Why CFOs Can’t Automate Relationships: A Sit Down with Janelle Gorman

Why-CFOs-Can’t-Automate-Relationships-A-Sit-Down-with-Janelle-Gorman,-CFO-of-York-IEI recently sat down with Janelle Gorman, the CFO of York IE, an investment firm helping reshape how today's companies are built, scaled, and monetized. 

We dove into several trending topics during the conversation, from the power of data to the rise of robots. Janelle shared her thoughts on finance and accounting's evolving role, describing how a high-performing back-office team can fuel the growth of companies of all sizes.

She also explains how high-quality, real-time data is the real superpower of the modern CFO and the F&A team. 

While automation is at the heart of what we do, Janelle made a great point about what shouldn’t be automated in the corporate back office. 

Keep reading to learn why Janelle said relationships were among the most valuable things a finance team can bring to an organization and why CFOs shouldn’t automate them. 

▶️ We also created a video of our interview, which you can view here.

Nick Ezzo: 

How has the role of the CFO changed in the last five to 10 years? And where do you see the function heading in the next five?

Janelle Gorman:

Janelle Gorman, CFO of York IEWhat the CFO role has always demanded is accurate and reliable data, and that demand continues to increase over time. So data is evermore from what I can see consumed and applied in real-time to make key business decisions. And that's especially true in the startup world or fast high-growth companies where decisions are made rapidly. They're made all the time. 

There's a lot of pivoting and changing, and data is the best basis to make those decisions. And the companies are looking for CFOs to supply that data in real-time. Financial statements are just the tip of the iceberg. We're diving into KPIs, analytics, trends analysis, projections. That's really the data that fuels the business, and I see that growing.


How long do you or your team spend preparing for an audit?


It depends. I mean, the goal is to be working on it year-round to maintain a steady-state of readiness so your information is accurate and reliable. You can provide support to document that at any time. So invoices, vendor information, you want to be maintaining those records throughout the year. So when they're needed, if, by an auditor or somebody else, they're ready to go. Compliance and accuracy need to be an ongoing effort that will shorten your time preparing for an audit.

It’s also important to make sure that you provide data that can be used and relied upon at all times. If you wait to prepare for your audit until your audit comes, then you're going to spend a lot of time preparing for that audit. You're going to be searching for data, spending a lot of time putting together schedules and documentation that they're looking for, and you risk waiting to find errors until the 11th hour. Then you're trying to fix errors at the same time as preparing for the audit. And that's really when kind of the fire drill starts. So we try to make sure that we're spending a little bit of time, all the time, in preparing for the year-end audit.


What are the challenges around building back-office teams and retaining the talent?


Finding the right people is difficult, and that's probably true for many roles, but especially the back office, because it's such a broad skill set that you need. You need folks that are going to be collaborative, motivated, and efficient at their work. Still, they also have to pair that with the ability to work independently, be reliable, and be detail-oriented. So that kind of scope of detail all the way through strategic thinking is hard to find and hard to build your team around that. Accuracy and compliance come first, but that's not enough. You can't just have someone willing to spend the whole day in the weeds and then try to punch out.

We need to know what to do with that data once we have it. And you want your entire team, whether it's an AP clerk, your controller, or your CFO, to always keep that big picture in mind and know how their detail work will apply to the strategy because that's really where your finance team makes a big impact. Having such a broad scope of work can often lead to burnout. So building a back-office team can be difficult, especially in the startup world where there's so much work to do at such a rapid pace to get it done. You don't want your teams burning out. So to achieve such an extensive scheme of work without burnout, you've got to look to things like automation and other ways to make people's jobs easier so they can get them done in a realistic timeframe.


When you think about the best finance people you've worked with, what separates the best finance people from the rest?


It's those that can achieve that broad scope of work to accomplish accuracy and compliance without burnout, and they're efficient and effective in their work. Their work can absolutely be relied upon—that's huge. But then, on top of that, they maintain passion, integrity, motivation for their work to keep going. They have time on top of getting all of the detailed work to grow, to grow in their roles individually, and also contribute at a corporate level. 

So not just to get the work done and kind of punch out for the day, but the best finance people say, okay, here's the data, here's everything I know about what we're doing. Here's what I think we can do with it. Here's a trend I've noticed. Here's how I think we can apply it. Hey, it looks like we might be coming into some cash flow issues, whatever it might be, but the best finance people hang on to their work to find those trends, and they're motivated to contribute to the bigger picture in that way.


Awesome. So if you could wave a magic wand and solve one problem in finance and accounting, what would it be?


It's this concept of  "there's just not enough time in the day. The scope of work that finance can take on seems to be getting bigger and bigger to me. It’s not just “have so-and-so from accounting get this thing done” and you never really have to interact or talk with them. It's “hey, accounting has data that we need to draw conclusions on and run the business.” And if you spend all your time being a nerd behind the computer, you're never going to have the time to do that strategic stuff and get the most value out of the finance team. One way you can look at this, it's solving this is to add manpower, but that comes with a lot of other responsibilities. You spend your time managing people rather than getting to your team's strategic initiatives that need to be tackled.

And it doesn't help balance efficiency and accuracy. And those are two of the main pillars that you need out of your finance team. So to create more time in the day, that magic wand is automating high volume transactions. I hear all the time -- this work isn't necessarily difficult. It's just tedious. It's just time-consuming. If I could just get it done quicker. If each transaction didn't take me three minutes to process, which doesn't sound like a lot in a microcosm, but when you're fast-growing, and your transaction volume is very high, three minutes per transaction eats up a lot of time. So I would solve for more time in the day. But if we could solve that for the inverse to get things done faster, we could make that up in the end.


