What Does The Finance Team Of The Future Look Like?

For Emburse CFO Katherine Edenbach, it all flows from digital transformation.

Emburse CFO Katherine Edenbach

The pandemic has certainly propelled digital transformation—whether companies were ready for it or not.

But Katherine Edenbach, CFO of Emburse, a San Francisco-based company that provides expense management and AP automation solutions, argues that companies, having accelerated their digital efforts, are better prepared for the next big disruption. We talked with Edenbach about how Covid impacted the CFO’s work and what that means for the future of finance.

What impact has the pandemic had on digital transformation?

Covid-19 made automation of certain finance tasks a necessity. Finance departments that had so far survived with manual, paper-based processes found themselves unable to function effectively when everyone was remote. Payments were delayed, invoices lost, and CFOs found themselves forced into the office to do check runs. Moreover, remote work for teams reliant on paper-based processes created greater potential for manual data errors, diluted the purity of the audit trail, and increased turnaround times.

There were material impacts too: In 30 percent of organizations, Covid delayed the processing of invoices—this jumped to 40 percent in organizations with 500-plus employees. In 12 percent of organizations, Covid delayed processing and reimbursing employee expenses. Waiting weeks to be reimbursed for a large expense like work from home furniture and IT equipment would be a serious financial burden for employees at an already-stressful time.

If there’s a silver lining from Covid, it’s that it forced companies to put proper systems in place and, as a result, gave finance professionals valuable time to focus on what matters most. Rather than having to personally “police” expenses and enforce policies, they can spend their time on the strategic planning and management tasks needed to propel their business forward.

Some are saying that pandemics like this may become more common. How can CFOs best prepare their teams for the next big event?

Whether it’s a pandemic or another event, it’s inevitable there will be business disruptions in the future. In these situations, cash flow is king. Digitization can help ensure cash flow remains strong even in times of crisis. Physical checks slow down payments, paper invoices take significantly longer to process. On the flip side, virtualized finance operations not only streamline these processes and ensure you’re not dependent on a specific person being in a certain physical location at a particular moment, but also create significant cost-savings.

Beyond this, improved cash visibility can deliver a range of benefits to business and finance leaders. For cash-constrained organizations, greater cash visibility gives them the ability to time payments to avoid cash flow shortfalls. For cash-rich organizations, the combination of improved visibility and the ability to process invoices more quickly allows them to take advantage of early-payment discounts. In order to access these benefits, CFOs will want to digitize all finance processes, including accounting, AP, treasury, AR and more.

The first step CFOs can take is to ensure they have strong internal processes and workflows. Once you have proper workflows you can automate and digitize them. Next, put in place an analytics strategy so you can track what invoices are out there and when they will become due, to optimize when to pay them.

Does digital transformation mean fewer career opportunities for finance professionals?

No—time and time again, across industries, it’s been shown that digitization and automation create career opportunities. But those roles are more skilled, more rewarding and more effective. It’s about giving finance teams superpowers.

The changing nature of finance creates new opportunities for aspiring finance leaders to acquire new skills and make their mark. Opportunities might include championing digital transformation initiatives, or acquiring data analytics skills. Plus, when repetitive processes are automated, finance professionals can move away from policing and enforcing policies, to spend more time delivering quality insights and implementing new initiatives that drive financial performance.

What does the finance team of the future look like?

There will be more shared service centers, versus regional or department-specific teams, as all data can be accessed in a single cloud solution. We’ll also see the convergence of AP, expenses and unmanaged spend, as well as payment methods such as virtual cards. Once these functions are all digitized they can be integrated to create one strategic spend management function, with seamless processes, reduced manual reconciliation and more actionable insights. Finance teams will likely start to reflect this shift, with fewer silos.

Finance teams will also have more data analysts, modeling what-if scenarios, identifying issues proactively and delivering insights to the business. For example, looking at expense spend can reveal patterns of policy non-compliance and inform a more effective policy, and analyzing invoice approval could identify bottlenecks that prevent companies from benefiting from early payment discounts.

ESG will also play a big role in shaping the finance team of the future, as it becomes more top-of-mind with shareholders. Again, analytics are part of that. With better analytics, CFOs will be able to see the social and environmental impact of their spending and make strategic decisions accordingly. For example, carbon footprint will become a metric against which companies are measured—one that also has financial implications as carbon costs increase.