Three Industry Innovation Sectors CFOs Should Know About

Krish Subramanian is the co-founder and CEO of Chargebee, a subscription billing and revenue management solution for scaling businesses. 

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The impacts of Covid-19 forced many CFOs to relegate more fundamental transformation imperatives to the background. But before the pandemic, many CFOs had been considering broader and longer-term efforts. Much of this thinking falls into two areas: playing a more strategic role within organizations and capitalizing on increased efficiency and impact via digitization.

In 2022 and beyond, these needs are returning to the foreground, but CFOs don’t have the luxury of just one transformation agenda. To excel in their roles and increase their organizational impact, CFOs should consider taking on three industry innovations at the same time: automation, analytics and agility, or an “AAA+ transformation agenda.” Managing three priorities simultaneously can be challenging, but CFOs who do so are set up to more successfully deliver on a long-delayed promise of AAA+ strategic impact to their entire company.

SaaS CFOs At The Vanguard

CFOs of software as a service (SaaS) companies often lead in all three elements of an AAA+ transformation. As with any company, SaaS CFOs must cover core activities such as bookkeeping, budgets, resource planning and keeping track of regulatory requirements. In a subscription-first world, SaaS finance leaders must also contend with multiple pricing models, the accounting and revenue recognition complexities of subscriptions, and recurring billing. 

At the same time, SaaS CFOs have a hands-on role in the customer life cycle because every recurring payment, subscription renewal and billing cycle represents another customer touchpoint. Customer behavior provides direct signals of loyalty and engagement. Subscription payments represent the front lines of expanding, upselling and cross-selling opportunities, and organic growth via referrals.

Finally, SaaS CFOs often find themselves in the position of absorbing “hypergrowth.” Gartner now predicts double-digit spending on all enterprise software — including infrastructure software and application software like SaaS in 2022. When SaaS offerings catch fire and sign-ups surge, yesterday’s workarounds can become today’s bottlenecks almost overnight. Customizations or separate spreadsheets don’t always scale when business conditions change suddenly.

Many of these lessons apply to CFOs in other companies as well.

Automation And Embedded Intelligence

Bookkeepers, accountants and auditors land in the top five in the World Economic Forum’s list of job roles with decreasing demand (“The Future of Jobs Report.” October 2020). Automation is a primary factor in that decrease. In theory, this trend could suggest CFOs are leading a disappearing department, but in reality, automation provides an opportunity for AAA+ transformation.

First, automation allows finance organizations to offload repetitive tasks that can lead to low job satisfaction and higher turnover. Tools such as machine learning and robotic process automation can help liberate staff from tasks by augmenting their skills. Second, it frees up time for higher-value activities, including analytics that helps drive revenue growth. Third, it reduces error rates and risks by taking manual data entry out of the equation.

I’m most familiar with billing automation due to my work, and it provides an excellent case-in-point. ​​Automated billing helps accounts receivable manage cash flow, reconcile payments, streamline collections, track revenue and generate reports, even as a business sees rapid growth. It also extends to meeting compliance requirements, automating tax management, payment processing and retries and reconciliations. Finally, it translates manual workarounds into predictable business rules for add-ons, coupons, different currencies and multiple billing frequencies.

Takeaway: Steer the automation journey by conducting in-depth activity analysis to understand where staff spends their time. That work determines where automation priorities should lie.

More Data, More Analytics

Customer payments provide valuable data about the business. Billing and payment data can help companies better understand which customers and strategies are the most profitable. Analytics provide an AAA+ transformation opportunity to unlock the value of this rich data. It is often a question of surfacing unused data from financial systems, but according to more than 150 banking and payments executives who responded to a particular question in Capgemini’s “World Payments Report 2021,” only 40% report using internal data to generate insights.

For example, linking customer acquisition costs to lifetime value can help companies identify where to focus their marketing spend, identifying where and how to source pockets of customers with the longest and highest likelihood to purchase. In addition, the ability to experiment with pricing strategies without disrupting accounting systems helps optimize discounts and other promotional offers.

Takeaway: Get creative about ways to use it to drive revenue as well as track it using the data in finance systems. Finance analytics can help build a holistic understanding of customers that spans sales, marketing and customer service.

Agility In A Complex World

Whether it’s called ‘agility,’ ‘adaptability’ or something else, CFO success increasingly comes down to the ability to respond and adjust quickly to changing circumstances. But CFOs have to go beyond acknowledging that business is getting faster and more complex to looking deep within their organizations to find systems and processes that will not easily flex to circumstances.

“What-if” scenarios offer a useful tool for agility planning. Typical scenarios include spikes in billing and payment volume, adjusting to new pricing strategies or business models (such as subscription-based services), issuing digital invoices and accepting new forms of digital payment, expanding into new geographies, and responding to cyber incidents.

Takeaway: The ultimate question is what can CFOs do today to future-proof the finance function for tomorrow.

New Tools, New Roles, New Possibilities

The skill sets of CFOs are changing. Mastery of accounting and finance principles remains essential, but the CFO role now includes technology planning, partnering with internal stakeholders and external vendors of platforms and services, data science, and more. It also means sourcing new talent to help make AAA+ transformation happen and create real value. 

But as a result, it’s an exciting time to work in finance. Finance professionals have a wider range of career paths than ever before. AAA+ CFOs can act on new possibilities and achieve impact across their entire company, changing the composition of finance departments and bringing an entirely new level of leadership to the table.


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