Contact Monisha: https://www.linkedin.com/in/monishadequadros/
Sparkbox Group: www.sparkboxgrp.com

FULL EPISODE TRANSCRIPT

Adam: (00:05)

Hey everyone. Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. Thanks for joining us today. I'm Adam Larson and this is episode 31 of count me in for today's episode. We're going to hear Mitchell's conversation with Monisha de Quadros, a former CFO in both the public and nonprofit sector and now founder of her own outsource CFO firm. Let's listen to Mona. Just take on the role of today's CFO.

 

Mitch: (00:44)

What are the main differences in the finance function between public organizations and the nonprofit sector? 

 

Monisha: (00:44)

So yeah, that's a really good question. there are very few nonprofits today that have a proper finance function. Many times what happens in a nonprofit organization is that the accounting team subsidizes and doubles up as a finance team. And unfortunately the skills required for an optimal finance function is actually quite different than the skills needed for accounting. So nonprofits can certainly train their teams for financial modeling skills, critical thinking and analysis. But it's challenging because the two functions actually a wired differently. And then the hiring process is also a bit of a catch 22 because it's difficult to recruit finance talent in the nonprofit sector and yet it is critical to the success of these organizations. So having the right financial support and the nonprofits helps drive profitability, grow revenue, stretch and maximize each dollar expense, deliver valuable insights, and then also create long term sustainable strategies. 

 

Mitch: (01:40)

Now with a perspective, from, you know, both sides of that conversation, what is the greatest challenge you faced as a CFO with today's changing finance function? Particularly with, technology and digital age? 

 

Monisha: (01:55)

Yeah. You know I think it's two fold. Like one of the biggest challenges the CFO faces today is transforming the finance function from a cost center to a value creation center. The second challenge subsequently is the evolution of the CFO role itself. So both the finance team and the CFO are gatekeepers of critical data required to support decisions and strategic plans as they chart their journey through the digital age, the success of one becomes more intrinsic in the success of the other. So let's talk about the value creation center first. So it's safe to say our environment is changing at a rapid rate and this is probably the slowest pace we will see in our lifetime. So the speed at which change is happening, it's forcing businesses to evolve and transform at quicker intervals in order to stay relevant and competitive. So factors such as disruption, innovation, technology, consumer behavior, and globalization are all contributing to this space of change. Without the right data and financial insights, businesses will have a tough time making intelligent business decisions compete in this environment. and as a result it becomes increasingly critical for the finance function to step up and equip the business with the right financial insights for better decisions. So we need to evolve into value centers. And what I mean by value centers as I'm preparing to choose thoughtful analysis, predictive analytics strategies, and most importantly actionable insights with respect to the CFO. What's really interesting is that the rule is actually sitting at the center of the digital transformation. So we're seeing a greater need for real time data enabled decision support to meet that need. The CFO is moving away from the traditional activities like transactions. And reports to a more strategic role. So they're driving business decisions and preparing the business for the future. CFOs are being asked to be leaders within this evolution, taking on advisory roles to the CEO leadership team and the board. And the speed at which digital transformation is happening is also producing a greater appetite for business risk. And in turn, the CFO will need to be more resilient and proactive in their strategies to innovate. We're also seeing trends where the CFO is taking on additional responsibilities like taking over the operations functions and the it and technology functions. And some would argue that the role is expanding and becoming increasingly more challenging. And I would, I would actually agree, but I would also say it's becoming more interesting. So the CFO has a wide perspective with visibility across all business functions. They can act as the bridge connecting and driving the business in a cohesive manner. And then they have this ability now at this point and the structure to influence leadership, to be change agents and impact long term growth within the business. And lastly, they're in this unique position to actually define their own path. In this digital age. 

 

Mitch: (04:48)

Now let's go back to step one for just a second. What are some ways the finance function can actually transition from this cost center to this new value center that you mentioned? 

