Until a few years ago, the primary duties of a chief financial officer (CFO) were only limited to tracking cash flow and doing financial planning. Today, they are expected to take up diverse and challenging roles in an organization, such as cutting operational costs, building safety measures against increased regulatory requirements, and handling investor scrutiny. Recently, ERP software has emerged as the best solution for handling finance-related challenges. But before that, let’s understand the four essential responsibilities of a CFO.
Deloitte’s framework titled “Four Face of the CFO” beautifully explains the varied roles of a CFO in the modern context.
Firstly, a modern CFO must act as a steward who safeguards the organization’s financial assets, closes the books appropriately, ensures the company is compliant with local tax laws, and communicates the risk issues to the managing board and investors.
Secondly, a modern CFO must provide various services like financial planning & analysis, saving missed deductions and penalties while filing taxes, and maintaining the treasury for operating an efficient financial organization.
Moreover, a modern CFO should be an influential strategist who excels in creating blueprints that provide a future direction to the company. They should possess the capability to align business and finance strategies and play a crucial role in other long-term investments of the organization.
Furthermore, a modern CFO must prove to be a catalyst in driving pricing execution, procurement, cost reduction, and several other process innovations that add to the company’s overall value.
CFOs are constantly being asked to take up multiple responsibilities and roles in the ever-changing financial world. Therefore, along with top-notch skills and years of experience, they need access to cutting-edge automation tools to make real-time decisions based upon quantitative evidence.
CFOs can significantly increase their capabilities by investing in Enterprise Resource Planning (ERP) software. But, to make things clear — CFOs miss out on cost benefits, information accuracy, and potential efficiency due to the lack of ERP software.
Let’s begin by understanding the primary concerns of CFO’s today.
What are the primary concerns of a CFO today?
The most significant challenges that modern CFOs face are increasing margins, acquiring and retaining the best quality talent, execution of financial plans, and organizational growth.
CFOs can establish a solid foundation for growth if:
- they have the appropriate means to consolidate critical financial data.
- They can get a comprehensive view of core business processes in real-time.
ERP software has emerged as a critical asset for CFOs. It integrates vital data across departments, allowing relevant stakeholders to access the database anywhere, anytime, and from any device. Another benefit is that ERP systems automate crucial business processes allowing CFOs to focus on meaningful tasks instead of wasting time on trivial jobs like electronic bank transfers and payment reminders.
ERP systems provide a single source of truth
The most substantial benefit of implementing an ERP solution is that CFOs get real-time insights about finance-related operations and monitor how other business arms are functioning. Thus, they can manage income and expenditure efficiently, check stocks within the inventory, and monitor customer orders, buying patterns, and feedback at the click of a button. In short, the CFO can keep a tab on what’s moving in and going out of the business that enables preparing budgets and making excellent forecasts in the long run.
ERP software also solves the challenge of crucial data stuck in data silos. Data silos are data buckets that safely store a particular department’s essential data. Unfortunately, they hamper the information from flowing freely between various departments that negatively impact the decision-making capabilities of the CFO. On the other hand, ERP software stores essential business data in a single repository, ensures the accuracy of the information, flags errors in the data, and protects data from being stolen or hacked.
ERP systems enable CFOs to identify potential inefficiencies and render various systems & processes redundant, thereby helping preserve valuable budgetary resources.
Some additional benefits of ERP software to CFOs are:
1. Performance tracking: ERP software measures the company’s performance against predetermined operational and financial KPIs. Based on these performance parameters, CFOs can take necessary action and do course correction whenever required. Moreover, when clubbed with a powerful analytics tool, ERP software allows CFOs to leverage predictive analytics and historical data to understand market trends, which helps brainstorm effective strategies.
2. Cutting down operational costs: Minimizing operational costs falls under the purview of a CFO. The good part is that cloud-based ERP systems don’t require installing an expensive IT infrastructure in the workplace. Moreover, companies aren’t required to keep a full-fledged IT team. Instead, the ERP vendor upgrades, maintains, and monitors the functioning of the ERP system 24/7. Further, cloud-based ERP systems can integrate with online financial management & accounting tools enabling the CFO to get a 360-degree view of the company’s financial health.
3. Making the company compliance-ready: CFOs need to ensure that the company meets compliance-related requirements mandated by the government. Fortunately, ERP software has a high-level reporting interface that allows CFOs to identify any compliance deficiencies across business processes and immediately take corrective actions.
Author:
Nishant Joshi likes to read and write on technologies that form the bedrock of modern-day and age like ERP, CRM, Web Apps, machine learning, data science, AI, and robotics. His expertise in content marketing has helped grow countless business opportunities. Nishant works for Sage Software Solutions Pvt. Ltd., a leading provider of CRM and ERP solutions to small and mid-sized businesses in India.You can learn more about him on Linkedin