Today’s CFOs need smarter data tools

Smart analytics broadens the business operations role of financial executives, exposing hidden patterns, risks and new opportunities.
Jodi Joseph
By Jodi Joseph, Divisional executive, Caseware Africa, a division of Adapt IT.
Johannesburg, 31 Jul 2023
Jodi Joseph, divisional executive, Caseware Africa, a division of Adapt IT.
Jodi Joseph, divisional executive, Caseware Africa, a division of Adapt IT.

In today's legislation-mandated world, reporting and compliance are top priorities, but they can be time-consuming and prone to error. As a veteran chief financial officer (CFO) myself, I know every financial and C-suite exec wants to be thorough and accurate, and nobody wants the auditors to find something their CFO couldn't find.

But the volumes of data to be processed are growing exponentially, and it is becoming harder for companies to keep their fingers on the pulse of everything happening in the business. 

This challenges a growing requirement for financial executives to become a strategic partner to the CEO and a catalyst for better business. Deloitte reported last year that today's CFOs need to add long-term value to the organisation and help shape corporate strategy.

At the same time, risk is growing and the need to control costs is a top concern. Traditional ways of doing things aren't enough anymore. Financial professionals today need smarter tools to empower them to work more efficiently and strategically.

Most organisations are still working in traditional ways, assuming analytics is the domain of internal and external auditors, where it is only used a few times a year. Times have changed and this model needs to be redefined.

Accountants, CFOs and financial managers should be factoring into their goals that of becoming data scientists, using advanced analytics to save time, underpin governance and improve business outcomes all the time.

Proper use of analytics slashes costs and improves profitability.

Unfortunately, this concept has been slow to gain traction, partly because stakeholders aren't pushing it as an expectation, and possibly because many organisations, auditors and CFOs themselves don't fully understand the benefits. There may also be misconceptions around the cost and resources needed to bring advanced analytics into the financial executive's domain.

Simple, smart risk mitigation

The technology allowing financial execs to leverage data analytics has advanced dramatically, becoming user-friendly and cost-effective, with an exponential return on investment.

Using data analytics tools helps them to reduce risk so that they are more enabled to find anomalies, outliers and fraud. This frees up time so that they are empowered to transform the way they work and are better enabled to help run the business more effectively.

Accountants have always been analysts and data scientists. However, modern software is an evolution allowing them to interrogate vast volumes of data across the business − all the time. While younger accountants will enter the workplace expecting technology such as this to help them be more efficient, the older accountants and financial professionals also need to change the way they work to become more valuable to the business.

The technology exists now to empower finance teams more than ever before, making them more thorough and proactive, reducing fraud and losses, and ensuring there are no surprises at internal and external audit. In organisations where risk is high, finance execs can schedule and run tests daily, or build in real-time checks to send alerts before a payment is released.

Everyone in the value chain should be using the technology to be more effective and provide better assurances. This empowers auditors too. Given the risk and size of datasets they are now auditing, they need new approaches, too.

If senior financial managers or CFOs were running analytics monthly − or even more frequently − as a standard part of processes, auditors could validate the reports annually as a test of controls. This reduces audit risk and the audit work.

Better business

At C-suite level in the finance field, the first time you run the datasets and observe the patterns exposed in a user-friendly way, that's it − the results cannot be unseen after that. This dispels long-held beliefs and assumptions about the business.

Suddenly, the business can be better understood with all its hidden patterns, risks and opportunities to do things in new ways.

Proper use of analytics slashes costs and improves profitability. Financial professionals armed with the appropriate analytics tools can detect interesting discounting practices, misallocation of payments and fraud.

By building analytics into the payroll system, they can mitigate the risk of fraud and ghost employees. They can also expose waste in systems, such as not optimising ordering to maximise payment periods.

Often, we think of data analysis in financial terms, but data also allows us to examine user patterns, document terms, e-mails and communications. We often start in the land of numbers, but all data − financial and non-financial − could be valuable for the senior finance exec.

Non-financial data could also help to deliver a deeper understanding of the business risk, performance, profitability and sustainability. It's up to the imagination as to how wide this could go. For example, one might support revenue forecasts by analysing complaints and collections e-mails to understand how happy customers are.

Many organisations have rich data sources, but they don't monetise and use them effectively. You can't know what you don't know, but CFOs, and senior financial managers who have embraced analytics, have gained a world of unexpected insights into the business.

Once they can view and interrogate data from across the enterprise, these execs report that they don't know how they ever managed without it. They become more strategic and valuable to the enterprise, identifying opportunities to reduce losses and boost revenue.

In time, those who understand their data best and act on the insights, will win.