Executive Summary
The saying “data is the new gold,” is not an exaggeration. As per a Harvard Business School article:
According to a recent survey of 1,000 executives conducted by PWC, companies who were
making decisions based on data were 3 times as likely to make significant improvements as
compared to those who were not. The key question we are tackling in this article today is what
data is under the jurisdiction of your CFO and why this matters.
Financial Data and Systems – From QuickBooks to a Robust Enterprise Resource Planning (ERP) System
Most companies on the African continent start by gathering their business data on word and
excel, prior to and perhaps even after incorporation. At a certain point, you might realize, due to
the increasing volume of your expenses and revenues, you might want to get an accounting
system to have accurate records of your books which can be presentable to investors and
revenue authorities. Despite affordability and ease of use, only-accounting systems have their
limitations as they often do not have procurement/POS integration. What ends up happening in
such cases is disparate data gathering – your financial data is in one location but all the drivers of
your financial data are still on excel or word documents.
Due to this, the future of most firms in terms of centralized data gathering lies in getting a modular
enterprise resource planning (ERP) system, where parts can be added based on affordability of
each module.
A seasoned CFO comes with not financial growth and sustainability expertise, but also with
helping you recognize what system(s) you need at your particular stage of growth. In instances
where you are unable to afford a more robust system, your CFO will help you integrate data
through templates (3rd party software, excel sheets, word documents) as much as possible.
Perhaps you have outgrown QuickBooks but don’t know which ERP to migrate you – your CFO will
guide you on such decisions.
Without data integration, you face the risk of not having the full picture at a glance and might
make decisions that are not taking into account “the full picture.”
Translating Data to Unit Economics to Drive Decision Making
Many CEOs receive accounting and other data on a monthly basis but are unable to translate it to
meaningful unit economics which ultimately drive profitability. Data is ultimately useless without
being able to derive meaning and make decisions based on it.
Your CFO should help you identify which unit economics drive revenue and expenses within your
company. For example, if you are a retail store you want to track: sales per square foot, inventory
turnover ratio, average transaction values, etc. When trying to get further investment for your
business, these unit economics are what will convince investors to invest in you.
Not having any data means ultimately, you will be disqualified from even being considered.
The Role of the CFO
As you can start to piece together, the role of a CFO is not only about ensuring compliance and
that your company is fraud-free, but also creating processes and systems which will point to how
your company can ultimately obtain the data it needs to get to the next level of scale.
What if your Startup Can’t Afford a Full-Time CFO?
Fractional CFO services are starting to gain traction around the continent. One leading firm in this
area is ProChange Africa, which offer hourly, daily, weekly, and monthly CFO rates. The best thing
about their approach is value add at all levels and the CFO will also be matched with your
company based on industry experience.
Check out their website: www.pro-change.co and schedule a meeting with a financial expert
today.
