Our Blog
How Automation Will Solve CFO’s No.1 Challenge in 2020
Date : 2020-02-27
In a Brainyard’s inaugural CFO survey, “State of the CFO Role“, the CFO’s no.1 challenge is “juggling too many responsibilities”. 186 CFO’s admitted that they are engaged with a spreadsheet for about 2.25 hours on average a day. Spreadsheet is time-consuming and still many CFOs had no choice most of the time.
Adobe Inc’s CFO Mr. Mark Garrett says “He is working on cutting Excel out of this process” He also adds that, “I don’t want financial planning people spending their time importing and exporting and manipulating data, I want them to focus on what is the data telling us”.
As like Mr. Mark Garrett, most of the CFO’s are aiming to adapt the change to improve accuracy, enhance productivity, unlock the power of data in real-time.
Several CFO’s who couldn’t completely move away from spreadsheets but working onto reduce the dependency on excel like Mr. Maurisse Johnson, CFO of Solutions Journalism Network. He stated, “I’m never going to move completely away from Excel”. “My dependence on Excel has lessened in terms of day-to-day manipulation, but there are instances where two disparate data sources need to be combined.”
Even many CFO’s like Christian Edoria, Director of Finance & Operations for Art in Action still love spreadsheets though willing to adapt transformation to save their time and invest it productively where real-time data can be leveraged to predict and forecast future scenarios more accurately. She says, “I love Excel to death, but I want to be flexible and adaptable to a changing environment – including anything that gets me away from the lines of a spreadsheet”. She also centralizing all her organizations data in NetSuite, where her team can perform allocation tracking real-time, which helped to understand all the costs that go into each art box that’s ship out.
Paul Jacobson, CFO of Delta Airlines says, “we’ve paid down over $10 billion of debt, which has reduced our interest expense by almost a billion dollars a year.”
To aim for growth, a CFO must balance the expenses to reach profitability. You need a more powerful tool that will give you more insights on how you save on costs and turn them into revenue.
Though CFO’s are best in managing cash flow and bookkeeping using spreadsheets like Christian Edoria, not everyone in your team. You know what? J.P. Morgan Chase lost over $2 billion due to a spreadsheet error, which was compounded because a single miscalculation was fed into other calculations due to staff’s embarrassing typo error according to Telegraph.
There are high chances of risks associated with tax compliance and regulatory requirements. What if the same error leads to penalties? A tax accountant omitted a minus sign when transcribed the net capital loss (of $1.3 billion) from the fund’s financial record to a spreadsheet. This turned the loss into a gain, causing the dividend estimate to be off by $2.6 billion. This caused Fidelity’s well-known Magellan fund forced to cancel a $4.32/share year-end dividend distribution.
A minor mistake in spreadsheets will ruin the CFO’s cash flow management efforts and end up losing clients, investor capital, shares. 44% of enterprise-sized company grapple with spreadsheet inconsistencies. Companies use only 50% of data available for decision making. Most cited reasons are
- Lack of Data
- Data Quality
Justin Doucette, CFO of restaurant management group were using excel spreadsheets and written queries to get reports. Justin started saving 10 hours a month through scalable automation on QuickBooks using Bison Analytics. The financial data insights allowed Justin to scale more with operational efficiencies. Now, the organization has expanded from 15 to 27 in numbers.
Similarly, Nadim Allidina, CFO of Generis Global Partners Corp use Quickbooks for accounting, ADP for payroll, and Office 365 for documents and collaboration. About a year ago, he adopted Salesforce to track revenue, and he also recently adopted Invoiced to automate his accounts receivable function. Now he’s looking to bring in an enterprise resource planning (ERP) system to connect everything into one integrated system. Allidina said, use of these cloud-based technologies is an imperative for growth, because he relies on them to achieve operational scale.
He also said companies failed to align operations with automation may face risks like couldn’t thrive the competitive challenges, labor costs, failing to meet customers & stakeholders expectations, Under-performance and slow execution
CFO’s must lead the automation efforts, especially in the finance function because you have to [consider the impact on] down-streaming users and how that will ultimately flow through and impact the P&L process, and all the internal controls surrounding finance.
