Digital transformation is capturing a greater amount of CFOs’ attention — one recent study found 70% of today’s financial leaders consider this to be their top priority, CFO Dive recently reported.
Taking steps to digitize daily processes such as accounts payable (AP) and accounts receivable (AR) can be especially helpful for middle market companies that are “sitting at this intersection of, ‘I’m not a billion-dollar-plus business and so I'm really focused on my mission,’” Joel Wilhite, CFO for AP automation provider AvidXchange, said in a recent interview.
“And what can be neglected is sort of the back office, especially in light of the fact that there's meaningful variation and complexity, so there's not homogenous solutions or firms out there, meant to solve kind of that middle market, back-office [challenge],” he said.
Notably, the move to digitization can also serve as a bit of a “push and pull” when it comes to the CFO’s set of responsibilities, Wilhite said — it can create opportunities for financial leaders and the business, but it also means the CFO is moving away from the traditional role as company scorekeeper.
“I think increasingly just the expectations of the CFO are increasingly different on that spectrum of scorekeeper,” he said. “There's fewer folks who look like me with the traditional accounting background, and there’s a little bit more [of] a wider diversity of disciplines and more of a need to plot the future.”
Digitization and the future of the CFO
Digitization and automation of processes such as AP can both ease back-office troubles for companies and help drive business value, Cameron White, the company’s SVP of finance said. Such capabilities help the business make better decisions and cut costs by consolidating tools or systems into one place, she said.
“I don't know that in historic CFO roles that has been as much of an opportunity to drive business value as it is now,” she said of digitization. "I think pulling that lens in and really looking at it that way has been...the fun part for me" of being in the organization's finance department, White said.
The expanding role and importance of technology throughout the finance function could also be changing the backgrounds or future skill sets for CFOs.
Wilhite’s background and career path to the CFO position followed familiar paths, including a stint as an audit manager at KPMG and several controller roles, according to his LinkedIn profile. Today, the skill sets for CFOs are, “increasingly, a little bit more diverse,” he said.
Most CFOs today still tend to hold familiar degrees in fields such as economics, business administration and accounting. Crist|Kolder Associates’ Volatility Report 2022 showed 33% of CFOs have undergraduate degrees in business, including 26% who reported having accounting degrees.
It also showed 28% of financial leaders reported holding undergraduate degrees in engineering, which may indicate a growing need for CFOs to have technological as well as financial expertise.
“I do think the accounting profession is in somewhat of an identity crisis,” Wilhite said. Financial executives need “to transform — if you think about universities and programs and the profession itself — to shift more towards the future-looking, kind of advisors skill set.”
Data and financial leadership
White, who rose through an FP&A or financial planning and analysis path, noted the shift is toward a balance of accounting and data analytics rather than one skill set taking precedence over the other.
One of the company’s most recent hires for FP&A came from the data analytics team, she said, “because he understands the analytics, he's learning the language of finance, and the combination of those two are extremely powerful.”
“I think there is just this continued morphing and we’ll continue to morph to be more capable in using data, using digitization in our decision making and showing them in a financial way,” she said.