CFO Role In Building Scalable Processes And Systems

A CFO’s role in raising and managing capital, in company strategy, planning and risk management are well discussed and very much in focus. What does not get adequate attention is the CFO’s role in building robust processes and systems, which can help in the sustainable and optimal scaling of the business. A good CFO needs to answer the question “My revenue outlook is positive and achievable, but is my ‘back end’ strong enough to support this future growth?” The question needs to be addressed both for financial processes and systems as well as operations or ‘customer facing’ processes and systems, including customer acquisition, customer experience and retention, material sourcing, production planning, vendor management, distributor management, product costing, warehousing, transportation and logistics.

Make it visual
A good Standard Operating Procedure (SOP) needs to incorporate these basic components into process maps, covering the flow of documents, data and materials:

· Who is responsible for each action

· What is the timeline within which the action is expected to be taken

· What are the dependencies, both upward and downward, for the performance of any task

The days of manual SOPs are long gone. Attention spans of employees have reduced in the last 10 years. No one has the time, patience or the inclinations to go through thick, boring looking manual documentation. Smart CFOs realise that the key to making any process work is to ensure compliance on the ground; and compliance is impossible if employees don’t understand the processes in a simple, quick and intuitive manner. CFOs, as a bare minimum, should look to draft SOPs in the form of flowcharts in Power Point or Visio. 

There are several other tools like Canva, LucidChart etc. More evolved flowcharts have embedded user videos embedded, to demonstrate how a certain task needs to be completed. These videos with animated or real actors (best drawn from the company’s employee base itself), with durations of not more than 5-6 minutes, go a long way in demystifying processes and remove any scope for any ‘confusion’ on what exactly is expected from each stakeholder.

Automate
CFOs who have automated processes have reaped rich rewards in the form of greater predictability and efficiency. For example: at one of our hospital clients, insurance claims reconciliations were a highly manual process done on excel spreadsheets with 14 different insurance companies, by 6 employees, who were involved full time for the whole month. DSO levels were >40 days. Implementation of a RPA bot, made the reconcilations real time and reduced DSO to <10 days.

The process is operated by just 1 employee now. An inherent challenge with any manual process is that it is reliant on human beings; with the best intentions human work is prone to errors, lack of focus, differing priorities and motivations and above all emotional state. Human work is inherently falliable.

A good approach to automation might be to thinking of it like Zero Based Budgeting (ZBB). In ZBB, every single cost item is considered and critically evaluated on whether it is required or not. Similarly, a CFO needs to list every single business process and evaluate if it needs to stay manual or whether it can be automated. The decision on which processes should be prioritized for automation can be done on a matrix with one axis for level of effort/ cost of running the process and one axis for criticality and size of business impact contributed by that process.

Given the proliferation of middle-ware or SaaS tools, there are ready to use, plug and play software products for nearly every single business process. These products are affordable (pay as you go), easy to implement (under 4 weeks) and can interact with/ talk to multiple ERPs, payment gateways and other software tools.

Workday for employee productivity in services businesses, Power BI for data visualization, Carta for cap table management, Slack for team collaboration, Scoro for project management, Concur or Check An Invoice for P2P, Power Automate or Reconcify for Robotic Process Automation, Anaplan for planning, ComplyGlobal for compliance, Zing HR for Human Resources Management, Happay for employee reimbursements are examples of tools that CFOs can use to automate specific business processes. All successful tools come with API integration that allows for data to be ingested from or exported to other tools.

Integrate
Once a process is defined visually and automated, the final step is to make sure that ‘it all hangs together’ i.e. all systems are integrated in a manner that they can ‘talk’ to each other. Good CFOs aim for single stream reporting i.e. data is entered only once in the company, avoid multiple ‘sources of truth’ and have a clearly defined technology landscape that defines in one chart, which systems talk to which other systems and when and how they do so.

Conclusion
Availability of tools to build scalable processes and systems is no longer a constraint. The ultimate test of whether the processes and systems are able to support scale or not lies in the correct and complete utilization by the company’s employees. CFOs need to focus on the human aspect of change management, set the right tone at the top and ensure buy-in from all internal business stakeholders in their journey to building scalable processes.

SVenkat is the Founder of Practus (www.roibypractus.com). Views expressed are in his personal capacity.

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