When Alexander Graham Bell, said “Watson, come here! I want to see you”, little did he suspect that in the 21st century, less than 150 years after he began his experiments, the telephone would be so ubiquitous that even in parts of Africa where there is no running water, there would be full cell phone coverage. And at that time, in about 1873, the “CFO” was a man in a tall hat with a quill in his hand in charge of a team of accounts clerks laboriously scratching numbers into leather bound ledgers.
Just as Alexander Graham Bell wouldn’t recognize today’s phones, so the “CFO” of 1873 should not easily identify with the role of the 21st century CFO – the CFO 4G.
The CFO 4G
The CFO 4G isn’t a pen pusher or bean counter. The role is much more strategic than that. And it’s more than just money – it’s about accounting for and managing the assets of an organization – and that’s why it is relevant to purchasing – and why purchasing is relevant to the CFO.
For many years, the finance function’s relationship with suppliers was all about administering managing the timing of payments. Delayed payment was a key lever in cash flow management but as many supply chain professionals know only too well, the implications of late payment to the supply chain and the consequent problems created for the business can be out of proportion to the cash benefits. Siloed procurement and finance operations create a dysfunctional organization that suppliers can take advantage of.
The CFO 4G sees this. In order to manage the assets of the organization, a holistic view needs to be taken balancing the needs of the core business, the importance of strategic supplier relationships as well as the importance of cash management. Prompt payment reinforces collaborative relationships. Early payment not only supports strategic suppliers, it has a financial worth and by implementing purchase to pay processes the pay back can be generated using dynamic discounting.
The CFO 4G doesn’t look like the Victorian “CFO” – just as an iPhone doesn’t look like it’s two piece Bakelite ancestor. And just in case the old style CFO needs it spelling out – there is no room in 21st century businesses for those Bakelite phones any more.