Navigating the New CFO Landscape: Taming the Triad of CFO Threats

By Gary Robinson

The Modern CFO: Connected Planning

“Even if you are on the right track, you'll get run over if you just sit there.”

This axiom from Will Rogers rings truer than ever for today's CFOs, who are evolving at an unprecedented pace.

Gone are the days when CFOs were confined to number crunching, financial statements, and scorekeeping. They have now emerged as navigators of business strategy, weaving intricate connections between financials, human resources, supply chains, and sales.

This evolution is referred to as ‘connected planning.’ In a world where data reigns supreme, this paradigm empowers CFOs to offer holistic insights for greater cost visibility.

However, as CFOs become increasingly connected and are tasked with managing a much broader remit, a trio of threats emerge.

CFO Threat 1: Labor Market Dilemma

Picture this: 77% of companies are grappling with talent shortages, according to Manpower Group.

This is having profound implications for the retention and upskilling of workers. The workforce is also embracing remote-first work arrangements, necessitating technology to support this hybrid work style.

CFO Threat 2: Inflation and Macro-economic Headwinds

From geopolitical conflicts to fluctuating interest rates, the global economic landscape is tumultuous. CFOs are steering organizations through turbulent times, where inflation reigns supreme. In the U.S., inflation soared to a 40-year high of 9.1% last year, and is still considerably above the Federal Reserve's 2% target

As interest rates rise, CFOs are keeping a close eye on their company's profitability. A Gartner survey revealed that 74% of CFOs have rated profitability as their top concern in the face of inflation.

Consequently, ensuring a company's financial stability will demand meticulous cost management, as investments will increasingly rely on existing working capital as new financing becomes restrictive.

CFO Threats 3: The Ongoing Supply Crunch

In today's tight supply markets where vendors are in high demand, they wield unprecedented power. Buyers can no longer employ traditional tactics such as multiple rounds of sourcing, aggressive negotiations, or extending payment terms to extract value.

Instead, the tides are turning, and buyers are shifting towards ensuring prompt payments, offering value-added services to suppliers, and fostering collaboration. To ensure they get their fair share of supply, buyers effectively need to become their vendor’s customer of choice.

How Invoice Automation can Rise to the Occasion

Combined, these challenges pose a substantial threat to modern CFOs. At the same time, CFOs are expected to seamlessly connect the dots between various facets of an organization, offering comprehensive insights for strategic decision-making.

However, here's the twist: digital initiatives offer a clamor of hope.

Meet Jason Kurtz, Basware's newly appointed permanent CEO.

Through its 1,200-strong workforce, Basware claims to automate more than 170 million invoices for thousands of customers every year.

We exchanged notes following his presentation at the Gartner CFO & Finance Executive Conference.

Jason professes to hold the answer for CFOs. It’s what he coins ‘True Automation’ – where 100% of invoices are automated within an accounts payable (AP - invoices paid-for) department.

In his own words, “powered by artificial intelligence and machine learning, ‘True Automation’ is the purest form of automation. It provides a truly digital end-to-end invoice process with business wide benefits.”

In theory, automation improves upon the manual process of receiving, checking and approving invoices from suppliers. These tasks are routinely performed by AP clerks within large organizations.

CFO Solution 1: Labor Market Dilemma

Back to the CFO threats and how automation helps.

As businesses grapple with labor shortages, they are redirecting their focus towards upskilling existing staff and using technology to attract new recruits. By automating repetitive tasks and using technology to improve accuracy and efficiency, enterprises ensure they can deliver more with their headcount.

“The labor shortage predicament is accelerating automation,” argued Jason. “By automating routine tasks and embracing technology-driven upskilling, businesses are filling labor gaps with automation.”

The result? Not just operational efficiency but also an appealing proposition for the next generation of workers. McKinsey estimates that automation could boost global productivity growth by up to 1.4% annually. Over just a few years this could add up to considerable gains.

Not to mention the added benefit of supporting a more remote workforce, monitoring workload, and freeing up employees to focus on more important tasks. Such automation tools can also go further to embed ‘logic’ to process exception invoices (such as those without a PO number) by cleverly matching details to original agreements. Or set rules to approve invoices with a <1% pricing discrepancy, for example, and that way, efficiency is prioritized and employees are not having to manually implement company financial policies.

Jason pointed me to one of their largest customers Heineken as a real-world example. By automating AP with Basware, he claims that Heineken witnessed a remarkable 40% reduction in its AP team's full-time employees, freeing up employees for more strategic roles. For him, the implementation of such technology is a low-risk, fast time to value investment.

CFO Solution 2: Inflation and Macro-economic Headwinds

In the age of inflation, innovation becomes a lifeline.

Technology in CFO departments can mitigate cost pressures and capture early pay discounts. For instance, INNIO's story underscores the potential; they saved €11m in 2022 from early payment discounts. This is primarily due to reducing invoice processing time from 20 days to under four.

Jason explained that simply trying to spend your way out of inflation is not going to work. Investing in technology, particularly in accounts payable, can have a long-term deflationary effect on business costs, securing a competitive edge. According to him, investing in tech to battle inflation is the way to go.

CFO Solution 3: The Ongoing Supply Crunch

In today’s supply crunch, suppliers have the upper hand, and this gives them more authority to negotiate terms with buyers. And all suppliers want to be paid on time.

The snag remains: outdated invoice processes often hinder timely payments. It is estimated that 92% of businesses pay suppliers late. The biggest reason given is that AP processes hamper the ability to pay online and on time.

Automated invoicing can bolster the supply chain's resilience. Fast approval of invoices puts a company in a better position to offer an early payment program to its suppliers.

“This can be highly beneficial for both the suppliers and buyers as it makes a highly collaborative way to strengthen the supply chain,” commented Jason.

Unlocking the Power of Finance

Therefore, as finance adapts to changing landscapes, CFOs are redefining their roles.

True Automation, fueled by AI and ML, emerges as the crown jewel in the CFOs' arsenal. By leveraging the power of data on cost visibility, it transforms AP from a cost center into a strategic source of connected planning.

Basware's solutions lead the charge, enabling CFOs to tame the triad of threats – labor shortages, inflation, and supply constraints.

During our exchange, Jason was buoyant as he knew of Basware’s impending acquisition of Glantus, an Irish-based AP automation platform and fintech. Glantus specializes in audit recovery and fraud prevention, harnessing AI/ML technology to back test balance sheets for anomalies such as overpayment, VAT reclaims, duplicate payments, and even fraudulent vendors.

The CFO's journey is much like Jason Kurtz's own at Basware, steering and adapting the company in the cloud and digitization. The modern CFO, akin to Basware, although on the right track, is no longer confined to the past but is resolutely focused on the future.

In this era of automation, where technology meets finance, CFOs are turning their threats into triumphs. By unlocking the power of finance, businesses are not merely surviving; they’re orchestrating a symphony of financial success.