Daniel Echeverri Restrepo
CFO
Renault Mexico

Podcast

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Expert Contributor

The Future

By Daniel Echeverri Restrepo | Tue, 08/02/2022 - 10:00

The chief financial officer (CFO) acts as the person responsible for driving a company’s profits over time. Despite being one of the most traditional roles, it has dramatically changed and will continue to evolve in the upcoming years.

Some time ago, gathering financial data from all the different departments and the interaction with diverse clients was a massive endeavour, performed with teams dedicated to crunching numbers from multiple sources and formats just to get the numbers right.

With time, computing power evolved and was followed by new software tools that made manual work less cumbersome for financial departments. CFOs then had the opportunity to become business partners inside the companies, as they owned the insights and could add value with a holistic view.

This transformation from crunching numbers to business partners is not the first nor the last that the CFO role will have to face. There is certainly a long road to follow before getting to the “future CFOs,” where every manual task will be automated. The path toward the future CFO will entail:

  • Setting the reporting standards and developing the related automation systems
  • Evolving the talent in the financial departments who can make data their playground
  • Aligning processes with other areas and customers/suppliers to improve information flows

At the point where the digital transformation, including talent evolution, is complete, the perimeters of the CFO will look different altogether:

  • Accounting and treasury will change. There are many ongoing bank initiatives to improve bank interactions. At the same time, countries are shifting to digital invoicing. These two main levers will definitely change the way accounting and treasury are done, making them much faster and precise.
  • Tax payments and reporting will also evolve with digital invoices. Taxes will be easily charged by governments and the calculations thereof will become significantly simpler for both parties (companies/governments).
  • External audits will be less complex and time consuming with data centralization and reporting systems like business intelligence.
  • Financial planning and analysis (FP&A) will be almost immediate thanks to seamless and automatic data flow. With business intelligence systems, budget, forecast and monthly closures will become virtually instantaneous.
  • Compliance and internal auditors will have more information than ever in real time, which will allow them to guarantee the compliance of each operation with automatic and programmed alerts.
  • Legal representation is a usual function for the CFO, which includes signing contracts and overseeing the company’s legal responsibility. With new tools, digital signatures and workflows, this workload will be simplified to a minimum.

Not all the perimeters are evolving at the same pace nor will they be ready at the same time, as the challenges and the stakeholders involved are different. By the time this evolution occurs, we will be facing the future CFO, who will still have some of today’s basic activities automatically performed, but new challenges will arrive.

The future CFO is going to have more information available than ever and his focus will be to prioritize the most important facts and develop a strategy to guarantee that all the data remains accurate over time.

With clear and accurate information, he should focus all the possible resources on enabling the business areas to improve the operations beyond “business as usual,” just by taking advantage of faster and more accurate data.

A special link must be then created between the main user of all the information (CFO) and the chief data officer (CDO), defined by https://www.cio.com/article/230880/what-is-a-chief-data-officer.html asan executive-level leader responsible for managing, interpreting, and leveraging data as a business asset.” In a small structure, the CFO will have to adopt the functions of the CDO in order to get the optimal data for the financials and the operation.

The future CFO will then remain owner of all their current responsibilities but the way data flows inside, outside and through the company will determine the efficiency and power of the financial teams and the company itself.

In the far future, and that could be from years to decades, depending on the technological and digitalization level of a company, the way data flows and how the CFO manages it will be only a fraction of the challenges to pursue. New technologies will create new businesses and opportunities related to the financial functions. We are already witnessing how AI is changing the way forecasts are conceived, Blockchain is certifying contracts and assets as never imagined before, cybersecurity is becoming a priority that has grown beyond antivirus and firewalls, and fintechs are revolutionizing the way all transactions with clients are performed.

For the future CFO, that is already happening today. For the far future CFO, the human talent and capabilities to manage data and technologies should always be perceived as the main enablers.

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