How Technology Is Changing CFO’s Role in 2020
By Varun Rathi
With Chief Financial Officers (CFOs) transitioning from their tactical roles as static bookkeepers to dynamic, strategic decision makers, they must become increasingly proactive and embrace advanced technologies to ensure that their companies stay ahead of the curve in terms of controlling and optimising expenses.
As India is gearing up to record an estimated $46 billion in business travel spend and become the sixth largest business travel market in the world by the end of the year (according to a whitepaper released by KPMG in collaboration with FCM), it’s the perfect time to take stock and prep for further accelerated growth. With tech savvy members of Generation Y and Generation Z increasingly entering the workforce, travel remaining a vital part of business operations, women accounting for almost 25% of domestic business travellers, the gig economy exploding, and regulatory pressures mounting, it has become critical to manage and optimise business expenses round the clock.
As these and numerous other dynamics change the business expense landscape as we know it, rather than reeling under the unexpected pressure of seemingly spiralling costs, it’s time to peek into the future and stay prepared for what’s coming ahead. Here’s a rundown of the top five trends digital CFOs can expect to see in 2020:
- From mere bookkeepers to strategic decision makers: A direct impact of the digitalisation of expense management processes will be the transition of the till-date traditional CFO role into a far more strategic role – that of a Chief Future Officer of sorts. In a bid to deal with the rapidly growing pressure to generate value, organisations are increasingly turning to CFOs, causing them to shift from their merely analytical, autopsy-like roles (that dissected the past) to more strategic advisory roles that inform smarter decisions for the future.
- CFOs by virtue of their job description already have access to plenty of business data – as well as their analytics. Thus, it makes perfect sense for them to assume more strategic decision-making roles. So as CFOs are evolving rapidly from stewards to strategists, they are spending less time drawing up and analysing past expense reports, and are instead leaning towards supporting future investment decisions.
- Greater visibility and control via AI-ML: Corporate fraud is among the most critical and growing challenges that companies have faced over the past few years, with misappropriation of funds being a leading cause. International studies have found that one in every five expense reports is misrepresented, which is an indicator of the sheer magnitude of the problem. Even more surprising is the fact that our benchmark study revealed that about 49% of CFOs interviewed were unaware of this frequency.
- Thus, there’s a growing demand for much tighter monitoring and regulation of expense management – for which it is essential to make the process transparent, real-time and automated. AI-powered, automated expense management will enable companies to automatically and instantaneously identify, flag and weed out any anomalous entries, leading to 100% compliant, error-free processing. While eliminating fraud is an ongoing process, the adoption of advanced technologies such as AI and ML will help companies enforce accurate reporting at scale, thus helping them achieve compliance and minimize revenue leaks at one go.
- Growing focus on employee experience: Continuing from last year, this trend is expected to witness employee experience retain centre stage over the next year too. With widespread deployment of 5G technology primed to start soon, mobility is expected to become an increasingly key expectation among employees. Thus, as employees become increasingly mobile, expense management solutions will have to follow suit. This will enable quick and easy submission of expense reports – literally on the go. Approval, reconciliation and reimbursement processes, too, will naturally get fast-tracked thanks to app-based access and tracking features.
- With the adoption of advanced technologies such as direct import of data from e-mail inboxes/ SMSs, OCR-enabled auto-extraction of data, and seamless integrations with travel apps such as Uber as well as with TMC solutions, the overall reimbursement process is expected to shrink to a matter of 3–4 weeks at the most – leading to high employee satisfaction and morale.
- Towards complete automation: The tedious, time-consuming and manual nature of traditional claims processes, which has for long been a major challenge for many a CFO, had led to several desperate, half-baked attempts at automation a couple of years ago – with the result that many businesses ended up with partially automated processes. This led to more confusion than relief, particularly following the introduction of GST. In fact, one of our recent benchmark reports found that 33% of businesses were still grappling with GST compliance due to inadequate digitalisation of expense management, particularly T&E.
- What’s more, the use of mere spreadsheets is inefficient and ineffective (and thus expensive) for businesses of any scale – particularly for small and medium-sized businesses, where inaccuracies can have a magnified impact on the bottom line. And throwing more people at the problem won’t get you anywhere. The only real solution here is complete automation of the expense management process. This will not only eliminate all the above issues but will also enhance overall end-user experience and free up employees for more core responsibilities.
- Growing demand for end-to-end expense management: While T&E expenses remain a top contributor to business expenses, which are to a large extent planned but, such expenses are extremely sporadic in nature. They can take any form, and even crop up at any time. For instance, a client site visit may at times crop up literally overnight. Or a vendor may need to get paid for a job done. Maybe an onsite employee even needs to extend his/ her stay due to new developments. Whatever the time, location or nature of business expenses, it’s extremely critical for you to ensure that they’re all recorded on a single, centralised platform.
- It is common knowledge that businesses regularly incur expenses to keep their wheels rolling, and these expenses are necessary to support and expand their operations and meet increasingly ambitious goals. Therefore, as companies grow, their spends (and spenders) naturally grow as well. A unified expense management solution will not only make life far easier for employees, managers and accounts personnel, but in today’s efficiency-driven and environmentally conscious economy, it will prove to be an indispensable tool to operate successfully at scale.
As another decade makes its way around the corner, we’re all excited about plenty of things – be it the pace of technological advancement, the growing popularity of customised travel, or the ability to perhaps just anticipate the future. It’s all happening fast. A couple of years ago, drones were all the rage, but today, they are already old news. The truth is, even as we speak about AI and ML as new technologies, they are already changing the way businesses operate. With Generation Z already entering the workforce, by 2020, these technologies will go mainstream – and we’ll soon be looking beyond.
The bottom line is technology is progressively transforming business expense management just as much as it’s transforming any other business process, or industry as a whole. As it becomes increasingly automated, it’s affording end-users the opportunity for more convenience, flexibility and self-service – all of which are key priorities for today’s workforce. In other words, improved customer experience, too, remains a major goal.
(Disclaimer: The author of the article is the Chief Operating Officer and Co-Founder at Happay, a company that works in the automated business expense management software space. The views expressed here are his own)