To balance other challenges like managing cash flow, faster growth, generating timely reports and finding & retaining quality workforce, CFO may outsource certain functions to balance and keep the operations in right direction. Setting up automated invoicing, outsourcing payment collections & contract negotiation will enable CFO’s to focus on core priorities and relieve CFO’s from juggling into too many responsibilities. Every CFO must have to strike through a balance to keep on track. Automating your finance team and early adoption of digital technologies will help you stay on track.
CFO Toolbox: 60+ CFO’s Favorite F&A Tools to Automate, Analyze & Forecast
Date : 2020-02-29
- Quickbooks
- Xero
- Netsuite
- Intacct
- Freshbooks
- InDinero
- Microsoft Dynamics
- Zoho
- Sage 50(Peachtree)
- Stripe
- Quickbooks
- Bill..com
- Paypal
- Authorize.net
- Netsuite
- Square
- Braintree
- Go Cardless
- Chargebee
- Gusto
- ADP
- Quickbooks
- TriNet
- Paychex
- Ceridian
- Insperity
- Sequoia
- BambooHR
- BrightPay
- Gusto
- Zenefits
- ADP
- BambooHR
- TriNet
- Personio
- Greenhouse
- Justworks
- Insperity
- Capshare
- Excel
- Carta/eShares
- Captable.io
- Certent
- Solium Shareworks
- Expensify
- Excel
- Quickbooks
- Concur
- Netsuite
- Certify
- Quickbooks Online
- Bill.com
- Xero
- Silicon Valley Bank
- Netsuite
- Excel
- Wells Fargo
- Square One
- First Republic
- Microsoft Dynamics
- Salesforce
- Domo
- Tableau
- Microsoft Power BI
- Grow
- Looker
- Evernote
- Google Docs
- Hubspot
- Intacct
- Excel
- Google Sheets
- Quickbooks
- Adaptive Insights
- Microsoft Dynamics
- Intacct
- Netsuite
- Chargify
- Recurly
- ChargeBee
33 Financial KPI Report Every CFO Should Keep Track to Predict Risks & Forecast Budgeting
Date : 2020-05-15
CFO’s duties in today’s volatile market conditions are critical. Innovative financial management solutions enable CFO’s to make strategic financial decisions smarter by analyzing the real-time KPI’s via built-in dashboards. The CFO’s key responsibilities as such budgeting & forecasting, economic strategy, treasury & controllership together form a strong corporate financial strategy. Monitoring key performance indicators in real-time facilitates CFO’s to predict risks like economic downturns, pandemics and forecast capital budgeting required to meet the organizational goals for every financial year.
Many organizations’ CFO’s could not invest in affording costly technologies, systems, and tools for budgeting & forecasting, monitoring financial transactions in real-time to take control over cash flow and capital management.
Our financial experts of Park Intelli Solutions collectively share the 32 financial KPI’s every CFO must keep track for accurate predictions and strategic corporate budgeting.
Every CFO Must Measure The 33 Crucial Financial KPI’s to Empower Corporate Strategic Decisions
Operating cash flow is the revenue generated by any business after deducting the operational costs. OCF is an important financial KPI used to predict the cash flow required for investments and expenses of your business operations. Compare the operating cash flow against total capital spent to evaluate if the cash flow is positive from your business functions.
Current Ratio is a financial KPI that helps to measure the company’s short-term liquidity. It defines an organization’s ability to fulfil all company’s financial obligations as such vendor payments, account receivables and current liabilities in one year. It is an investor indicator that is used to assess a healthy operating cycle of any business.
Quick ratio or acid test is the precise measure of a company’s financial health to evaluate organizations short-term assets to cover its interim liabilities excluding the inventories & prepaid expenses.
The burn rate is a financial KPI used to denote the investors and CFO’s whether the company’s operating costs are sustainable in the long run. It is a measure of cash utilization rate on daily, weekly, monthly, quarterly & annually basis from its cash reserves to generate operating profit for the respective period. It also indicates the average time period required to generate the cash reserves that are projected to spend with operating profit in a due time.
