Compounded with concerns over rising interest rates, market volatility, and inflation, companies are starting to curb growth plans. While it may make sense to press pause on large-scale financial moves such as an IPO or acquisition, that doesn’t mean growth has to halt entirely.
Tony Tiscornia, CFO of business spend management company Coupa Software, discusses the importance of scaling financial processes to support a company’s growth ambitions and improving risk management and controls.
CFO, Coupa Software
This interview has been edited for brevity and clarity.
TONY TISCORNIA: Many CFOs think the only answer is to pull back. Yet, they can often weather a recession without resorting to broad cutbacks or mass layoffs. CFOs can use this time to invest back in their business. Whether it’s R&D, researching M&A opportunities, or honing internal processes, they can invest in projects that will help them emerge from the period stronger and poised for future growth while also increasing their competitive advantage. You can make thoughtful, smart, measured investments in a more optimal way internally, especially if you have your arms around capital allocation and spending and have data to help guide you.
You can make thoughtful, smart, measured investments in a more optimal way internally, especially if you have your arms around capital allocation and spending and have data to help guide you.
TISCORNIA: We often see manual processes and data that are siloed. That can hold companies back from performing optimally. Leaders need technology to scale financial processes, provide a clearer picture of the best investments, and manage liquidity. Yet, when we conducted an IPO readiness survey recently, we learned only 48% of financial leaders can access real-time spend and financial data. Unified platforms that specialize in integrating all the data from different financial systems can make an immediate impact on those companies.
TISCORNIA: When a company is younger and growing, leaders are often focused first on the top line, so they funnel their investments and resources into top-line-driving initiatives and systems — sales, marketing, branding, and lead generation. Later, when they begin to consider if they’re ready for an IPO, they look at the operational aspects of their back office. Then they realize they’re behind because they’ve been focused on the top line for so long. The truth is, a public company has to have all aspects of financial operations dialed in, from forecasting, budgeting, and accounts payable automation to employee- and payroll-related needs, supplier spend, and accounting.
TISCORNIA: Look first at where the organization has a lot of manual processes. They’re the low-hanging fruit, especially in areas that are key to financial performance. Most companies have an enterprise resource planning (ERP) and customer relationship management solution in place. But the two other areas that really impact financial performance are human capital management (HCM) and supplier pieces. We typically see companies with an HCM solution using emails and spreadsheets and typing data into their ERP system for things like purchase orders, accounts payable, invoice processing, expense reports, and payments. Manual processes and data entry are time-consuming.
Look first at where you have a lot of manual processes. They’re the low-hanging fruit, especially in areas that are key to the company’s financial performance.
TISCORNIA: I think the biggest obstacle is a lack of knowledge about how quickly an organization can get a return on the right digital transformation investments. Spending money to make money in an environment like this is kind of counterintuitive. But when you use financial statements to see how much money companies are leaving on the table, they become much more interested. The first thing I would say is to prioritize. Which areas are you pretty sure deep down are bleeding costs, cash, and expenses that you need to fix? Then educate yourself on that.
TISCORNIA: You need leaders on your team who understand scale and know there’s a balance between adding more heads and more technology. You may also want to have a systems person if you’re doing a lot of transformative work that has a financial tilt — someone who has a background in accounting and finance but whose career has gone down the path of being systems scale-oriented. In other cases, though, you can use consultants or maybe suppliers themselves.
Sandra Beckwith is a freelance business writer.