IMA’s Neha Lagoo Ratnakar speaks with Oded Zehavi, CEO of Mesh Payments, about digital transformation of the finance team. They discuss how powerful new software tools and automation opportunities empower CFOs and their teams to streamline business partnering, sharpen internal controls, and simplify business operations.  The good news is it’s much less complicated than you think.

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Full Episode Transcript:
Neha:

Welcome back to Count Me In, the podcast by and for management accountants. I'm Neha Lagoo Ratnakar from IMA, and today I'm speaking with Oded Zehavi about how the enormous potential of digital transformation is finally coming to fruition for CFOs and finance teams everywhere. As the CEO and founder of Mesh Payments, Oded has a bird's eye view into how accounting and finance professionals are utilizing and customizing powerful new software tools to streamline business partnering, sharpen internal controls and simplify business operations. And what struck me during the conversation was that how appropriate the word transformation is in this moment. It's like the buzzword I've heard a million times crystallized into something real for me. During the course of this interview, you'll hear how technology has clearly elevated the value the finance function is able to provide to the business in real time. Let's get started with Oded to see how businesses are leaning into this exciting new era of innovation.

Neha:

So let's start with the obvious question today. We are all witnessing a transformation in the way we work and finance and accounting is one of the functions that lends itself very well to remote working. How do you think the CFO's office has changed since the pandemic?

Oded:

So people usually speak a lot about the fact that everything is remote now, which is key, by the way, by the way that finance people operates. I will even go back in time and speak about something that less people are talking about, which is why the category, which I mean, which is spend management, have been really driving from the beginning of the pandemic. And in my mind it's always start by the fact that before the pandemic, the finance teams were really focusing about T&E. So everybody were a lot of fun. Various sales guys were traveling and it's all about how we collect received, how do we close the books? There was so much noise so many people involved. What does does it mean? And so many employees have been brought, and it's really beyond the fact that he's taken a lot of the time from the finance teams activities.

Oded:

It also created a lot of noise and camouflage some other problems that might have been bigger or different. And when the pandemic started, that was shut eliminated overnight. So now nobody travels anymore. No receipts have been chased. That noise have been gone quiet. Totally. And on top of it, there were two other trends which in my mind have really impact the way finance team operates. One, as you mentioned, is the fact that now companies are fully remote and distributed. So a lot of the processes that historically the finance team could have solved by telling the employees, you know, what? Come to my desk, yes, tomorrow and we'll make this happen have not been relevant anymore. And last, but not least, the fact that many of these companies move a lot of the infrastructure to the cloud. So now a lot of these old on premise licensing models have been shut down.

Oded:

And now everything move to more recurring models where you need to pay every month a much smaller amount with much more softwares. So the combination of all of that really made a huge difference when it comes to how finance teams need to treat spend or treat corporate spend. And what I'm seeing is that over the last two years, the space itself have been exploding. So many great companies have come into this space, which are now giving very new technology, amazing user experience will talk about it in the second, and last but not least, a new business model, which in our category, historically, companies have been used to pay for software that helps them control spend. I'm amazed there are still companies that are even considering paying for some of the very, very old legacy platforms on things they are not really using, where there are so many options like mesh in the space that enables them to pay only for what they use and sometimes not even pay anything because a lot of us have been using the model where we, the merchant that we are paying for are, are really paying for the service. So a lot of transformation and changes in the way finance team have looked at spend management and on top of it and you started by the remote and the fact that companies are now distributed. So it's not only that are distributed, they're also global. If we were talking, having this conversation few years ago, most of the US companies were usually around this very one site usually in one city in the US it could be San Francisco or New York or one of these leading countries.

Oded:

The pandemic really shifted a lot of the employees all across the US and now there are new places where employees from different reasons want to spend time in like Austin, like Miami, like all these places which are totally outside of the where traditional headquarters have been based and last than not least, why stay in Austin when you can spend the same time and work from a much more exotic place. And I've seen companies that have become fully distributed and fully remote. And for the finance teams, all of these challenges are really something that is transformational. And they have really invested a lot of time and effort in the last two years to be ready to give solutions or be, give service in such a changing world.

Neha:

Wow. I love that, Oded, there's so much that has been happening, and thank you for summarizing so well how work, softwares, platforms, our activities have changed in the last couple of years. Now let's talk about the mindset changes. What have you seen change in the last couple of years and is there anything that the CFOs or the finance departments can do to help with this mindset change?

Oded:

So it's interesting that we are talking today, which is more or less in the middle or the beginning or some people out the hand of additional neutrons to change in the mindset of finance team or finance people, if we can go back when the pandemic came, everybody stopped and tried to reduce cost and see what happens that very quickly after a month or two, the world, especially the high tech scene, have really shifted into growth. Just growth and growth and growth. And companies have been growing and bringing more to employees. They're more talents and spending more on media. And it was really about growth. Not all, but most of the companies didn't invest enough time about unique economics and controls and things that are fundamental when it comes to business. And we are in the beginning of a new transformation or new mindset change where everybody said saying to the same fine sense things that they will say to them a year ago, Grow, grow, grow, stop, stop, stop.

