To maximize business goals, today’s CFO needs to be a “renaissance man”, as the job requirements have evolved along with the responsibility. CFOs aren’t strictly number crunchers and finance gurus as they were in the past – they’re also strategic architects, trusted advisors to CEOs, and leading communicators in the Boardroom.
What hasn’t changed, though, is that the CFO must continue to manage expenses and grow profitability. Here are the three most effective ways for CFOs to uncover hidden cost savings and maximize profitability in 2017:
1. Think Strategically
Traditionally speaking, CFOs have looked to cut costs in the most logical areas, for example, by minimizing administrative and operational overhead costs. It makes perfect sense – reduce spend across departments and cut down on expensive dinners, conferences and retreats to free up budget to allocate elsewhere, right? Well, yes, maybe in the short term but it’s not effective in the long term.
CFOs need to be sure that every quarter, they’re thinking outside the box, of innovative ways to save money – and that this way of thinking aligns with their overall business strategy and goals. Is a new product or service you’ve invested in providing value and ROI? Are you wasting time and money by complicating processes that could be streamlined with a different approach? These are the types of questions CFOs should be asking themselves to find new ways of cutting costs.
2. Uncover Hidden Costs
According to IDC, the U.S. Mobile worker population is expected to soar past 100 million by 2020. Having a mobile workforce costs more than many realize, considering things such as expense fraud, being out of compliance with company policies, maintenance of a vehicle program, and tax waste.
Let’s consider a fictional example that’ll put these costs into context. Howell Hot Dogs is a hot dog vendor based out of Atlanta, GA that has a workforce of 10,000 employees that drive for work each day. About half of these employees require a specially-branded, company-provided vehicle, and the other half drive their personal vehicles for business.
For those employees that drive company-provided vehicles, how will Howell’s CFO account for personal use? In other words, isn’t it reasonable to think employees might drive these vehicles outside of business hours? This can cost the business significantly. Let’s also say the other half of Howell employees driving personal vehicles are being reimbursed at a cent-per-mile rate. The issue here is that a good chunk of these employees drive far more than others, and in different areas of the country. If they’re all reimbursed the same rate, this leads to inaccurate and unfair reimbursement, which is also costly for Howell’s CFO without truly realizing it.
3. Leverage Technology
To continue the above example, Howell Hot Dogs employees submit monthly paper mileage logs to their manager for reimbursement. This raises yet another problem – there’s a good chance that a portion of employees will misreport their business mileage. This noncompliance leads to Howell shelling out excess dollars in reimbursements on an ongoing basis. In fact, a Chrome River Survey shows that 35% of those that commit expense fraud do so by misreporting their business mileage.
With a technology approach, these problems disappear. With an automated technology platform, Howell can reimburse its employees based on where and how much they drive with compliant mileage logs. Also, by eliminating the paper-based process, Howell’s CFO can rest assured knowing employees are being more productive and focusing on generating revenue for the business.
The Bottom Line
The modern CFO has more responsibility and pressure than ever before. This requires a need to maximize profitability and report positive results to the CEO to propel their business to the next level of growth. To realize cost savings, CFOs need to be strategic about their overall goals, pay closer attention to the way they reimburse their mobile employees, and take a technology approach to avoid costly lawsuits and ensure a compliant workforce.