Analyze, align, automate: How to optimize financial systems.

Optimizing your financial systems to meet your company’s evolving needs is not just a matter of implementing new software. “People and processes need updating as well when it comes to processes evolving,” Reuben Cook of Squire told Airbase CFO Aneal Vallurupalli at a recent What I Wish Knew session, The value of consolidating systems and processes. As Partner, CFO Services at Squire, Reuben works with companies through their transformative growth phases to establish best practices. 

“I have the luxury of dissecting multiple businesses to look at what’s working well, but also what’s misaligned and how we can solve these problems in an efficient way.” He defined transformative growth stages as typically being between $20M and $200M in ARR.

Reuben has noticed three main motivations when companies start to look for optimization strategies: 

1. How do we scale? A company might be preparing for an IPO or hoping to achieve unicorn status.
2. How do we manage risk? What keeps us compliant?
3. What makes us efficient? This has always been a hot topic with manufacturing companies, but Reuben has noticed a focus on efficiency from SaaS companies recently. 

The evolving role of the CFO. 

Upgrading systems increasingly falls under the Office of the CFO. Reuben noted several factors behind this trend, including the rise of cloud computing and no-code software. “When we implement an ERP, for example, there is less of an IT role than there used to be and more of a role for the Office of the CFO. “ That’s all part of a growing awareness of the cross-functional nature of the role. 

“I like to say that all roads lead to the general ledger. No matter what process we’re doing, every transaction has an endpoint of financial impact.” 

Some of those processes just naturally draw in the CFO, while in other areas they need to be deliberate in expanding their footprint — a shift that often involves upgrading systems with an eye to consolidation. Reuben gave an example of companies that aren’t aware of rising cloud service charges because there is no central oversight or pricing model in place. 

Aneal noted that more analytics teams are reporting to the CFO instead of R&D. The no-code reporting functions used are viewed as tools that fall under the CFO office because that is where the business leaders reside. Systems and processes for these analytics must be built around principles of consolidation and collaboration in order to involve all relevant stakeholders. 

Consolidation as an efficiency driver. 

Reuben explained that the benefits of consolidation are a frequent theme in his work. 

“The commonality that tends to surface is that everyone has waste in efficiency. That waste can be in terms of lost time, redundancy, or bottlenecks — so system consolidation becomes part of that discussion,” he explained.

Not too long ago, AP would have had multiple systems to manage the different components of AP — bill payments, reimbursements, corporate cards — but now it’s possible to manage those functions from one consolidated platform. It’s all part of a growing trend. 

“15 years ago, I talked about the shift from a one-system-that-does-everything approach to a best-in-class approach. At the time, we couldn’t have two systems that talked together efficiently or reliably. That led to a situation sort of like where we are at with streaming services now — I have about seven streaming subscriptions.”

“Now we’re starting to see a settling with a more optimal way to use technology and consolidating certain systems where it makes sense.” 

Audience members identified consolidation as an important priority. In an audience poll, 35% said consolidation is an essential part of software evaluations. 

A framework for optimization.

Reuben pointed to the high levels of waste he sees — even in well-established companies. Ultimately, that should drive conversations about optimization, which he defined as “alignment with minimal waste.”

With that definition in mind, he said the guiding framework for systems and processes optimization should be:

“How can we better align our processes to business objectives? And how can we align our tools to our business processes? All while minimizing waste by automating as much as possible.”

The importance of company stage. 

Another frequently overlooked factor in optimization discussions is aligning a company’s stage of growth with the right tools. That starts by taking a step back and looking at current processes with an eye to growth.

“We use a simple methodology: analyze, align, automate,” Reuben said. 

Issues that raise concern include the cross-functional problems that arise when a company expands.

“They’ve transformed from this founder-centric company to a more process-driven company, to a more regulatory, compliance-driven organization. What we want to do is to get from that process-driven environment to an enterprise environment.”

Reuben explained that growth can ultimately harm efficiency. As a company expands, they hire more directors, who each implement their own processes, without considering the benefits of consolidating them or even collaborating to determine best practices.

“And now we’ve got silos. It’s a natural transformation that everyone goes through, but we’ve got to keep the next stage of enterprise level in mind. How can we consolidate our tools? How can we have cross-functional processes?”

Aneal joked that an excellent example is a company using Dropbox, Box, and Google, all doing the same function, or Notion, Asana, and Jira for identical tasks. New tools that give visibility into subscription spending, like Airbase, help the finance department to be the unifying glue across the company. But it’s not just a matter of canceling a subscription, because it’s also necessary to get all departments aligned on any changes to their processes. 

“The Office of the CFO can be the transformation leaders within the organization because they see it all,” said Reuben. Someone has to take the lead to move away from a disparate, siloed environment to an enterprise-level one. “We can’t get compliant and we can’t meet regulatory requirements until we get to that enterprise model.”

Finance can identify duplicate spend and opportunities for savings. They can also assess systems that aren’t performing well. If it takes a couple of weeks to finish the month-end close, for example, there is a problem with the systems and the processes that provide the necessary information. Similarly, if finance isn’t getting the data they need to make informed decisions, that can lead to conversations around digital transformation initiatives and the need to upgrade systems. 

Collaboration is key. 

If system optimization seems overwhelming, Reuben suggests going back to the main factors of redundancy and efficiency, drawing on input from all affected stakeholders. In his work, Reuben finds the prime area in need of improvement is spend management.

“This is the number one area where there is dysfunction, partly because it is so cross-functional. Typically, we end up with disparate systems.” He added that many clients introduce a consolidated spend management system to resolve those issues and improve collaboration. 

Optimizing systems and processes through consolidation has far-reaching implications across a company. Both speakers acknowledged that it’s a never-ending task as businesses evolve and change. By emphasizing collaboration and communication, optimization efforts are scalable. 

Airbase partner Squire works with organizations to optimize their spend management environment. Airbase’s spend management platform improves collaboration through configurable, cross-functional workflows.

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