The CFOs Dilemma: Unlocking Business Success Through Accurate Data

Written by Sergio Garcia
December 15, 2023

Wyatt Earp famously said “Fast is fine, but accuracy is everything”. Navigating the uncertainty of the current market and geopolitical landscape certainly can be compared to the wild wild west. But, for contemporary CFOs, Wyatt Earp’s famous words ring true in the context of data analysis.

Reliance on data is the foundation of any finance executive looking to create accurate forecasts and allocations that help drive informed decision making. However, the reality is a staggering 70% of organizations have made significant business decisions with inaccurate financial data (BlackLine). This begs the question how can CFOs improve data accuracy? This pervasive issue shows that business decisions are often made in the dark, guided by flawed information. 

Almost half (49%) of executives grapple with various issues that hinder their ability to navigate business impacts – such as fluctuations in customer spending power, inflation, interest rates, and the escalating prices of goods and services.

A major contributor to this all too common problem lies in the labor-intensive, manual processes many finance teams go through to collate and reconcile bank data. Manually leapfrogging across multiple bank portals to access transaction data, spending days and weeks compiling it all into spreadsheets, resulting in out of date liquidity positions and ad hoc forecasts. Many finance teams are faced with this slow, cumbersome process that is prone to costly errors even with a legacy Treasury Management System (TMS). In fact, simple mistakes in spreadsheets have cost companies millions, sometimes billions of dollars.

But now, treasurers and finance executives can use tech and advancements like open banking, AI, machine learning, APIs and cloud computing to instantly access accurate data in real time. In this blog post we’ll explore how modern treasury management software can transform your operations. But first, let’s look at what CFOs identify as the most common roadblocks to improving data management.

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The Roadblocks to Data Accuracy

Effectively utilizing information for agile decision-making can be challenging when it’s not readily accessible and accurate. CFOs face the task of enhancing data management to align with the company’s vision and strategy, ensuring widespread understanding across the organization. Beyond this, addressing the fundamental challenge of acquiring suitable technologies for reconciling and processing data is crucial. Additionally, CFOs must attract talent with the expertise to operate these systems and analyze the data within them.

According to Deloitte’s CFO Signals survey, over half of CFOs identified inadequate technologies, immature capabilities, and a shortage of experienced talent as their primary obstacles in converting data into accurate insights. This underscores the need for CFOs to adopt a systematic approach to leverage data for decision-making and value creation.

Align on What Data is Useful

While not all data holds equal significance, its usability should be consistent. The information should cater to recognized needs, whether they pertain to financial, operational, or environmental aspects aligned with a company’s industry and operations. To achieve this, CFOs must gain a precise understanding of the origins of financial data and its intended consumers.

Unleashing the full potential of data necessitates a comprehensive tracking of its trajectory. The following outlines six specific actions CFOs can undertake to enhance the usefulness of data seamlessly integrated into every company interaction:

  • Clarify your requirements – Pinpoint the specific data and the level of granularity needed to comprehend the value drivers of your business, facilitating informed decisions that shape both business strategy and performance management.
  • Institute a data model – Implement a standardized approach to capture and analyze data, accommodating its diverse applications.
  • Establish uniform standards – Streamline information from diverse sources, identifying crucial data and prescribing methods for its cleansing and preparation.
  • Synchronize data – Determine the downstream processes that the data is intended to influence.
  • Embrace robust governance and uphold data quality – Proactively manage data to meet evolving needs in routine tasks such as capturing, storing, securing, controlling, and reporting. 
  • Align information requests – Ensure that data is in sync with any performance management expectations it is meant to support.

Implementing these actions will allow you and your team to be aligned on what data matters. It will also enable you to get the most out of your tech solutions and focus on providing value through strategic insights. With this framework in place, you need the right technology to streamline the process and reduce the chance of errors. 

