CFOs lack visibility into corporate spend, and departmental silos are a major reason, a new report found.
“The Strategic CFO in a Rapidly Changing World” report, commissioned by corporate expense management company Coupa, found more than 60% of the 500 CFOs surveyed said they can’t see the full picture on transactions.
“To gain the visibility needed to execute corporate finance strategies, CFOs need to do a better job breaking down silos, ensuring that everyone within their organizations has the right information needed to succeed,” according to the report. “Doing so requires CFOs and other executives to adopt collaborative and entrepreneurial strategies. These qualities are more than buzzwords—they are key descriptors of leading companies.”
The 5.6% of respondents who said their organizations are most able to manage risk, cost and capital more often describe their employers as collaborative and entrepreneurial, while self-reported low performers (14.4%) say their companies are siloed almost three times as often.
The departments that CFOs said could do more to help the financial mission are management, sales and strategy, according to the report. More than 25% of respondents said that those three could do the most to help visibility, while 10% want legal involved.
Although emerging technologies such as artificial intelligence and data analytics provide new opportunities for finance departments, they also create new vulnerabilities such as cybersecurity risks and less control over corporate data, the report states. That’s where collaboration with the IT department can help, respondents said. Almost 30% of high-performers said IT could lend a hand, while 17.9% of low-performers said so.
“Respondents who think their corporate finance departments have become more effective at meeting corporate goals over the past two years are nearly one and a half times more likely to work closely with IT, compared with those who do not think they’ve become more effective,” the report states. “Self-reported high performers are also about one and a half times more likely than other respondents to say that IT could do even more to help.”
Silos also impede capital management, the report found. About 30% of respondents who said their companies are siloed think they have the right technology to meet capital management goals, compared with 56% of those who say their companies are collaborative. “Similarly, 52% of siloed organizations agree they have the right strategy for capital management, compared with 72% of collaborative organizations.”
More than 30% of respondents cited business performance risk as the biggest obstacle to managing capital effectively, followed by consumer risk at 30% and fraud risk at 25.2%. Almost the same amount of respondents cited the same top three risks as likely to grow in severity during the next two years.
One way to manage those risks is with new technology and processes. In fact, 67% of respondents said they would help. Almost 68% of respondents said their organization has an appropriate risk management strategy in place, while about 65% said they have the right people and 61% said they have the right technology.