Futureproofing Finance Teams

Now that finance functions are tech-enabled and the staff no longer crunches numbers, needed skills include financial analysis and interpretation.

When Paul Rouse joined what is today known as Thryv Holdings in 2014, the CFO swapped out the entire finance organization for a mix of people with upgraded analytical skill sets in addition to traditional certifications like a CPA, CFA and CMA. The new team even included a few data scientists. Everyone had the aptitude to glean insights from the Software-as-a-Service (SaaS) provider’s technology systems.

“We were sprouting all this information useful for decision-making purposes, but the previous finance organization didn’t know what to do with it or what it meant; they were focused instead on transactions and processes,” said Rouse. “I wanted a team of thinkers, people who made use of the data our systems produced.”

Thryv Holdings CFO Paul Rouse

These “thinkers” were needed to achieve the company’s strategic growth plans, which entailed a new business model. When Rouse joined Thryv, it was a conglomerate of fragmented businesses known as Dex Media. Among them was the regional Yellow Pages, a printed telephone directory of businesses organized by category to help consumers find a local insurance agency, plumber or repairperson.

The holding company still publishes the Yellow Pages and hosts a popular online version that competes against search engines, but it was all those millions of small businesses inside the digital pages that ignited the idea to create Thryv, an all-in-one subscription-based business management platform for companies with two to 50 employees.

To turn the idea into a revenue-generating opportunity, Rouse’s motley crew of thinkers were tasked to dig into the digital Yellow Pages to unearth analytic insights into the software and services small businesses might need but weren’t getting. “Our role in finance, aside from the traditional oversight and governance of financial activities and capital decisions, is to provide useful information to the rest of the company to make decisions,” said Rouse.

The information paid off in a decision to launch the Thryv subscription-based platform in 2016. Growth was gradual at first and then took off after the outset of the pandemic, when many small businesses were struggling to survive. “They desperately needed to digitize their operations to respond to evolving consumer expectations and new work paradigms,” Rouse said. “We offered a fast and inexpensive way to do it.”

The end-to-end platform provides a range of business functions helping small businesses to reach customers, stay organized, get paid faster and generate reviews. Using Thryv’s software, they can create a digital customer database, automate marketing through email and text, update business listings across the internet, generate estimates and invoices, and process payments, among other features.

With revenues growing 30 percent on a quarter-by-quarter basis over the last year and one-half, Thryv Holdings became a public company in October 2020, validating Rouse’s decision to swap out yesteryear’s process-driven finance organization for a team composed of multidisciplinary skill sets. “That’s the power of business analytics,” he said.

Too Much Data, Not Enough Talent

Welcome to today’s optimal finance team, a group of highly trained professionals with broad technology and analytical skills in addition to the alphabet soup of certifications previous generations of finance teams have long held. This potpourri of skill sets is perceived by many CFOs as a generator of business growth and competitive differentiation.

The challenge is recruiting these individuals and holding onto them. “We keep hearing from our CFO clients how important it is for them to win the current war for finance talent,” said Steve Krueger, Principal and Business Consulting Integrated Finance Lead at EY.

Part of the problem is job hopping, with 55 percent of working Americans actively looking for a new job, a survey by Bankrate in August discovered, including (one presumes) young finance professionals. Twice as many Gen Z and millennial employees are planning to switch jobs than older generations of workers. That’s a problem for CFOs, Krueger said.

“The traditional way for skills to sharpen in a finance organization is through the apprenticeship model, where it takes years to come up through the ranks,” he explained. “If companies don’t provide what today’s young certification holders want—remote work opportunities, condensed workweeks, and especially cutting-edge automated processes and analytical tools—they’re apt to move on elsewhere.”

This is a risk that sends a CFO’s heart rate racing. According to a September poll of U.S. CFOs by StrategicCFO360, their confidence levels fell 2.5 percent to the lowest level since tracking began in October 2020. Lack of skilled labor was cited as one of the chief concerns of CFOs for the future.

Other polls affirm these worries are widespread. Preliminary findings from a recent survey of more than 1,150 C-level executives and finance professionals in midsize and large organizations in the U.S. and Europe indicate that most CFOs are not confident they have the analytical, consultative, planning and due diligence skill sets in the finance function to ensure sound business decision-making. The survey was conducted in August and September by BlackLine, a developer of cloud-based services designed to automate financial close, accounts receivable and intercompany accounting processes.

BlackLine CFO Mark Partin

“The findings suggest that investing in talent is going to be one of the biggest business priorities for CFOs in the next five years,” said BlackLine CFO Mark Partin. “Many finance professionals said the volume of transactional work they’re dealing with has made it difficult to learn new skills or think about career development.”

According to the preliminary survey findings (full results will be released in early November), the most concerning gaps in current finance talent are strategic thinking, leadership and technology skills. When asked which skills were most important for their finance function in the future, CFO respondents pointed to the ability to analyze and interpret financial data, understand risk and best practices, and collaborate with other functions.

