CFO 4.0 - The Future of Finance
Welcome to CFO 4.0, where we explore the dynamic landscape of Financial Leadership in the era of Technology 4.0. I'm your host, Hannah Munro, Managing Director of itas, a pioneering Financial Transformation consultancy.
In this podcast series, we unravel the intricate connection between cutting-edge technologies and the financial domain. It's more than just adopting tools; it's about cultivating the skills necessary to navigate and spearhead the transformative journey within Finance.
CFO 4.0 embodies the archetype of the Financial Leader in the future — a fusion of strategic visionaries and tech-savvy innovators. As the CFO role swiftly evolves from a mere cost controller to a strategic influencer, each transition opens up novel possibilities. Tune in as we share valuable insights and guidance from inspirational CFOs and finance leaders every episode, empowering you to revolutionise your processes, people, and data.
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CFO 4.0 - The Future of Finance
243. The 90-Day Finance Transformation Playbook with Hannah Munro
In this special solo episode of the CFO 4.0 Podcast, host Hannah Munro takes on a personal challenge what she would do with 90 days to transform finance. Drawing on her experience working with finance teams, Hannah breaks the journey into three clear phases: stabilisation, automation and efficiency, and forward looking acceleration.
You’ll discover practical, actionable steps you can apply in your own finance function, including
- How to stabilise core processes in the first 30 days, including bank reconciliations, AR, AP, cash collection, reporting structures, and balance sheet checks
- Why automation and efficiency in the next 30 days should focus on AP automation, AR solutions, payment processes, chart of accounts redesign, and month end optimisation
- How to approach the final 30 days with a forward looking mindset, including forecasting, budgets, dashboards, and integrating wider business data
- The importance of KPIs for measuring effectiveness across AR, AP, bank rec, and reporting
- How to set realistic timelines for transformation without overwhelming your team
- Why process mapping, controls, and risk management are essential foundations before scaling
Links Mentioned:
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Welcome to CFO 4.0, the future of finance. The CFO role is changing rapidly, moving from cost controller to strategic visionary, and with every change comes opportunity. We are here to help you take advantage of this transition to win at work, drive your career forwards and lead with confidence. To win at work, drive your career forwards and lead with confidence. Join Hannah Munro, managing Director of ITAS, a financial transformation consultancy, as she interviews key experts to give you real-world advice and guidance on how to transform your processes, people and data. Welcome to CFO 4.0, the future of finance.
Speaker 2:Hello everybody and welcome to this episode of CFO 4.0. And a bit of a different episode. This time we're going to talk about what I would do if I had 90 days. So somebody said and this is kind of where the idea for this episode came from is, if you were in a company for 90 days, how much could you actually achieve? So I took it as a bit of a personal challenge and thought I would step through how I would approach, and I think of it in three phases really. So the first phase I want to stabilize and make sure that what we're producing is strong and consistent. And then the second phase would be more about automation and efficiency and controls. And then the third phase I would focus on how do I really accelerate what finance does? So thinking about budgets, forecasting, that's the things, because all of that has to come out of a strong base. So let's talk about how we, how we do that. So the and I think what's really important is you can make a huge amount of difference in a very short space of time, but you have to have focus and I get in there. So I am making assumption in these like 90 days, um, that I am in in that company for that full 90 days, like I'm full-time dedicated to helping them change and transform. So when you're setting your own timelines, just bear this in mind and, um, don't try and set yourself up. If you you up to do this, if you've got obviously the day job to do as well, okay. So what would I do? So in that first 30 days, I want to get hold of how the finance team operates right and I want to make sure that they're operating in a consistent way. So what that means is it's repeatable, it's scalable, etc. Okay, and I'm obviously assessing at that point where I want to go for the rest of my 90 days.
