Finance expert unpacks how CFOs can use digital finance to improve their business performance.
With the world moving to digital, many companies have chosen to digitalise their offering to cement their relevance in the modern market. Companies have also been forced to digitalise to satisfy their customers’ needs and expectations to determine their prospects of success.
How to improve business performance
During a Finance Indaba Network webinar, in partnership with Zoho Expense, Unni S, head of business development and strategic partnerships, said that digital technology can improve the work of finance teams in a time- and cost-effective way.
“Today we have technology that can glean insights from multiple departments within an organisation and even outside to provide you with forward looking metrics in real-time, and help you with leading indicators that tells you how your business is going to perform in the future. This fundamentally arms the finance team with information, helping them to be a driver of any kind of business change, and in turn saves the company money,” he said.
Unni highlighted that the adoption of a cloud-based technology like Zoho, Salesforce and many more can help a department reduce its cost expenditure by 30 percent. He explained that the use of digitalisation cut the costs spent on paper and other office equipment that require extra cost.
“The very adoption of a cloud-based technology itself can represent a potential cost saving of over 30 percent on the on-premises equivalents. At Zoho, we have realised around 75 percent reduction in our IT spend,” he added.
Unni mentioned that digitalisation comes with privacy challenges, however stressed that CFOs must have a system that protects the information of the company and its clients.
“Adopting a cloud-based system helps you to minimise the maintenance costs and ensures that you can protect your information. Cloud-based systems can use an Application Programming Interface to validate all of the rules. It can also ensure that you always are compliant and address your privacy challenges,” he said.
Traditional method vs. digital method
Many company departments still rely on the traditional way of doing their day-to-day accounting processes, however Unni argued that departments that use digital platforms benefit more than those that use traditional methods to do their financials.
“In the traditional way of finance, everything was driven by plans and milestones, and that is mainly to control and manage the risks. However, in the digital world, outcomes take precedence over the plans and milestones, and funds should be channelised to ensure that the business is able to experiment, and the outcomes are tested,” he said.
He mentioned that because traditional methods do not allow for flexibility, they are lacking in the adaptation of changing market needs.
“The traditional method is generally subjected to great uncertainty and does not provide the flexibility to quickly adapt to changes like changing market needs – as the digital method does. The adaptation of change is required for companies that look to do small-scale experiments, as it helps them to respond to market needs. This will help gain more cost-effective results, which will help you gain more customers.”
He said for companies to start digitalisation, they need to follow these steps:
- Eliminate paper
- Move all your information to a cloud or online system
- Identify the process that needs to be transformed
- Identify processes that need analytics
- Distinguish what challenges your company, employees, and vendors face
- Discuss with CFOs the costs and challenges that the company may face
- Get insight from your finance department
Why CFOs are important in planning
According to Unni, for financial departments to have a smooth transition to a digital platform, they must establish a clear financial initiative that will create revenue. He added that companies must ensure that their CFOs are included in the establishment of plans to move to digital, as they can provide insight on how to create revenue.
He highlighted that to determine success of a business, the finance team must be allowed to gain operational control over various aspects of the business.
“If companies can allow their finance team to own the analytics path to gain operational control over various aspects of business, they can get the desired financial success,” he concluded.
