While digitization and automation dominate the payments ecosystem, the underlying fundamentals remain the same and must be in place if automation is to realize its intended goals.
That was a key insight shared by Attila Kulcsar, Global Payments CFO, PayU, in a conversation with PYMNTS.
The Changing Role of the CFO — COVID-19 as Catalyst
Kulcsar said the role of the CFO, and even the whole finance function, has changed dramatically — not just over the last two years, but for the last decade. The pandemic accelerated that trend, but it was on CFOs’ radar pre-pandemic.
COVID-19 changed people’s personal and professional lives, so it was a twofold trigger for technical transition. Kulcsar cited digitization of traditional “wet” signatures as a tactical case in point.
At a strategic level, Kulcsar observed that CFOs must balance performance, efficiency and risk while maintaining strong control and compliance, working in concert with the entire executive team. Customer expectations are increasing, and they expect tailored solutions. Regulatory requirements are tightening, competition is heating up and inflation is fanning cost concerns.
Yet amidst this dynamic, rapidly changing environment, the objective remains the same. Digitization is simply an enabler, according to Kulcsar — a tool to streamline and optimize procedures, driving cost efficiency and adding value to the business.
Kulcsar endorses the view that accounts payable (AP) and accounts receivable (AR) are the key ingredients in the recipe for a healthy balance sheet. Automating manual work can improve working capital management by enhancing control and driving cost down.
The effort and investment are not trivial, but the potential returns are larger still. The path forward is to focus on making the necessary changes and moving on.
Overcoming Digitization Obstacles
Kulcsar noted that digitization isn’t a magical “do my job” button. He pointed out that financial teams need to understand a few working principles before launching any digitization effort:
The devil is in the data. Proper data management procedures and architecture help put everyone in the organization on the same page and define key performance indicators (KPIs) that matter most to the business.
Data hygiene is crucial — the data must be clean. Furthermore, everyone needs to use the right permissioning to access it.
Automating a flawed process just makes you fail faster. Companies need to begin by reviewing procedures and processes with a goal of identifying and understanding pain points. Then, based on this understanding, decisions can be made to prioritize the digitizing agenda. Conversely, automating a preexisting flawed process won’t yield the desired result.
Don’t overlook the human element. In Kulcsar’s view, success involves not only technology, data and procedures, but also capable people. Firms need to build a talent pool of digital natives who embrace technology and welcome change.
Kulcsar emphasized the importance of a holistic approach. Unfortunately, that is not always the case because companies are in a rush to get results quickly. In these scenarios, haste makes waste, which can lead the impulsive into the dreaded shadow of the tech valley of disappointment.
As a general rule, if you’re digitizing and you’ve not done the groundwork, you’ll get to the end and you’re not getting your expected results.
If You’ve Seen One, You’ve Only Seen One
However, when it comes to how CFOs should prioritize the process, there is no one-size-fits-all answer, according to Kulcsar.
“There is no straightforward answer to that one, because each company is different,” he continued. “Each company has different pain points. You need to see that whether you have issues with data integrity, cost, highly manual work and effective controls, or data visualization — how you communicate to your stakeholders in a user-friendly way the information you would like to share.”
Based on each company’s specific pain points, their severity and the magnitude of their impact on the business, the CFO can weigh the benefit of potential solutions against their cost and prioritize accordingly.
Costs derive from the elements of Kulcsar’s holistic approach — additional effort, technical resources, money or human resources. It’s a complex matrix. Companies need to do their homework before they really start an overarching general approach to financial digitization to streamline and automate procedures.
What the Future Holds
Kulcsar’s crystal ball is based on the principle that the overall goals of the CFO are immutable, but the path has become more and more digital.
He emphasized that while there are more opportunities, it’s just as important as ever to get the fundamentals. That includes payment processing, settlements, reconciliation and recognition, all of which must be done in the proper way.
PayU has already embarked on the digitization and automation journey. As for the future, as a fairly recent arrival to the firm, Kulcsar is assessing what further kinds of procedures need to be included in the scope of work.
Kulcsar said, “Clearly, the firm must manage working capital, but it’s not only your balance sheet. This is also about having a better relationship with vendors. In the past, these business processes were very manual, requiring substantial resources to execute.
“So, if you can automate and streamline the process and put additional control in place, that not only helps you, but also your partners.”
In a supply chain-constrained environment, such improvements in vendor relationships can give firms an advantage in the competition for scarce resource inputs.
Scalable Practices = Best Practices
Kulcsar provided this advice to smaller companies: “For the smaller companies, the challenge is that they do not have enough resources to execute. I would really encourage them to have a review to create some clarity around that, what are the pain points, what can they implement, what resources and effort do they need to put in place.
“Sometimes with relatively smaller investments, you can really achieve great results. So, it doesn’t mean that they need to start the holistic approach — addressing all the procedures and the whole finance function — but they can find really the sweet spot.
“That’s going to help them make some small changes that are properly prioritized, and thus can yield outsized returns. They can do step by step with a regular approach.”
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