In the past, the chief financial officer’s role has been somewhat relegated to the financial aspects of a business. Now, CFOs face a challenging array of responsibilities that include payments modernization, fraud mitigation, and the selection and implementation of technological solutions.

In a recent PaymentsJournal podcast, Jeff Feuerstein, SVP of Paymode-X Product Management and Market Strategy at Bottomline, and James Wester, Co-Head of Payments at Javelin Strategy & Research, discussed the obstacles CFOs face and the role technology plays in the finance office.

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The CFO’s Agenda

Though CFOs have a lot on their plate, three key themes highlight their agendas. The first is payments modernization, which is an integral part of a company’s digital transformation. This could include the migration from paper checks to electronic payments. It could also involve the transfer from paper invoices or documents to data that can be leveraged across the enterprise.

“The next big theme is fraud and risk mitigation,” Feuerstein said. “Recent research shows business email compromise has grown over 70% year over year. Fraud is riddling organizations in such a way that CFOs are concerned about when, not if, their company will get hit by an attack. How do we protect ourselves and our businesses?”

Because of the tough interest rate environment, the last priority on CFOs’ agendas is their organization’s cash position. Understanding their working capital enables leadership to fully grasp where they stand at all times and make more informed business decisions. On top of those three themes, CFOs must keep their organizations up to speed with the latest technology, which hasn’t traditionally been a part of the role.

“What’s surprising about some of these discussions is they actually involve CFOs,” Wester said. “In the past, CFOs were tangentially involved with discussions about technology, especially payments, but not in a way where they were decision-makers. CFOs are now coming into these discussions fully informed on what’s going on in the space.”

Companies were often divided between the business side and the tech side, but that division has eroded over the past few years.

“This side spoke business, this side spoke tech, and someone had to translate,” Wester said. “Though there are still times when that divide exists, now everyone in the CFO’s office has a strong understanding of what’s going on in the technology side.”

Obstacles Facing Finance Offices

Another change to the CFO’s role is that, 10 to 15 years ago, the finance office was very focused on the enterprise resource planning as the general ledger.

“There were not as many of what I’d call ‘point solutions,’” Feuerstein said. “Today, you’ve got several different point solutions, whether it be AP automation, AR automation, cash management products, cross-border solutions. CFOs are leveraging all these solutions and tying them together in a way that’s interoperable across the organization. It doesn’t just improve the efficiency of the CFO’s office; it brings revenue to the bottom line.”

One of the main responsibilities of today’s CFO is to understand all the solutions that are offered and how they can be leveraged. Given the number and complexity of those solutions, it can make for a difficult task. But the different perspective can also lead to new insights and improved partner relationships.

“They’re much better equipped to engage with partners,” Wester said. “They know what they should be able to get, and they’re judging those partners accordingly. It holds the partners’ feet to the fire somewhat, because they now have an entirely new constituency they have to serve.”

Though that represents a challenge for partners, it’s an opportunity as well.

“The bar has been raised for partners, and the competitive landscape for them is tougher than ever,” Feuerstein said. “But it also creates opportunities for partners to work with customers who are well-informed and fully understand their solutions. If partners are looking to elevate their game, those are the types of customers they should look for, because it elevates both companies.”

Leveraging Tech and AI

Finance teams are no longer simply cost centers for organizations. Payment strategies delivered by the CFO’s office are driving not just product innovation but also accounts payable automation and revenue back into the organization in the form of rebates.

Payment networks that can improve automation and generate rebates are a vital part of the transition away from the cost center model. Leveraging technology is the key, which could be through a virtual card, a premium ACH product, or a financing solution. The most powerful technology for finance offices, however, is likely to be artificial intelligence.

“In regard to AI, there will be both sustained innovation and disruptive innovation,” Feuerstein said. “The sustained innovations are those marginal gains that are improving existing processes, like answering questions faster at the customer support center. Disruptive innovation will be in areas like supplier onboarding or contract management that will be completely reinvented because of new language models.”

AI can also be a critical tool in the fight against fraud. AI can mitigate fraud in several ways, including:

• 
  
• Identifying anomalies in customer spending habits
  
  
• Cross-referencing account behaviors against fraudulent characteristics
  
  
• Flagging fake account creation
  
  
• Analyzing customer communications for suspicious activity
  
  
• Neutralizing credentials-based attacks by malicious bots
  

Though companies should use technology to the fullest, they must also understand its limitations. For example, as the tech develops AI is likely to flag false positives.

“AI is clearly the topic that everyone wants to talk about, but we know that AI isn’t a magic wand,” Wester said. “It’s not going to fix substantial problems that exist within an organization. And AI is being offered and implemented everywhere. If everybody is using the same tools, then the gains will be the same across all organizations. The real question is whether your business is using the tool in ways nobody else is.”

Though companies must get creative with AI, they shouldn’t wait for inspiration to strike. There will be a first-mover advantage for those companies that adopt AI early and find ways to use it in their businesses.

Final Thoughts

A recent U.S. Bank survey found that 45% of CFOs say they’re just starting their journey toward digital transformation. For finance offices, the landscape is far more complicated than it’s been since the financial crisis. Interest rates are still rising, and cash flows are king.

“Look for the areas where you can drive the most amount of change in your organization,” Feuerstein said. “It could be working capital, security and risk mitigation, or automating those paper-based processes that are sticking in your organization. In the U.S., there’s going to be $32 trillion in spend flowing around, so there’s tons of white space in this market.”

“We’ve been talking about digital transformation for a long time, but we’re still really at the beginning,” Wester said. “The most important message to decision-makers is that this is the time to do it. Just because there’s a lot of white space doesn’t mean other companies aren’t doing the same things. It’s an important time to evaluate your payment strategy and digital transformation plan and make those moves.”

Discover other trends and topics being discussed in the CFO’s office in the Bottomline 2024 Business Payments Outlook. Get insights from Bottomline subject matter experts, along with industry partners and influencers.

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