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10 Digital Steps to Become a Successful CFO

Companies now have to move more quickly towards digitalization thanks to Covid-19. a case study? These days, we all work from home, begin each day by gazing at a dashboard, and schedule virtual meetings and coffee breaks. We are also seeing how robots and AI algorithms may make our lives easier by processing massive amounts of data and solving complex problems on their own. Long live digitization, then!

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Everyone is aware that increased digitization is required because it makes tasks easier, faster, and less expensive while increasing productivity. However, a new CFO survey reveals that most finance departments' output has dropped from 60% to 80% since the pandemic began.

Who Is CFO??
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The highest-ranking financial expert in an organisation, the chief financial officer (CFO), is in charge of the company's financial well-being. Building a top-notch finance and accounting team is one of the CFO's duties, along with maintaining revenue and expense balance, managing FP&A (financial planning & analysis) activities, recommending mergers and acquisitions, securing funding, collaborating with department heads to analyse financial data and create budgets, attesting to the veracity of reports, and providing advice to boards of directors and the CEO on strategy.

On the basis of their financial insights and domain expertise, CFOs may also recommend changes to supply chains and marketing strategies, as well as help determine the future of technology, particularly fintech. The best CFOs are visionaries that have an eye on the future, collaborate closely with senior leadership, and aren't afraid to suggest tactical decisions.

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10 digital steps for a CFO
Numerous factors could be to blame for this drop in production. For instance, working from home with kids is not recommended because the absence of social interaction and downtime causes undue weariness or stress. However, there's more. After all, this epidemic has served as the first substantial test of the digital transformation of financial departments. Prior to this, everything seemed to be a feel-good programme. As a result, successful digital CFOs can teach us a lot. Ten important steps are involved in doing so:

Modify your hiring procedures

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CFOs that want to concentrate on digitalisation should modify their retention and hiring practices. After all, the decision-making and data-processing capabilities of the financial department will suffer from a lack of tech-savvy workers.

Improve reporting usability

Data in the finance departments is overflowing. Specific format criteria or standards are frequently applicable to how these data are displayed or interpreted. Because of this, employees without a background in finance frequently find financial reports to be overly complicated or dull and quit reading them. Digital CFOs reevaluate how data is presented and improve the usability and intuition of reports.

AI will persist.

In the coming years, AI will fundamentally alter finance departments. As an illustration, AI technology will automate several monotonous processes and help the CFO make difficult decisions. Naturally, provided that the CFO is aware of the technology and makes the appropriate investments in infrastructure and training. How can I ensure that my data infrastructure and data processes support AI? Which profiles and training courses should we invest in? Which activities can smart algorithms handle? These are some of the important questions CFOs can pose to themselves.

Learn financial analytics again
Digital CFOs take a far more proactive approach to determine how they can offer in-depth analyses and strategic guidance to other departments, including R&D, logistics, IT, marketing, and production. The proliferation of reports and interpretations can also be resisted by a proactive CFO.

The cloud will continue to exist.

Many CFOs expressed interest in the cloud before the Covid-19 disaster, but they eventually refrained from making the switch because the investment was too large or they were concerned about security and privacy threats. The same CFOs are now recognising that some applications and data are not available remotely and that traditional ERP systems are overloaded as a result of people working from home. Therefore, the move to the cloud is essential. It makes it possible for the finance department to move considerably more quickly and adaptably.

On-demand reporting
The pressure on the finance department to report in real time has increased as a result of changing reporting requirements. Additional real-time access to data and sophisticated analytics are also required by outside interest groups. The following questions must be answered by CFOs in order to meet these expectations: "Which technologies can help them to report on demand?" and "Which guarantees can be given when financial and non-financial data are published in real-time?" The final question is, "What data ultimately qualifies for real-time reporting?"

New potential risks are brought up by digital change.

As more businesses, along with their clients, suppliers, and the government, have integrated into the digital ecosystem, they must cope with a growing amount of cybercrime, including malware, ransomware (like Picanol and Asco), identity fraud, crypto hacking, and system fraud. To determine the degree to which business assets are vulnerable to these cyber threats, the expenses that may be associated with them, and how to report on this both internally and externally, the digital CFO closely collaborates with the CIO or the security team.

The CFO helps the AI system

Though it depends on the CFO's input, the AI system may help the CFO make complex judgements. As an illustration, the digital CFO makes sure that the algorithm can learn from high-quality and trustworthy data. Additionally, the CFO encourages the ethical and sustainable use of AI technology and aids in the interpretation of AI results, particularly when such results are unexpected.

Partnerships and innovation

Many CFOs are guided in their digital journey by outside technology players. RPA and accounting robots, for instance, are offered by various businesses. Experience, however, has shown that many of these solutions are not genuine answers, they may lead to several additional issues, and they are frequently misrepresented as AI technology. For this reason, it is preferable to look for a technology partner who prioritises the client over the product, one who is motivating and lists achievable goals. Additionally, they encourage an innovative culture within their organisations. After all, a lot of AI technology is open-source and enables independence for the finance department. There is no such thing as a standard AI solution, as every digital CFO is all too aware of. Every business setting is unique. The CFO can better assess what the technology can do (and where it still falls short) with insight and more knowledge of AI!

CFO Leadership
CFOs must be careful not to let the "hard" kind of leadership dominate as they become more interested in technology like cloud computing, AI, and other analytical solutions. In any case, because they base their choices on facts, CFOs frequently have a reputation as being "tough cookies." The digital CFO also needs soft leadership skills in order to maintain a solid balance. In the near future, it will be just as crucial to successfully lead the financial department through the digital era to possess originality, adaptability, integrity, modesty, commitment, and empathy.

Frequently Asked Questions

Q: What are the CFO's main success factors?
A CFO who is effective should be able to lead strategic initiatives for each department. To create the company's future, they collaborate with the board of directors and executive team. As agents of change, they act. When learning how to become a great CFO, developing a strategic mindset can help much.

Q: Describe a digital CFO.
The "digital CFOs" are a new generation of CFOs who are transforming financial management. CFOs now have new chances to access and analyse massive volumes of financial data in real-time because of the development of cloud computing, big data, and advanced analytics tools.

Q: What part does the CFO play in the shift to a digital economy?
While there are many advantages to digital transformation, some of the most significant ones are improved customer experiences, higher productivity, and new revenue streams. It is your obligation as a company's CFO to make sure that your business is taking full use of these advantages.

Disclaimer: This content was authored by the content team of ET Spotlight team. The news and editorial staff of ET had no role in the creation of this article.

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