“Traditional academic qualifications don’t always prepare people for what’s required in today’s F&A (finance and accounting) roles,” said Partin. “The research strongly suggests that future finance leaders need a diverse set of skills in the organization, which actually creates opportunities for CFOs to invest in and upskill young talent to ensure they have what it takes to move the finance function forward.”

Redstone Federal Credit Union CFO Wayne Sisco

Wayne Sisco is making sure that Redstone Federal Credit Union’s finance organization has what it takes. “What used to be paper reconcilements are all automated now, changing the job description of F&A talent,” said Sisco, CFO at the credit union, which tallies more than 1,200 employees at 26 branches in Tennessee and Alabama and over $7.1 billion in assets under management. “Technology has changed the landscape of finance.”

This new landscape requires accountants at the financial institution to move beyond manual bookkeeping tasks like journal entries and account reconciliations to conceptualize how data flows from the bank tellers at the front end of the credit union to the general ledger at the back end, and then analyze what the data flow means in terms of service upsides and downsides for the credit union’s members, Sisco said. “To do this, accountants need to have critical thinking skills—the ability to analyze and interpret data to make recommendations to the CFO and other strategic leaders on where there are opportunities, where there are risks and what we should do,” he said.

He provided the example of a new technology system implemented by the credit union to amortize loan origination fees and costs. “In the past, we were unable to run these calculations due to the cost and time to manually crunch the numbers on thousands of loans,” Sisco said. “Thanks to the accounting staff’s strong technology and analytical skills, we were able to automate the process with confidence in the numbers.”

These skill sets in finance will be in even greater demand once the credit union reaches $10 billion in assets under management. “At that size, regulatory expectations change,” said Sisco, who projected the threshold will be breached in the next three years. “Before we cross that line, we have to conduct stringent capital planning and stress testing,” he explained. “In preparation, we’re planning to add more CFA-level people with data analytics skills to the team.”

Making Sense of the Numbers

A similar talent development initiative is underway in the finance organization at FM Global, a 186-year-old mutual insurance company known primarily for its worldwide commercial property insurance and loss prevention services. Much like the experiences of Thryv and Redstone, as the insurer’s finance and accounting processes were automated, the need arose to populate the organization with analytical skill sets.

FM Global CFO Kevin Ingram

“In finance, it is not uncommon to have long-tenured employees,” said Kevin Ingram, CFO at the Providence, RI-based company. “In our case, we have employees (in the finance organization) who’ve been here 30 years and longer. Their traditional skills in F&A, internal control and FP&A (financial planning and analysis) are great, but not all of them are the most technologically astute individuals.”

The finance team’s widescale use of automated finance and accounting software solutions requires people to make sense of the data spit out by these solutions. “Because data is so available now, we’re getting downloads and dumps of all our transactions,” said Ingram. “The finance team needs to be able to run analytics on the data and then explain what it all means.”

To do this required new capabilities in finance, chief among them an enhanced ability to analyze data as opposed to merely processing it. “That’s not something we needed to do to any great degree prior to automating our systems,” Ingram said.

He provided the example of the finance team’s use of AI tools like robotic process automation (RPA) to replicate the repetitive tasks they manually performed previously, such as the assessment of insurance claim filings and losses. “Just because the RPA tool eliminates the processing burdens doesn’t mean the outcomes are accurate for assessment purposes,” Ingram said.

The claim incident data, for example, may fail the robustness test—fall short of what is needed volume-wise for the RPA tool to highlight either an opportune or worrisome trend, he explained. “There’s risk in over-relying on technology to automate everything,” Ingram said. “We still need people to use their heads, tapping their analytical skills to take a hard look at the outliers—the data points that differ significantly from their trained observations.”

The CFOs predicted that five years from now, their finance organizations will rely even more on automated software to process manual transaction tasks, liberating their staff to provide more value-added strategic analyses and consultations. “I expect that in a few years we will using AI tools that integrate our internal financial data with external economic data, looking well beyond the historical data to project market directions with greater confidence,” said Rouse from Thryv.

This capability presumes the current war for talent will have eased by 2026 or earlier. “There’s absolutely a war for talent and it is an expensive war,” said Rouse, noting that he recently retained consulting firm PwC to recruit and hire additional data scientists and accountants with upgraded technology and analytical skill sets for the finance organization.

“I don’t mean to disparage my profession, but we’ve tended to be followers and order takers and not thinkers,” said Rouse, a CPA and former audit manager at Ernst & Young. “I’m not looking to hire people from the tax and audit side of accounting firms—unless they have the analytical skills that will help me drive the business forward. I need people who can tell me why we can do this or can’t do that. Those are the people I want in my finance organization.”

The rub is that, increasingly, most other CFOs want the same thing.