, regions and territories.

But, if you can take that data and apply external factors, CFOs could have the power to use this as a bargaining chip. They could get better deals with airlines or hoteliers by guaranteeing the average number of trips by employees,
for example.

In recognition of the importance of this thematic data, Sage has been working with more than 600,000 clients to improve understanding of the tools a CFO might need to build and steer successful growth businesses.

“If you think about a CFO, the ability to have information, data and financial information at your fingertips is crucial,” says Mr Gill. “For us, it is about giving CFOs the most up-to-date financial data.

“We offer real solutions and give CFOs the most up-to-date financial information to take their business further than ever before.”

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