A Modern Treasury Management Platform for Modern CFOs

By now you’ve likely heard all the trending tech related buzzwords in finance – APIs, generative AI, cloud technology, and the list can go on. But, amidst all the hype there are concrete and practical ways in which this technology can enhance the efficiency and capabilities of finance teams in their daily operations. While terms like cloud computing and open APIs are frequently mentioned, it’s essential to understand their practical implications for improving data accuracy. 

1. Open Banking APIs Saves Time and Automates Bank Reconciliation to Improve Accuracy

Accurate cash flow data empowers CFOs to make strategic decisions with confidence. From investment strategies to resource allocation, having a clear understanding of the financial inflows and outflows ensures that decisions are grounded in reality rather than speculation. This, in turn, enhances the overall effectiveness of the CFO’s strategic vision.

Open banking APIs are a game changer for finance teams. Rather than manually gathering data from multiple banking portals, this technology enables your company to establish read-only access between your corporate treasury software and your bank.

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This setup creates a unified dashboard that displays your organization’s liquidity position in real-time, consolidating all relevant information in one location. This approach minimizes the risk of errors and establishes a singular source of truth for modeling, analysis, and forecasting.

cfos improve data accuracy

With precise cash flow data, CFOs can navigate the intricate terrain of strategic decision-making with clarity. Accurate financial insights enable you to identify growth opportunities, optimize capital investments, and align the company’s financial strategy with broader business objectives. This, in turn, empowers you to spend more time focused on value-add functions as a strategic partner, contributing substantively to the organization’s overall success.

2. Cloud-Native Technology for Collaboration and Team Visibility

Reliable financial information is a cornerstone of building trust among stakeholders. Be it shareholders, board members, or external partners, accurate cash flow data instills confidence in the organization’s ability to manage the financial health. This, in turn, enhances the company’s credibility and easier access to capital.

Stakeholder confidence is a valuable currency, influencing investment decisions, partnerships, and overall market perception. CFOs, as stewards of financial information, bear the responsibility of ensuring that stakeholders can rely on the accuracy and transparency of financial data.

A modern treasury management platform provides a unified source of truth accessible to all users. This ensures that everyone is viewing the same numbers, with any amendments made by users being saved. This facilitates efficient and seamless sharing of analysis and data among all users to ensure consistency and accuracy amongst your team as you share data and insights with stakeholders.

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3. AI Automated Cash Forecasting

In today’s dynamic business environment, adaptability is key to survival. Accurate cash flow data enables CFOs to quickly respond to market changes, emerging trends, and unforeseen challenges. Whether it’s capitalizing on new opportunities or navigating economic downturns, a real-time understanding of cash flow positions the CFO as a strategic navigator, guiding the company through turbulent waters.

Prompt decision-making is essential in today’s economy. This is precisely why the functionality of automatically generated cash flow forecasts is crucial. These forecasts dynamically adjust with changes in your situation, providing a consistently accurate and clear projection of the future. Historical data from your bank accounts is automatically compiled, and machine learning algorithms evolve to grasp the rhythms of your business. This ensures that the forecasts become increasingly precise over time.

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The reality is, automation is no longer a mere “nice-to-have” – it’s a necessity. With automatic recording and normalization of cash flows, your team can transition from data wrangling to data analysis. This analysis aids in identifying vulnerabilities, enabling you to manage your entire cash position – whether as a unified entity or individually across regions – in a manner that mitigates risks effectively.

Get More Accurate, Actionable Insights with Trovata

The transformative potential of accurate cash flow data for CFOs cannot be overstated. It is the linchpin that unlocks the door to strategic decision-making, risk mitigation, resource optimization, stakeholder confidence, and agile adaptation to market changes. As CFOs navigate the complex landscape of modern business, the need for precise financial information has never been more crucial.

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With Trovata you can gain unmatched visibility of cash daily across all accounts, empowering you with automated, AI powered reporting and forecasting to make the most out of excess cash. Aggregate, search, tag, analyze, forecast, and report; gain everything you need to make smarter decisions. Elevate your business’s financial operations with Trovata’s superior tools today.

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