What are some of the challenges around forecasting cash flow?


Yeah, cash flow is tricky because so much of it is based on timing. So when we go to predict a P&L to make forecasts to make budgets for the year, I can predict what are our customers going to be spending with us? How many customers do we think we can bring in based on our headcount and other inputs that go into that. But it's challenging to predict, "when will my customer pay? Will they pay on time? Will my new customers select monthly billing or quarterly billing? When does the cash actually come in? And that's different from one is the service provided in revenue recognized.

On the flip side, when is a vendor going to be paid? That can be tricky to predict. I might know I'm going to spend X dollars on a certain service throughout the year, but am I paying for that upfront? Am I paying for that quarterly? You know, some subscriptions are annual in advance, that makes a big difference to cash. Timing is one of the biggest challenges on cash. To predict that, you can see how a cash forecast file will get really long to start to think, not only of what will happen in the business but what timing do we predict to happen? That can make a forecast file really big.


How concerned are you that errors are lurking in your financial data?


It's a concern. It's something we always are solving for. I don't think the goal is to eliminate 100% of errors in our data. That would just be all too time-consuming. We talk about a balance between accuracy and efficiency. So in striking that balance, we know we might have some errors that slipped by. The two ways that I tackle the risk of errors is by materiality, which just means is this error large enough to have an impact? Of course, that's subjective, depending on whom you ask. The other way that we tackle errors is to look at-risk areas. So what's the risk that something in this area is wrong, whether it be cash revenue expenses or otherwise. And then, we can focus our efforts to reduce errors based on materiality and risk.

You start with prevention, which establishes great internal controls, segregation of duties and processes that prevent an error from happening in the first place and reduces the opportunity for those errors, which can be done by manual checks and balances or even better automation. If an error occurred right, then detection and correction become the next huge hurdle to tackle. That's, we've got to find it and fix it quickly. 

Sometimes if an error is based on a flaw in a process, that error can grow over time. They're not always a one-off thing. So review an analysis, of course, is a great way to be detecting and preventing errors. But higher volume either requires more time or more automation to reduce the opportunity of ever. That's critical for a CFO or anybody in finance to ensure that accuracy is maintained with a good reduction of errors for no material errors.


What does your CEO or your board expect from you and then, by extension, your accounting, and finance team?


Foundationally, the finance team is expected to deliver compliance and accurate data. Not only that, but the data has to be compliant and accurate, and it has to be usable. They have to be able to consume this data to be applied to the business in a way that drives the business towards its strategic goals and initiatives. From the CFO specifically, they're expecting meaningful collaboration from the finance team and from the CFO, which is really broad, right?

But I think each executive leader is expected to drive the organization towards its goals. And each executive leader has kind of a superpower in doing that. I see the CFO's superpower as data, right? It's compliant. It's accurate. It has historical financial performance and trends. It has quantitative reasoning and has financial projections and tolerances. So, the CEO and the board expect a collaborative leadership team and an all-hands-on-deck kind of effort. Finance can provide that through really great data that can be applied in countless ways.


What are some of the most disruptive technology trends you've observed in accounting and finance?


Automation has been beneficial. Many companies are adopting this already at some level, but the potential is fantastic here. So what has already been adopted easily that maybe we're not even paying attention to is electronic bill pay or even just using a cloud-based ERP system where we start to use machines a bit. Trust machines for some of these processes -- the automation potential in AI and machine learning can blow that out of the water, right? The potential there is huge. The next steps I've seen picked up in my career are memorized transactions, prepaid Emiratisation processes, pre-programmed revenue recognition schedules. These are the things that when you get into high volume, and an automated process can help, the benefits really take off. They're easy to see from day one once you implement some of these things, and I think those are getting adopted more and more.

What could be really disruptive—and it's coming, or it's here for some and maybe not all—is that automating a process fully end-to-end where a human didn't necessarily set up each transaction type. This automation can do it for them end-to-end. That's going to be really disruptive and hugely helpful. A computerized analysis and a call-out of risks or anomalies will be absolutely incredible and impact how the finance function operates and contributes to the company. So the potential there is huge for a computer to tell us something that a human mind certainly could figure out but would take so much time to do. And a computer can do that thinking and that processing much faster for then a human to come along and absorb the information that that computer has given it, and then make decisions based on that rather than doing the full process themselves.


Are robots going to take away finance and accounting jobs?


I do not think robots will take away finance and accounting jobs. I think they will enable finance and accounting jobs to be what finance and accounting professionals want them to be. And that's strategic, that's goal-oriented. That's really impactful to the business. I hear so many times in my career, I just have to get through all of this, and then I can do the analysis. I just have to enter all of this stuff, and then I can provide my conclusions and recommendations for the business. Nobody enjoys those tedious tasks of getting through the tedious work. You know, a lot of the finance and accounting professionals want to flip to the results part of it, the contribution part, how can we grow? What can we learn from this? And so I think computers will enable us to really develop a finance organization into the potential that it could be to drive the business forward.


Are there some finance functions that CFOs will never automate?


Oh yeah, for sure. You can't automate relationships. You can't automate human interaction and collaboration. And I think that that's some of the most valuable things that a finance team and a CFO can bring to an organization. Those won't go away. There's a lot that finance does that isn't just paying the bills or paying payroll, and for some people that aren't in finance, that can be hard to see. Still, there are banking relationships. There are insurance relationships, there's cross-collaboration between departments, there are pricing and strategy discussions. There's so much value that a finance team can provide to an organization that computers will never take. Computers will help us to be more proactive and more resourceful in that regard.