 

Monisha: (04:58)

Yeah, so I think we're the hardest, but probably most needed task is to develop an agile analytical mindset within the department. So agile is the ability to learn fast, adapt quickly, and iterate. Often one of the ways CFOs can adopt an agile mindset within their teams is to foster more creativity and curiosity. It's about creating an environment where it's okay to innovate, embrace risk, and sometimes even fail on the process. So just remember to have a feedback loop in place for lessons learned when you actually implement this process. Cause that's very, that's a critical step. Some of the practical approaches implemented today have been to create special projects with small teams or rotate job functions within the department. And of course offer continuous learning. Agile requires a different set of skills and talents that I think the CFO is going to have to either train or hire for. And these skills include digital competency, predictive analytics, agility, and even the human skills such as empathy and decision making capabilities. Another equally important step in creating this value center is to to emphasize collaboration across functional departments. You know, interestingly enough, recent studies have shown that there's a direct correlation between effective collaboration and the rate of revenue growth. So in order for businesses to make better decisions, there needs to be greater collaboration and the continuous flow of information back and forth between the functions. One can foster collaboration by developing a platform, a mutual trust. And by this I mean a space where both parties feel safe to share and constructively challenge each other with the common goal to increase customer value. Lastly, spend the time and resources to optimize current systems and improve integrations like the long term savings and efficiency and agility the business will see from doing these initiatives are well worth the effort and costs upfront. And I cannot stress that enough. Like the goal was optimization is to transfer data seamlessly between systems like the ERP system and the CRM and the finance system and enables finance function to pull clean and accurate information on a timely basis. In today's environment, finance team spent an inordinate amount of time pulling data from multiple systems and then they have to spend the time cleaning it and ensuring for data integrity, making it increasingly difficult for them to find the time to analyze and actually deliver insights. Now the upside is that there's a range of technology enhancements that can be utilized. So McKinsey study, from the global Institute show that 42% of all finance activities can be fully automated. 77% of which is general accounting. That's a really high percentage. So front and center in automation, it's artificial intelligence, AI. And then the next one is robotic process automation, which is RPA. All finance functions to be leveraging it in one way form or the other. RPA is really interesting because it automates simple repetitive tasks and frees up the staff time for analysis. Another really interesting tool that can be used is data visualization. Like Tableau for instance, they provide real time information to end users in an intuitive format, so that allows for accelerated decision support. The third and a handsome meant that I would suggest would be predictive or or advanced analytics and this allows the business to uncover hidden growth opportunities. Let's say for example like pricing optimization or identifying a customer behavior trend. So it is understandable that system design and optimization can be really expensive, so therefore I would encourage finance teams to start with simple automation off the current systems. Then move to larger projects involving data analysts or Davis size data scientists, and then lastly, implement AI, which is obviously the most expensive to data scientists. I have a really interesting function. They help aggregate enormous amounts of data from different sources and present that information in a really meaningful way. In this digital age that we're in. The benefit of system enhancements is enormous. It up-rise provides for more collaborative thought partnership across the functions and they're also strategically positions the organization for sustainable growth. 

 

Mitch: (05:50)

Let's take all this back to more traditional accounting for just a second. How can businesses leverage this transition to a value center, and really notice the impact on the financials and long term initiatives? How does all this ultimately lead to driving some kind of sustainable growth for the business? 