Speaker 2:So the areas that I would personally focus on in that first 30 days is bank. So how you know, how well is my, how quickly and how accurately is my bank being reconciled? I'd be looking at the AR and AP ledgers. So I'd be looking at how consistently and quickly an invoice is coming in, what you know. What controls do I have around there? I'd also be looking at how well we're collecting cash right. So, if I think about it, I want to know my cash position. I want to be really strong there. I want to make sure that money's flowing in and that I'm controlling the flow out, and then I would then do an assessment of my reporting structures, because if I have to go into a chart of accounts redesign, all of that would have to happen, you know, happen quickly, in order for me to achieve my, my end goal, which is, you know, strong reporting to the board and management team. So so what would I be looking at there? So let's just talk about bank rec.
Speaker 2:Okay, so most systems across the board have some form of automation around bank rec. So I would be looking, unless you've got some very weird and wonderful or, you know, the exception to that is if you've got lots of customers that pay exact same amount. That's a little bit of a different ball game, but there's other ways to address that. So I would be looking at um I've been looking at. Have we got things like matching rules set up? Have we got um automated payment collections, you know, are there any ways that we can shift to things like direct debits or card payment collections? What does that mean for us as a business? Because if I can do that it it removes the need for me to do matching. So wherever possible, I want to do get the systems to do that uh matching for me. So I would work through that. Um, I'd look at setting that up as a system. So, again, most systems have this out of the box, right? So, or at least a layer of this out of the box, so you should be able to go and start some of these things. That would be my first piece. Second piece would then I'd be looking at AP Again.
Speaker 2:What I'm looking for here is two things how quickly are we getting purchase invoices in the system? Because if I don't know about it, I don't know what my exposure is. And the second piece is how am I controlling the payment of those invoices? What I would be looking at in this first 30 days is do I have any controls in place, right? What does my authorization matrix look like? I have any controls in place, right? What does my authorization matrix look like? Um, and what you know, do I have an automated OCR technology at the moment to scan those invoices in and get them into the system? And then, what is my payment process look like, you know, in terms of how do I select and generate that? So, and I think in the first 30 days, what what I'd be going is do we have a tool out of the box in my system or easily addable to my system that would allow me to scan in my invoices and then set up authorizations? And if I'm comfortable with yes, it does, then I'd crack on with that Because that can be a really big win. Because that that can be a really big win if you've got certainly if you've got a decent amount of volume around purchase invoices.
Speaker 2:Normally there's a lot of hidden work in purchase invoicing. So what I mean by that is there's time spent chasing authorizations, there's time spent checking and thinking about coding all of those things. So if you can get hold of that process, personally I wouldn't go down the po route in the first 30 days. I because that involves a wider business, why I'd be really focusing on once it comes to finance. Am I able to do that? The caveat is is that if it's based on po matching, then you might need to roll a wider PO piece out.
Speaker 2:But I do find with purchase order processing, unless you've got something in place already even if it's paper based around the processes of having POs and requesting POs and filling in some kind of spreadsheet or sending an email requesting approval, you've got to change a whole discipline within the business. So that's not a quick change because it's people right. It's not just the systems, it's about making sure that the wider business is on board with that. So making sure that, at the very least, finance is processing invoices efficiently and it has the right controls okay, because again it's one of your normally your areas that are most exposed to fraud is your processing invoices efficiently and it has a weight, it has the right controls. Okay, because again, it's one of your normally your areas that are most exposed to fraud is your purchasing side. So if you can sort that, most people have lots of controls around who can, um, who could do things in the bank, right, but what they don't also they don't often check is that they've got controls around invoices and suppliers and things. So just making sure that front end of often check is that they've got controls around invoices and suppliers and things. So just making sure that front end of the process is strong sets you up for success and making sure that you've minimized risk Okay. So, yeah, if I've got.
Speaker 2:So what I would be doing at this point is, if I, if I think that I've got a full AP solution that's going to work for the business long term. I just maybe implement the OCR scanning part of that quickly, just to get that in, if I feel and we'll talk about this in a bit. But if I'm, as I'm going through the systems and process, I'm going, my core system isn't very good. I know I'm going to need to change it because it's too small. I wouldn't necessarily. Obviously that can take a bit of time to get in and make a decision around which new system you're going to. So I would probably start that process around assessing once I've got through my assessment phase.