Oded:

And let's focus on the fundamental economics control and visibility. And it all comes back to the fact that now changes are happening much quicker, but then nobody knows if we'll talk again in two months, what will be the mindset then, that it will be just control, and it might happen the same way it was in the pandemic. The only thing that we know that is that we don't really know. From what the impact for finance teams is that they now need to have an infrastructure, which is usually based on technology automation that enables them to change the way they operate and based on this changing mindset. So they need one day to have tools that will enable them to spend more and get more employees empowered to spend and to do more projects.

Oded:

And one day they need to say, take the same employees and make sure they have have full visibility of what, how they spend. They can in one click start canceling some of these services that they've just asked them to order. And the only way to do that in the pace that is expected now by the industry is to have tools and technology to help you. So in one way, you might say that the change in mindset really prevent from finance teams to act and really make them focus on other projects from the other end. The great finance team, so the ones that are going to be fully successful are the one that knew how to balance between following the trends and in parallel building the infrastructure that will enable them quickly to be adapting themselves, adapt themselves to the changing trends, which that's what what really makes great finance teams shine.

Neha:

Wow. I love that, Oded. And you touched upon a great topic there about speed and transparency for finance departments. Are there any trends that you noticed or what can finance teams do to improve this speed and transparency?

Oded:

So historically when a lot of the finance operation was based on paper and receipts and invoices and manual processes, the ability to get enough visibility and enough control was very tough. Now, and going back to the pandemic, which have digitized them, a lot of the processes when it comes to payment, when it comes to ordering, when it comes to having data sources that can expose to you trends that are happening outside of your organization, that's really enables you to try to reach a situation where everything is automated and based on data. So you don't need to, going back to the example of pre-pandemic in some of the old systems, usually finance team have seen the transaction of the person who is traveling only two days after he actually done the transaction. Today with the new systems, it's all in real time.

Oded:

The minute you spend, you book your hotel, regardless where you are in the world, the finance team automatically get visibility to what's going on. They can even create a control, by the way, can even create a process that they will preapproved that payments. Because with the systems that are exist today, that's something that can happens in real time. So it's the fact that now everything is in real time, that there is data sources that can help you really make wise decisions and not just cut. One of the things I'm seeing lately because of the latest challenges in the macroeconomic situation is that a lot of finance team have been requested by the CFO, by the CEO just to cut 20% of everything. That was how things were done before because he said, I don't have enough visibility.

Oded:

I don't know, I don't have the time. Let's cut 20% our thing. Maybe we cut some good things, maybe we will not cut enough, some bad things. But we understand that we don't have enough visibility. Let's cut 20% outta everything with finance teams that have been ready for this situation and have clear visibility about what's works, what doesn't work, how we spend. They don't need to take these types of actions anymore. They can granularly look at each one of the spends and decide where it makes sense to cut because of the new macroeconomics. And when it doesn't make sense, because it brings benefits to the company, it might help the company to recover. These are these things that can only happen when you have enough data and automation infrastructure, which that's what we have seen across the board.

Neha:

Awesome. I love the insights you brought in there Oded, and I would like to dig a little bit deeper on that. You brought up tech automation a couple of times, and of course there are a lot of things that companies can do in terms of infrastructure updates and putting budgets into automation of these processes. But right now, with the economic downturn, like you said, not everybody has those budgets. And our busy accounting and finance professionals from around the world who are listening to this podcast today would like to change some things tomorrow or today if possible. What are a couple of things which are low risk but high return steps that they can immediately take to improve things at their workplace?

Oded:

So what I've seen in the market, there are so many tools that are either free or not expensive, that can give you people historically things about implementing financial systems is something that takes six months and require so much effort, right? The latest advances in technology, there are tools that can be deployed overnight. They are either free or very not expensive, and they can give you at least immediately visibility about what's going on. By the way, sometimes that visibility comes from places that are historically have been beyond the reach of the finance team. I usually take the example that is close to my heart. We are giving companies a tool that enables them to map all the services the employees are accessing even without knowing if they pay or if they don't pay for that. So the finance team, which historically they need to go to IT and ask their permission to get such a report so they can look to see if they are spending or they are over accessing or don't use enough a specific product, have the ability to get a real time visibility about what employees are using.

Oded:

If there are tools that are using a lot, which means that they might be paying a lot and we might want to scrutinize that or tools that they know that they are paying a lot, but they see that there is not too much usage. And that might create a process where they will go back to the vendor and try to negotiate or they will ask us to help them with that. So in the end of the day, it's finance team don't need to feel that it's all or nothing. Meaning if we implemented the very sophisticated accounting system maybe you were in a good shape, even if you don't, we are in a bad shape. There are enough tools that can first of all give them visibility because in the end of the day, wise decisions are based on fact and not based on feelings.

Oded:

Especially when it comes to finance. Listen, we are not talking about marketing or things that are less tangible by definition. We are talking about cash flow and run rate and things that should be very accurate. It's very important to know how much, when is the last month that you have to pay your employee salaries. Exactly. Not approximately. So what I'm, what I'm urging finance team is really not to say, you know, as you said, there is a downturn what can we do? Let's cut everything without even no questions asked, just ask everybody to cut everything. Spend a little bit more time trying to get better visibility of how your organization operate. And when you will do that, first of all, it will help you make better decision. But more important, it will be the infrastructure for you for the next time you will be requested to get this decision.