The financial KPI used to measure profitability is called Net Profit Margin. It indicates the percentage of revenue generated as profit through the business, after deducting all operating costs incurred from the overall revenue generated by the company.
It is one of the critical KPI’s that indicates financial health of the company is Gross profit Margin. It is a measure percentage of revenue generated against the cost of the goods sold after deducting from net sales. The higher the gross profit percentage indicates the capability of the organization to manage operating costs and/or reinvest for innovation & growth.
It is a financial KPI used to measure a company’s liquid assets such as cash reserves, short-term investments & account receivables to meet its short-term liabilities. It is a measure of a company’s ability to make cash quickly for interim solvency.
It is one of the critical financial KPI that measure the company’s outstanding cash reserves liable to receive as a result of services/products sold at credit for the client company as letter of credit or in the form of invoices with average due period of time to make payment. It is a measure of a company’s short-term liquidity factor to analyse its financial health. A high current account receivable indicates risks of loss for the company due to its inability to collect its receivables from long-term debtors.
A financial KPI measures the overall liabilities of the business for a short-term to all its creditors such as vendors, banks and financial organizations or provisional investors. A high current account payable indicates the risks associated with the company to meet its interim liabilities with its available short-term assets.
It is financial KPI that measures the rate at which the company is paying its suppliers and debtors. A slow rate of account payable turnover indicates the company’s capability to repay debtors or decreased credit ratings, while a fast rate of account payable turnover indicates how quickly the company depletes its cash reserves for vendor payments. Manage your accounts payable turnover ratio with more control to keep your business credit score on the rise.
Cost Containment Strategy for CFO’s to Flatten the Curve amid Covid19 Downside Impact
Date : 2020-05-21
CFO’s are stressing and stretching because of Covid-19. As the pandemic started a few months ago, most of the small businesses are suffering due to the cash crunch. Large organizations started to take control of cash reserves to prevent liquidity risks due to macroeconomic uncertainty.
According to a survey, small businesses have cash reserves of up to 27 to 47 days. While large organization cash reserves are enough to manage expenses until 6 months. It’s critical to keep up positive cash flow during the lockdown to manage solvency & sales snags. Forward-thinking CFO’s curtail non-essential expenses to stay viable post-pandemic and prevent downside risks for the business.
Check out a few strategic cost-cutting measures to cut superfluous expenses amid Covid19 as advised by chief financial officers in a survey.
Bill Deferment
Reach out to bank managers, credit unions, credit cards or other lenders to check if you qualify for forbearance during the crisis. Check if the EMI payments shall be suspended for a while or until further recovery without any deferred interest rates or fewer interests.
Delay payment to suppliers, landlords, and other utilities
Talk to landlords for reducing payments such as rents, utility payments, and suppliers’ credits or negotiate temporary relief to save on costs. Pay only for critical small-scale suppliers with good ratings to prevent conflicts on approval.
Freeze travel & entertainment expenses
Minimizing the travel for the most critical function eliminates the risk for employees and travel-related expenses during a pandemic. So, it is very crucial to cut costs associated with travel & entertainment and explore opportunities to remotely set up meetings, conferences to save on overheads.
Cancel leadership events/offsite
Set Up an emergency task force to develop an event contingency plan to discuss the implication of canceling or postponing all leadership events/off-sites. Reschedule the event based on multiple scenarios or engage through virtual events with a health and safety plan.
Delay CAPEX investments
Focus on canceling or delaying the capital improvement projects or renegotiate contracting terms on payment reduction or deferments for unused leased equipment, fleet vehicles, office spaces, SAAS platforms, software applications that are redundant and expensive at the current situation. Defer on-premise technology spend.
Reduce consultant/contracting spend
Talk to your consultants and contractors to pause services or close accounts temporarily. Explore free consulting services from SCORE or small business development centers, if required. Renegotiate the essential contracting/consulting services pricing to your favor as much as possible.