Speaker 2:But I would pick an ap solution that integrates to multiple business systems, finance systems, so that when I do move system I can implement that now and when I do move system, that can come across with me. So I would pick one of the suppliers that works with multiple platforms, like we've got use, for instance, and that works with stage 200. It works with interactive, you know like it works with multiple. What's with non-stage systems as well? Um. So just, uh, that's one of the systems we use with. It's not the only one um, but that's an example of how you can automate that bit and then when you, when you're ready to shift systems. You. That's a whole piece that you don't have to re-implement because the you know the approval routines are there. You just might need to change some of the coding and things if you need. If you do change your nominal structure on the switch, okay.
Speaker 2:So we've gone through, we've we've looked at bank rec, we've automated what we can.
Speaker 2:We've assessed whether we need to implement some payment systems, ie direct deb, direct debits, card payments etc. Or a payment allocation system, just to put that in there. Then I've gone to AP. I've made sure I've got an understanding of what's the authorization matrix and if we haven't got one, I need to figure that out quick. I've looked at what tools we have within our current system and whether they'll suit our longer term process and gains. And then I've started off on a track of implementing at least a basic OCR system, maybe an OCR plus authorization system. And if I get there and I go, I think we are at a point where we're going to have to move systems at some point in this next six months then I would probably choose an external AP solution because that can move with me. So I always find it really hard to explain to people why they should choose ITAS as their financial transformation or stage partner. So rather than me tell you how awesome we are, I'm going to let our customers do it.
Speaker 3:So we decided to go with ITAS because, when we were looking for a partner, we felt that they not only took the time to understand our business and they knew the needs of everyone on the team or everyone that would be using the system, but they also were very transparent in kind of what they could do, what they couldn't do, and, prior to having us, you know, sign anything or make any agreements, they held meetings with us to walk them through our processes and our business so that they really understood everything that would need to be done and give us realistic timelines as well. And another thing was because we were so new and we didn't have a current system going. We were looking for something that we could implement rather quickly but also do it correctly, and we felt that ITAS would be able to achieve both of those in terms of, yeah, understanding our business and implementing it how we wanted it, but also doing it in our rather quick timeline.
Speaker 2:Okay, so bank AP now on to AR. So one of the things I would look at is just make sure I'm doing the basics around credit control, because it is genuinely worrying how many organizations I go into that don't do the basics. Now, the basics for me are have we got statements going out to customers in bulk every month? Have we got invoices going out on automated template selection? So when I send an invoice it automatically chooses the right template. I'm not selecting a different template for every customer? Um, and have, and ideally I should be sending out well, I should be sending out better letters for me. That's the basics, right. What I would be looking at in addition to that is have I got some automated chasing right? Because a lot of the chasing um that makes it that needs to be done is is is literally sending emails and automation all right, and that could be automated. You can build rules around. You know, seven days overdue, send this email, this many right, and then that removes as a level of a level of admin, so that the credit control time that you have is spent on actually phoning and getting detail right, because if people are chasing, you know if you're chasing, you phone up and they go. I haven't received an invoice. Once they've received it three times, that excuse kind of disappears. So making sure we're clear on that is really important. So I would be looking at is there an easy to set up, you know, are those three core processes in place? And then, is there an easy to set up and quick to deploy AR solution? Ideally, if we go back, you know, with some kind of card payment or where they can click a button and pay immediately, style system, or a customer portal where they can download their invoices. So that's kind of my my core.
Speaker 2:I would then be looking at what does my month end look like? So again, I would, I would map out all of the processes that make up month end, I would assign accountability responsibility and I would figure out what day they go on and how much time they actually take, and I would use that to figure out where I'm going next personally, because what I want to make sure is that I'm clear on who does what on a month end. I want to know where the blockers are. So what is the stuff that either starts late it could start earlier and what is the stuff that takes a lot of time and energy? Because I would use that to then decide what I'm focusing on in my next 30 days. So that would be the piece.
