For modern CFOs, it's about more than just the numbers
By Janet Berry-Johnson | for The Net Gains
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The role of CFO isn't what it used to be. Gone are the days when finance chiefs could simply focus on balance sheets and budgets. Today's CFOs are strategic leaders, tech adopters and risk managers. Adriana Carpenter understands this shift firsthand as the CFO of Emburse, a subscription based expense management solutions company. With a track record that includes steering a company through a successful IPO and leading finance at a high-growth subscription-based business, Carpenter really gets what it takes to be a CFO today. She sat down with The Net Gains to share her take on AI's impact on finance, the challenges of subscription-based revenue models and how to prepare for high-growth milestones. -Janet Berry-Johnson
The role of CFOs has expanded beyond traditional finance functions. How do you see the modern CFO’s responsibilities evolving, especially with the rise of automation and AI?
More and more, we’re seeing the CFO’s role shifting from traditional financial stewardship to one that is both strategic and operational. With the rise of financial technologies and the availability of AI, CFOs must embrace new tools for automation, reporting and data analysis. But it’s not just the finance function using AI; CFOs should partner across the C-suite to understand where and how to invest to best leverage AI in external-facing products. Lastly, as you leverage AI and technology, be mindful of the company’s cybersecurity posture; companies handling large volumes of data may increase the risk of data breaches and other cybersecurity risks. Ensure your company has appropriate data governance and data security protocols in place to safely deploy a holistic AI strategy.
With your experience leading finance in a subscription-based business, what are the biggest financial challenges companies face in this model, and how can CFOs address them?
The advantage of a subscription-based business is its recurring revenue stream. However, understanding the levers that could accelerate or decelerate that revenue stream is critical to ensuring you’re meeting your financial goals. Two key metrics to measure are the cost to acquire new customers and the net expansion rate of your existing customers (is your customer growing with you or shrinking and canceling). You also need to consider cash flow management; you’ll want to establish standard contract parameters to maximize your cash position, such as requiring annual, up-front payment and improving customer retention metrics through longer multi-year contract terms versus terms that are cancellable or month-to-month.
As someone who helped guide a company through a successful IPO, what advice do you have for CFOs preparing for high-growth milestones, whether it’s an IPO, acquisition or major funding round?
From an external market perspective: Know your key differentiators—what makes your company stand apart and how do those differentiators map to financial? Internally, you need to ensure that across all functions, there are consistent processes and systems to support a quarterly cadence of delivery. Each area needs to be prepared: product to deliver committed enhancements, sales to meet its targets, and the finance team to deliver financial results. The whole company needs to learn how to deliver to an external quarterly cadence that is much different from a private company’s annual cadence. Don’t underestimate the amount of investment and preparation it takes across the company holistically to be ready!
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The Net Gains is curated and written by Janet Berry-Johnson and edited by Bianca Prieto.