How to Build the Finance Function of the Future
The corporate finance function today isn’t what it was 30 years ago, or even three years ago. Companies have seen such rapid shifts since the beginning of 2020, and finance directors need to move quickly to adjust.
Enhanced expectations, distributed workforces, and economic downturn all promise to change what was once expected of finance teams.
So how should CFOs prepare? Based on where we are today, where are we going?
To find the answers, we spoke with three finance leaders from fast-scaling, modern companies. They explained their vision for the near future to more than 600 registrants in this live CFO Connect event.
About our experts
Pedro Barros is VP of Finance at Remote, which provides payroll, benefits, & compliance solutions for companies with international teams.
Michael Kuntz is CFO at Pitch, a collaborative presentation software for modern businesses.
Lili Peng is Head of Finance at Loom, an asynchronous video messaging platform used by companies worldwide.
Watch the video here or read on for the biggest highlights from the session.
The future of finance
The future is by its very nature unclear and hard to predict. But for the clearest change, our experts immediately seized on the recent shift towards remote work.
For them, this is soon to be the norm. And to keep up, you need the right tools and processes in place now.
“You need to build all the collaboration on cloud solutions or at least collaborative tools,” says Pedro. “Excel was good when everyone was in the same room, but it's not scalable.”
This may not be “normal” for most finance teams. But for scaling companies with evolving routines, software literacy is no longer optional. “The more your finance folks are tech savvy, the better they can really enable the use of these tools and deliver reporting at a much deeper level from the traditional P&L.”
For Michael, this also reflects how expectations on finance teams are changing. “The finance function is in the midst of a change towards a business partnering role. You now need to be able to interact much more with sales.”
As CFOs build out their finance functions for the future, three focus points should be top of mind: experience, tools, and communication. Let’s look at each of these in detail.
Hire for the future finance function
Our three experts all agree that finance teams will need to be remote friendly by default. So how does that impact the way you structure and build the finance function?
“Traditionally when building your team, you start bottom up,” says Pedro. “Everyone is in the office and you can share experiences and knowledge very quickly. But in a more distributed setting, you may need to start with more experienced folks. Then add lower level capacity as you build the functions, processes, and policies.
“Given how specialized some of these functions are, hiring some very experienced folks that can be independent and be autonomous and take a lot of ownership will help massively.”
The kinds of skills and experience may also be different. “You also need to be more tech savvy,” says Michael, “to not just create reports, but also really understand the entire dataset from beginning to end. I think this offers huge chances also for junior folks with a different skill set and education to also be extremely value-adding from the get go.”
Lili explains that you need to rethink your hiring scorecards. “We're probably rotating more towards aptitude, and not just looking for experience. Especially for more junior folks, can this person really take ownership? Is this person really excited to show up to work every day in a virtual setting, where I'm not sitting next to them? Are they actually able to motivate themselves in an autonomous manner when we're really distributed?”
But the overall upshot is positive. Remote-friendly companies today have a competitive advantage. And the sooner you future-proof your finance function the sooner you can tap into this.
As Pedro says, “I think it actually made it easier because now you're enabling anyone anywhere to join a company and something that was highly localized, two, three, four years ago. Now it's becoming fully distributed and my team goes from Korea to the U.S.”
Place a premium on communication skills
The biggest need for remote companies is clear and structured communication. You can’t rely on the subtleties of body language to express what you need. And for some finance professionals, interpersonal communication skills haven’t been a priority.
Today, they should be.
As Lili explains, “Communication at work just becomes a lot more transactional in a remote setting. You send a message to someone when you need them, you don't send them a message to hear about how their day is going. And so you need people who adapt well to that environment and are able to build bonds in terms of cross-functional business partnering.
“Finance covers so much surface area across the company. The more you can communicate really clearly, work autonomously and take ownership, the better. And those trusting bonds cross-functionally just make you a better partner up through the ranks.”
This means hiring strong communicators and flexible workers. But how can you set your current team up for success?
Lili continues, “centralize around public forms of communication. Use public Slack channels versus email so that everyone can see the follow up. Are people actually engaging?
“We encourage a lot of Loom usage, which isn’t surprising. In Loom you can see viewer analytics and engagement. So I can actually see if someone on my team is explaining something in a way that I think is clear, and give them feedback.
“Even if I'm not present in a live setting for that conversation, I can follow up with mentorship and coaching that way.”
Choose flexible, scalable tools
Great technology goes hand in hand with the right skills and more modern processes. As mentioned above, your finance teams need to be more technically proficient in general, just to keep up with changing business software.
But the finance function will also run smoother and scale easier with the right systems to support. And as Pedro says, the “right” tools depend on your company’s size and how complex your financial challenges are.
“Remote is the worst example because we moved right into the hardcore ERP tooling (with SAP). But we had a reason - we’re in 65 countries today, with 100 entities incorporated. So just managing this scale is very different from the usual setting of where you have a couple of entities and you can work out the consolidation in a relatively easy manner.
“Bring the tools that adapt to your needs. If you are more enterprise on the finance side, like Remote is today, then invest on that. If you're a smaller company or fast growing, but you have one entity or it's an easy setup, go with simpler SaaS tools. Then either scale out of them, or scale them with you.”
Lili explains the tools setup at Loom. “We're on NetSuite as our accounting system right now - we recently transitioned from Xero. The other tool I would highly recommend is a really great BI system. We use Tableau and Snowflake Snowsight. Data analytics are not directly finance, but it’s critical to understanding your business, your metrics and understanding where your levers are.”
Pitch is younger and smaller than Remote or Loom. But already Michael is looking ahead to the next technology they’ll need. “We still have to go through some of those challenges such as implementing an ERP system. We are still on the very classical German Datev setup, which is definitely not a tool I love, but a tool I need to work with. But we will also introduce a classical ERP system.
“But there's a lot of SaaS tools out there, especially in a fast growing organization where you don't necessarily have a procurement team., There's some really cool SaaS spend solutions, such as Sastrify, which helps us to really scale down costs on the SaaS side without having to invest a lot of time on our end to negotiate those contracts.
On the planning side, we’re also using spreadsheets. And I’m very interested in tools like Pigment and Abacum. They have this approach to decentralized planning, but are also extremely lean and similar to Excel. So even those folks that are used to Excel still know how it's going to work.”
Respond to market forces
“Uncertainty” has become a corporate cliché in recent years. But with good reason - leadership teams have had to react to volatility in both financial markets and work habits.
Our experts agree that CFOs need to use their knowledge and experience to guide their companies through choppy waters.
“We're entering what might be a down cycle in our market,” says Lili. “As we look out into the next 12 to 24 months, it looks a bit scarier than the past five to 10.”
Pedro agrees. “That's not an interesting extrinsic planning point. For finance folks, you need to work closely with the business in terms of planning, understanding efficiencies, and your constraints. What are your enablers? What are the levers that you can pull?
“Finance just becomes core to really understanding all this and to help the business make the best decision in terms of sustainability, but also continuing investing in hyper growth.”
Plan for the future today
Future-proofing your business doesn’t mean gazing into a crystal ball and guessing what might happen. As our experts shared, we’re already in a different landscape from what most finance leaders trained for.
The finance function of the future needs to be remote ready, tech savvy, and flexible enough to adapt when necessary. And it needs to continually find ways to create bonds and partner better with other business units.
The secrets to this aren’t really secret at all. Choose smart, intuitive team members and give them the tools to succeed. That way, you’ll be as ready as you can be.