Speaker 2:I've done quite a few sessions on month end improvement, so if you haven't watched that, I've done a couple of financial transformation live and podcast sessions on month end, so please do go back and have a look at them. But fundamentally the best. I've got a few templates, I think, on the website as well, um, but fundamentally, you want to map out almost like a timeline for month end and you either squeeze the time it takes or you start earlier, um, and so I had somebody that was saying oh, I can't, um, I can't close my month end because all of my supplier invoices aren't in by the fifth of the month, and I and my answer to that was that's what the crewels are for, so making sure, so you can think about, is there a different way to to do this task that I can do on the first day of the month so that I am there and I'm sorted, and then because other things that can slow down month end, like getting your invoicing out with the sales team so how can you streamline that process? Um, and once you've got that sort of that spreadsheet. That is then your bible to say right, are we? Are we faster, are we quicker? Because you should be getting your month end generally down to three to maximum 10 days after month, 10 working days after month end. Right, three to five is not, I would say, good and fairly and achievable for most businesses. Obviously there's others that do it in a lot quicker than that, um, especially smaller businesses that are less complex, but you should be aiming for three to five days for a month and close if you're there, you know you're, you're within and reasonality.
Speaker 2:If you're struggling to hit that, you probably need to have a really good look at that month end um and figure out why, um, because there will be ways to do it. And if, um, yeah, I would definitely have a look at my. If you're over five working days to close your month end, definitely have a look at my month end improvement podcast. Okay, so we've got hold of bankrupt ar ap and we've assessed them all. Yet we've implemented some basic changes and we've made sure that they're strong and consistent, because you you will find small things as you go through. Maybe you need a coding matrix to make sure that people know where things go and you know small things like that. And then, last, but Maybe you need a coding matrix to make sure that people know where things go and you know small things like that. And then, last but not least, you need to do a reporting assessment in that first 30 days.
Speaker 2:Okay, so I would get hold of. Is my data structures suitable for the business, both now and in the future, for the reporting requirements that they want? Okay, so how would I assess that? Well, the first thing I need to make sure is I'm clear on what does the business need from finance in terms of reporting? So and I think there's two things to think about is everyone goes straight to management reporting and strategic reporting, and you're absolutely right, that needs to be there. But don't forget your operational reporting. Okay, so I would go through. I'd sit down with all the key stakeholders. So, seeing you know your, your senior management team, I would sit down with my board and go right, we're rethinking this. What would you, what would you value? And if you had to give me an order of priority, what would that look like?
Speaker 2:So, talking about how do they want to slice and dice the data and working through that, I would then go through each of the functional average data days, days over agreed terms, days, sales outstanding, you know all of those kind of things so that I've got a basic set of KPIs for AR, same with AP. So you know, if I have got POss, it'd be things like invoices paid without PO or it could be, um, uh, you know, time to payment. So am I paying my suppliers within payment terms? Um discounts, not um collected. So if you've got early payment discounts with suppliers, are there any suppliers where you haven't managed to meet those terms? So I've just been going through each of the areas and and there's a few different um, uh, if you look, you know kpi sheets and maybe at some point I will do a podcast just on kpis, but I would just go through each area and see how I can measure how effective those areas are and what I would look at, because once you get those KPIs, that allows you then to work on how we improve them. So you know and again you know, it's not just about the financial impact, it's things like how long does it take me to get an invoice approved? And again, looking at those kind of things will allow you to then assess that. Okay, so I'm starting to collect my kpis for each area um and I'm assessing then so I've got my management reports how do I want to slice and dice my P&L, my TB et cetera? And then I will look at that and go, okay, what do I need from an operational perspective?
Speaker 2:And if I was in a finance leadership role and I haven't been in that business I would probably just do a quick look at the balance sheet, because a lot of process problems hide in the balance sheet. So you might have a revenue rep that's time consuming. You might have a fixed asset register that's manual. You might have a deposit ledger where you aren't quite clear on that, you know. So I do find that balance sheets hide a lot of things. Normally everyone's pretty good on the pnl because lots of people are looking at it. Not so many people are in the balance sheet um on a regular basis.