Oded:

And we are not, that's not, unfortunately, that's not the last times where probably people need to change the way they operate. Hopefully things will recover and then they will need to grow. Maybe they won't recover, and then this will take much longer and they, we will need to make even much tougher decisions then we are getting today. So don't get under, it's not about, don't get into hysteria. Breathe, count to 10. See how technology can help you. Don't be intimidated by thinking that it requires a lot of effort and a lot of time to implement fundamental technology and just do it.

Neha:

Wow. Those are some great lessons for our listeners here today, Oded. Let me pivot to your professional career. And we were talking about it. You've traveled around the world, you've lived in lots of different places. We were talking about your travel in India, for example, and there are lots of our listeners who are considering going global in their careers or having a more nomadic lifestyle. Now, is there a lesson that you would like to share from your travels and your work around the world?

Oded:

So pandemic really changed the mindset of executives and recruiters about where they can find talents in so many aspects, by the way, it's not only about traveling, it's the fact that now companies can aim to get the best talents in everything they are trying to do regardless where they are. Historically, they were really bounded in the geography where they were based. And if they knew somebody, great, but it was remote, he couldn't travel, that was probably, would've made them decide to take somebody that is not perfect but is much close by, that ended. Now companies can really try to aim and try to hire the best talent they can for the specific task they are trying to achieve.

Oded:

But from the other end, it brings new challenges because if you hire the greatest talents, they have much higher expectations and they are trying, they will be much more effective, but from the other end, they will expect from the company to support them in this global environment to enable to pay them salaries on time. We've announced a few weeks ago a partnership with a company called Papa Global, which is the world leader in global payroll and enables finance teams or global companies to pay employees whenever they are. This is a huge effort that is coming into the place. How do you pay the payroll and time and accurately? And second, these talents which will get a lot of responsibility, they will be in charge on strategic project for your companies. You should also enable them to pay for this specific project.

Oded:

You cannot expect them anymore to do out of pocket expenses as historically, you might have been telling them you, that's what it is, just pay and we'll talk about it in the future. So you need to have the infrastructure to enable that. I don't see, and I have a lot of conversation with executives, even if, and Covid, most of us have forgot Covid. But I don't see the world reversing in the way it operates. Maybe some companies will open again their headquarters but I don't see what was five years ago when companies have forced employees to move to specific location that's done. And last and not least, it means that for finance teams, that's the new norm. They cannot say, you know what we will try to move back to some of the processes that we've been used for so many years.

Oded:

They need to adapt to these types of behaviors. By the way, just an example, which not two people understand or they usually understand too late, which is you have an employee in a specific country and you enable him to pay cards or payment instruments works differently in different countries. You mentioned in India there are some specific limitations to how you pay where you are India for example. So not only things are becoming more complex, you need to understand and master things that before that you could have just issue a card from your all local bank and it should work well in the territory you are based in. So from one hand, a lot of opportunities, but it always come next that it creates new challenges for the finance teams. Some of them really enjoy the excitement and the fact that there is new things to do. Some of them prefer that the world would not have changed. That's not possible anymore.

Neha:

Right. The only thing that doesn't change is change itself. Right?

Oded:

Totally.

Neha:

I love those practical tips. Thank you, Oded. Now this brings me to the last question of the day. How can companies and finance professionals be future ready? So we are not caught off guard again, like we were the last time when the pandemic hit.

Oded:

So it's really important for finance team in my mind to acknowledge that it's not only about them, it's mostly about their employees. And what I'm seeing that more and more finance teams focus more and more about employees experiences, finance team that will be future ready will build infrastructure that is employee friendly, that employees lack. Like historically, there was a lot of tension between the employees and the finance teams about controls, about how employees, what they need to do in order to help finance team close the books in the end of the month. The future of finance and finance team automation is by building an infrastructure that employees like, which is sometimes sounds too good to be true. It can be done. And I'm seeing more and more finance team that don't only think about their own challenges and their own problems.

Oded:

They really see themselves as enablers. They're not only the bodyguards of the company treasury, they're also the ones who enables their employees to operate with less friction. And that's something that is very important. I really urge finance teams to think, rethink about the way they look at the, and the way they operate their companies. Finance team, by the way, one of the interesting things that the finance team have become much more dominant in the corporate structure. Historically, HR was very strong. Maybe IT was very strong. Finance was just the ones who were handling the books today, finance teams and especially finance executive that becomes the, the closest consultants to the CEO. They are, he listens to them a lot. You expect them to do above and beyond just to do the traditional finance activities. So for me it's really, I'm really urging them to take that opportunity, grab it, don't push it back and saying, you know, we have enough work by handling our own specific problems. Use the opportunity. I'm seeing so many CFOs that evolved have become much more dominant. Some of them even became CEOs over time, and that's only because they understood the new norm, they understood the opportunities that the future brings to them. And that's really exciting.

Outro:

This has been Count Me In IMA's podcast, providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.