 

Monisha: (09:14)

Yeah, that's a good question. you know, driving like driving sustainable growth. I think it's a collective process. In today's environment. The CFO cannot be the only person in the finance team that is thinking strategic go long term. So everyone in the finance function should be thinking about the future. How can I make this better? Where can we add value? How does my decision impact the organization today? And what does it like in the long run? So the finance function, it has a responsibility to explain and guide the value creation process within the organization. And there are several areas that they can leverage to drive sustainable growth. So one of the areas of KPIs, when we move our focus beyond the traditional financial KPIs to operational and business metrics, we provide a clear roadmap for sustainable growth. I tend to like to call them actionable KPIs because they look, they're forward looking metrics that drive future strategies. And provide a holistic view of the company. So traditional KPIs are, are based on historical trends while actionable KPIs, provide business intelligence for future decisions. For instance, when a business focuses on customer satisfaction, like an NPS score, they have the ability to improve customer attention and or full rates and then which in turn increases revenue growth and profitability. So another way that organizations can leverage financial data for sustainable growth is to strengthen the forecasting process for both accuracy and operational intake and integration. So a good forecast provides businesses with early signals to maximize opportunities and minimize risk. Leading organizations today treat their forecasting proxy process as a standard operating procedure. It's incorporated as a month and month end close process. They use both qualitative and quantitative methodologies and they include forward looking updates from their business partners. I would also suggest creating a conservative and aggressive forecast to allow you to stretch your thinking and explore a larger set of opportunities. Another suggestion is to incorporate predictive analytics in the data inputs itself, which will also strengthen the forecast and improve long term growth. You know, since we're talking about the digital age in this podcast, it'd be remiss for me not to mention AI. So AI is becoming increasingly popular to use in forecasts because it provides organizational wide visibility. Artificial intelligence helps with accuracy, it pulls large data sets seamlessly and provides real time forecasting for quicker, more intelligent business decisions. The last and the most important building block for sustainable growth is a dynamic strategic plan. And I can't stress this enough, like long gone are the days of the traditional five year strategic plan performed once a year to compete and transform in today's changing environment strategic plans need to evolve adopting an agile approach to strategic planning will keep the business flexible and nimble and enable the leaders to quickly seize opportunities and potentially avoid pitfalls. So what does agile planning, right? Agile planning is a continual iterative process. It uncovers long term strategic initiatives that can be broken down into smaller, digestible, short term projects. So think of it as a relay race with four short, 100 meter sprints to make up the 400 meter base. Unlike the annual typical planning process, agile strategic plan, occur typically every quarter. And they also begin with smaller groups of stakeholders that are empowered to make important decisions whenever needed. The key to success in an agile process is to break down initiative into smaller achievable tasks that include a rapid review and approval process from leadership. And finally, fast track the implementation.If the short term project is not working out in that time period, the business has enough time to change directions to still met it's long term objectives.

 

Mitch: (09:31)

So to wrap things up here, how can one tie everything together and start to implement some of your suggested best practices? What are you doing in your career to help these professionals with these challenges and opportunities?

 

Monisha: (09:31)

Yeah, to tie everything together I think the first and foremost part is to build a dynamic finance team. One that is ready for change, agile, curious, analytical, and excited about creating value for the business. And then integrate strategic thinking throughout the fiance department because everyone has a role to play in this transformation process. Secondly, adopt technology to automate and integrate the way data flows throughout the organization. It'll make it easier and quicker to deliver financial insights for better business decisions. And last but not least, utilize KPIs, flexible forecast and agile strategic planning takes celebrate value creation, transformation, and sustainable growth. So over my career, engaging in small businesses and nonprofits, I found those inherent need for financial strategies, skills that delivered value creation and actionable insights in today's changing environment. So because of that need, I started a company called Sparkbox. At Sparkbox. We're an outsource CFO firm focused on creative finance solutions for social enterprises, both private and nonprofit. Because of that need. I started a company called Sparkbox as BarkBox. We're an outsource CFO firm focused on creative finance solutions for social enterprises, both private and nonprofit. We offer four thinking strategies that challenge the status quo and build upon your mission to promote scalability, profitability, and sustainable growth. What really makes us different is that we apply a holistic approach to our solutions, integrating all functional areas of the business. So our part time and fractional CFO services are designed to transform your business and help you keep and help keep you relevant in today's rapidly changing digital world. 

 

Announcer: (15:26)

This has been Count Me In, IMA's podcast 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.