Speaker 2:So I would also do a balance sheet reconciliation. Just go from a controls and a risk perspective. Do I have the right, you know, can I reconcile this easily? Um? And if there's any areas where reconciliation is challenging for whatever reason, then I would dig into that and have that in my sort of my 30 to 6 day priority plan. Okay, so we've, within 30 days, we've done a full assessment of most of the ledgers and there will be other areas within that, of course, but we've got through bank rec, ar, ap, we've done a month-end assessment, a reporting assessment, and we've had a look at the balance sheet and gone right. Are we comfortable with what's in there and is there anything in there that hasn't been reconciled or we don't have reconciliation records for? Ok, so that's my first 30 days. It's busy for 30 days, but it's my first 30 days. I would then use that to put together my plan for the next 30 days.
Speaker 2:So my next 30 days is how do I address the challenges that I've seen and I'm really focused on? How do I? Either everything I do has to either make things faster, so more automated and more productive, or it has to reduce risk or control, or it has to improve reporting capabilities, and if it doesn't meet one of those three things, we're not doing it. And again, um, I would. And it is at this stage where I'd be like, okay, we are implementing this new ap automation process, I would maybe restructure the chart of accounts, and so obviously there's a lot that goes into that. So it's a. It can be fairly hefty work but it's worth it. You can't move on to next stage if you haven't.
Speaker 2:I would be looking at implementing new payment methods or an AR collection solution and I'd normally be looking at, you know, the key areas in the month end. Can I either squish them so they take less time, or can I bring them forward in that month end close period so that I'm not doing so that it reduces the overall month and time frame? So that's my, that's my problem, my 30, 60 and then when I get so, hopefully, um, at that point I'll get to my 60 days and go, oh, that's been a a busy 30 days. Um, and then I would move on to what I would call almost the forward-looking finance piece. So we've kind of gone stabilize and assess, automate and optimize.
Speaker 2:And then the third thing is look forwards. So then I'm looking at right, what do we need in order to help the business move forwards, rather than recording what it's done behind me? So I would look at things like have we got budgets? Have we got, you know, budgets uploaded in the system? Have we got regular reportings? Are my team having conversations with my department heads? Yep, have we got dashboards for each department.
Speaker 2:Talking of dashboards, I'd then be looking at all those KPIs that we've put forwards. Let's do a reassessment of those and let's set some benchmarks so that we're clear. You know what percentage of our transactions should be automated, how long it should take us to to go quote to cash, from initial order to producing, you know, collecting the payment. What does that look like? All of my um, dso model set, sales outstanding, all of those kind of you know number of days for month end, all of those kind of key metrics should be recordable and visible so I can see. And then I would be looking at forecasting. So, based on the data I know now, what does next month and the month after look like, and looking at some form of measure of accuracy. So I'd be going into then how do I start collating data from the wider business so that I can try and get closer and closer to this. You know this forecasting. So at that point I'd start looking at integration with things like CRM. How much visibility have I got? I'd be building out some forecasting models. I might be looking at some forecasting tools at that stage so I can get my way forwards. So there you go.
Speaker 2:That is Hannah's approach to a 90-day finance transformation program, but hopefully that gives you a little bit of thinking and inspiration for how to if you do need to make some changes rapidly, because sometimes when you either you've got something new on the horizon, maybe it's an investment round or something coming up where you need to show improvements quickly, or you need to be in a certain position, that kind of gives you a feel. Maybe you're about to go through an acquisition or a series of acquisitions and your core needs to be sorted. That's a different conversation and actually a great topic for a podcast, um, but hopefully that gives you a little bit of inspiration, um, and a little way of thinking about the structure of how you move forward and you jump in um, and, of course, as always, I'd love your feedback. So, um, this is not an episode type that we've done before.
Speaker 2:So if this was useful, if there's areas I didn't go into enough detail on, if there's things that you think I should have covered that I haven't love to hear from you, please do message me on linkedin, send me an email, hannahmonroe at itassolutionscouk, or um. For those of you that know me, feel free to reach out on other other um platforms, um, I'd love to hear from you and, of course, if you've enjoyed this episode, if you've got any value from it, then please do like it and leave a review, share it with somebody, um, so we can uh grow the podcast and help others uh, hear and uh and get value from this content. So thank you so much for your time and joining me today and I'll see you next time on the CFO 4.0 podcast.
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