Clarity, predictability and strategic insight regarding finance management. These are the top requirements that CEO’s have for their CFO’s, demanding increased visibility from finance executives. In a recent study from KPMG A View From the Top, 63% of the surveyed CEOs from high performing organizations believe that the CFO’s role will increase in significance over the next 3 years, as compared with other C-suite roles.
This presents a challenge for CFO’s, already tasked with additional responsibilities and limited resources. Virtually unlimited amounts of data are available for analyzation, but how can this be organized and sifted through to create relevant solutions? Providing effective analysis and strategic insights can provide additional transparency and value, but time for a complete review is limited due to the day-to-day demands within finance.
In addition, finance executives are being asked to carefully monitor the travel and expense (T&E) budget line item. Industry research shows that T&E accounts for 12-15% of an SME’s overall budget; and this piece of the budget is the second largest controllable cost.
To stay relevant in today’s competitive, global marketplace, providing controllable, predictable results to your CEO is essential for business success. How can Finance Executives manage T&E while at the same time deliver valuable, strategic insight through increased visibility into and control of travel spending, thereby increasing overall financial predictability for CEO’s? Following are three ways that CFO’s can effectively deliver results.
Determine shared expectations with your CEO
As the Finance Executive within your business, it’s very important to balance the financial requirements (accounting, audits, etc.) of your organization with business requirements, such as strategic planning and trend reporting. Your CEO should be sharing the company vision with you on a regular basis, and if not, it’s critical for you to sit down with him/her and determine the expectations your CEO has regarding the type of financial data needed, and how this can be interpreted and presented to create predictable results. These results can then be used to provide solutions regarding budget planning, market trends or new project implementation for business success.
Vetting expectations within each area of business is key, and within the travel category, it’s essential. A practical and thoroughly communicated travel policy allows for complete examination and in turn, shared expectations of how, when and why employees within your business travel. As you work to provide increased visibility for your CEO it’s critical to be clear on expectations.
Assess talent and department structure
There’s no question that with increased CEO expectations, CFO’s need to have staff within the business that contribute to the delivery of results. According to the KPMG study, “CEOs put a huge value on people skills, but many see their CFO’s as lacking in this area. 97% of CEO’s say that talent management is the most or equally important factor in improving the finance function, yet only 33 percent give their CFO’s a passing grade in talent management.” In order to give consistent, predictable results, the best people need to be in place. Assess the key management positions within your department and determine if the correct people are being efficiently and effectively utilized. Decisions regarding employee talent (or lack of) are not easy, but by developing a top-notch financial management team, your ability to give clear, measurable, predictable results to your CEO increases dramatically.
Leverage available technology
Technology plays a critical role in providing cost control and efficient financial data management and reporting. Assessing technology needs, and determining best solutions can be a game changer for some organizations.
- Invest in an Enterprise Resource Planning (ERP) system
One of the biggest challenges facing finance executives today is the ability to oversee, manage and control all of the financial data that’s being collected throughout the organization. Investing in a quality ERP system provides predictability, control and a single access point for all financial data.
Once the finance system is established – the core - in your ERP system, other departments such as production, sales and operations can upload relevant information. Using on premise, cloud based solutions that can include a software-as-a-service (SaaS) component simplifies the maintenance and management of your business’ data. Finance executives can spend time analyzing facts and figures, adding value to financial forecasting and budgeting instead of managing data collection.
Technology resources increase transparency through accurately providing real-time data for review. The availability of reports that can then be analyzed to provide sound financial advice and strategic direction provides predictability in budget planning and forecasting. Utilizing ERP in combination with an effective T&E management system provides a complete analytics solution.
- Ensure your T&E automation system integrates with ERP process
Using an automated travel and expense management system integrates ERP with your online booking tool, making it easy for travelers to comply with travel policy and report expenses as needed, adding control and predictability to financial analysis and reporting.
According to the CFO Research Study, Improving Control of Travel Expenses, “…companies that rely on a unified source of travel-expense data, 84% of respondents say that their management decision makers have access to robust, timely, and comprehensive information on travel expenses, whereas this figure is only 57% at companies that rely on many sources of travel-expense data in many formats. “Collecting and managing travel and expense data and streamlining this process with your business’ overall financial system will clearly give you, and in turn your CEO, access to relevant, predictable information.
One technology solution is Cornerstone Information Systems’ iBank product. This cloud based data management platform consolidates travel information to provide clear, concise and comprehensive information regarding a business’ travel spend. Their three major components include data consolidation, a management reporting system and interactive dashboards and scorecards. These detailed analytics provide information on travel spend, policy adherence and provide control and predictability to deliver complete results.
While challenging, it is possible for CFO’s to work closely with CEO’s and additional leadership to provide the visibility needed in executing a successful business plan. Discussing financial analytics and reporting expectations, ensuring a talented financial team is in place, and leveraging technology will increase control and visibility into spending behaviors and resulting financial implications, based on CEO or board decisions. What are your biggest transparency, visibility and analytics challenges? Share in the comments below.