The once massive “Business World” is now being affectionately dubbed a smaller, faster and more intimate “Tech Village”. Although cute-sounding, technology has seriously streamlined international communication and operation, changing the character of business completely, demanding more speed, value and capability than ever before. Hello, Globalisation.
Businesses are no longer competing with the team in the office next door or even the one on the other side of their city. They are now competing with companies from San Francisco to Hong Kong. Client bases are also becoming less local and more international. Not to mention the funding and investing landscape. Buying, selling, investing and competing internationally brings about both massive risk and massive opportunities. Business owners can no longer afford to just keep their eyes on their local market.
Globalisation and Finance Management
The implications for this business-going-global trend are far reaching for your company’s finances. You need a finance person at the frontline of your company’s financial future that can think global, someone able to reactively meet a complexity of international standards and proactively capitilise on the opportunities that come with global trade. They will need to be able to set up the group structure that attracts the most investment and the least tax as you scale.
They will need to able to get Reserve Bank clearance to facilitate your international funding. They will need to understand the effect of Rand devaluation on the cost of your suppliers. They will need to navigate compliance and planning in the different tax regimes in which you operate and know how to best trade in different currencies. This is a professional that we would refer to as a Global CFO. From the youngest start-up to the most sophisticated corporate – no entrepreneur can navigate this international landscape without one.
Globalisation and Tech
The other major trend that is turning over the apple cart is the rapid development of technology. Many sectors have felt the effect of this. Rental agencies and guest houses are losing out big time as Airbnb puts short term holiday rentals in the hands of the individual. New York’s scrap yards are full of yellow taxis who never thought that an app would ever pose a threat to their business.
The use of technology is enabling both new, innovative and differentiating ways of doing business, and new in-turn revenue streams. It is also making scalability easier. Just a few examples from our client base proves this:
- a recruitment company that uses an app and online portal to match newly qualified graduates with internships and first jobs from the other side of the world;
- to a domestic services company that uses a sophisticated platform to bring jobs to hundreds of cleaners and a fast, simple and transparent cleaning solution to the home owner;
- to a logistics company that uses an app to enable quick door-to-door deliveries;
- to a payroll company that uses cloud technology to effect payroll transactions throughout Africa;
- to a drone company that uses online training tools to accredit drone pilots and uses an app to authorise and insure drone flights.
The list goes on. In running such companies, management could have one or many of the problems that come with the tech territory: a disbursed sales team, a rapid influx of new contacts and leads that need to be turned into business, staff expenses that need to be reimbursed, large volumes of transactions that need to be processed, massive amounts of information from which decisions need to be derived, and fast moving cash flow that needs to be managed.
What they need is a financial professional who is not only able to keep up, but simultaneously innovate, utilising technology to give the company a competitive edge. What they need is a Tech CFO.
Such a professional would be able to build in the cloud solutions required to manage a disbursed sales team. They would be able to help set up the CRM system that ensures that leads can be tracked and converted. They can help automate expense claim systems that allow easy staff reimbursement. They can introduce the right cloud accounting system that can process big volumes quickly. They can build the right dashboards for management to always have a live snapshot of key metrics and financials and build in the right cash flow tools for forecasting and planning.
Yes, the financial rules of business still remain the same. Management reports are still as relevent as a century ago; cash flow needs to be monitored and planned, and financial ratios and key metrics still need to be tracked and improved on. However, not only has the game of finance itself changed for entrepreneurial businesses, but the technology that can be utilized to improve how a company is managing, competing in, engaging with and adding value to a global community is too.
Nevermind new capabilities like the easy deployment of multilingual and affordable international teams, and immediate opportunities like building international relationships with suppliers, mentors and investors in other countries, the smart utilisation of tech has enabled new types of businesses, new revenue streams to supplement top line revenue, never-seen-before efficiency to increase bottom line profit and the opportunity to streamline and scale for so many companies.
What Does This Mean for My Business?
More than ever before, the World is your oyster. Ensuring that the person at the head of your finance team can wear the Global and Tech CFO hats and implement effective tech can better enable your business and people to perform, innovate and succeed.
About the Author
Louw Barnardt CA(SA) is the managing director of Outsourced CFO, a financial management boutique of Chartered Accountants. Louw and his team specialise in CFO services for fast-growing technology companies to help them navigate and scale their finances in a rapidly changing world. You can find out more at www.outsourcedcfo.co.za.