Episode 36: How can Finance leaders build up their existing tech stack?

Madhurima Gupta (00:00):
Hi, welcome to the CFO Circle podcast, powered by HighRadius. Today I have with me David Appel, and we are gonna talk about how you can build your finance FinTech, how you can build your finance tech stack up to enhance how things are working at your CFO’s office. And before we get started, here’s a quick context that I wanted to set. For growing mid-market businesses it is imperative to continuously evolve, the technology in their day-to-day processes to ensure there’s a smooth functioning with clear insight into business processes. But how can CFOs and finance leaders build up their tech stacks to ensure that their tech environment is not only supporting them in the long run, but also being used to its full potential? Now, on that note, I’d like to invite David. Hi David. How are you doing?

David Appel (00:49):
I’m fantastic. It’s great to be here.

Madhurima Gupta (00:51):
I’m so excited to have this discussion with you. And the reason is that David is working as head of SaaS vertical at largest, one of the largest companies, on London Stock Exchange that sage. And over time as a sales and GTM leader, his organization has done really well for itself. He was previously running direct sales@bill.com and led NetSuite’s software vertical and was part of IBM’s corporate development team.

David Appel (01:18):
I’m so glad to be here. I love talk spending time with CFOs and, and, chair people of the audit committee and their teams. It’s a real treat to be here. HighRadius is a real strong partner with us. We appreciate the relationship we’ve developed and the many mutual clients and success we’ve had over time. And for you, our, listener, I hope this is valuable for you. It was kind of, when you do all the background, it, sounds good, but it was just a really blessed to work with some great companies, with some great people and, and, and really help some amazing companies in their growth. So thank you for having me, Madhurima.

Madhurima Gupta (01:52):
Thank you so much for those kind words. David, on that note, I have my first question for you. Given that you’ve been talking to so many, mid-market CFO, finance leaders, wanted to understand, what have you seen to be their accounting tech stack like?

David Appel (02:07):
Well, I want to set some context for this and this, I focus on the software and technology space, but this can be applied to most any spaces. There’s a continuum that people go through and you first create a product or a service and you’re trying to make sure the market’s gonna resonate with that. And then if that case, it’s just the ceo, the founder’s just throwing receipts in a shoebox and paying, you know, the team off a credit card. It’s really simple. It’s not much you need to do, but then you wanna prove you can sell what it is that you just created and you, so you wanna start to automate the processes around cash flow. So money coming in, money coming out with your billing, your AR and your AP, but then you wanna prove you can grow even faster and then keep and retain and upsell those customers. So all of a sudden a lot happens to finance at once. Volume is going up, the complexity and changes of the orders are going up, multiple line items are going up, might be happening to across multiple entities. And there’s all that complexity and scales going up. You’re trying to reduce the friction every place you can because we have a little internal joke. We say every finance project is really a reporting project because the executive team and the board and the CFO just wanna understand what’s been happening, going backwards and going forwards coming into the business. But then you come out of that stage and you wanna, if you’ve won your market, you become leader, you’ve got exit trajectory, then you wanna make everything profitable, repeatable and predictable. So a lot more fp&a comes into this, a lot more customer retention comes into all this. And so there’s several applications you need to apply to all that. And then if the next milestone is that you wanna big outcome of an IPO or a sale and there’s course growth that comes after that. But what this drives is there’s a whole level of international that you have to deal with with the consolidation that occurs and the foreign exchange that happens with all that and consolidating all of it so you can have a predictable forecast because when you’re in the public markets, you’ve got to nail your billings revenue and cash amongst many other numbers. So there’s this continuum, there’s this backdrop of what’s happening in the business cycle that the CFO that needs to guide everybody as to what’s happening. And so you go through this maturation of different portions of the tech stack as you’re going up through that. I can go deeper on it but I don’t wanna, for all of you listening, I just want to kind of keep it simple. We’ve got some visuals on this. If you just go to sage gentech.com/easy climb. We’ve got some, videos and visuals that give compliment all this. We don’t have ’em here in podcast that we’re doing, but please keep going on Madhurima, if I can go deeper on that or next question.

Madhurima Gupta (04:45):
Absolutely. So you know, with so many CFOs that you’ve worked with and you’ve seen what kind of solutions that they’ve been implementing, have there been cases where their text actually becomes a challenge rather than being the solution?

David Appel (04:57):
I spent a lot of time with our customers and I ask many questions. One of the questions I ask is, what do you most dislike about the job? And if you want to answer that for yourself as you’re watching this video or or to our listener, but you know what your peers number one answer is, it’s being doing manual work primarily around reconciliations, reconciliations of trying to tie data across multiple systems. What’s the AP say versus the GL? What’s the expense system say versus the GL? What’s the bank say versus what the chart of accounts say? You can go on down the list. It’s the integrations that are the pain in the key. I’m trying to manage all of this and so what people have asked for is just gimme a platform where I have as minimal integrations as possible and where in the they are make them as seamless as possible. So you know, just protect me, the customer from them because ultimately I just wanna get the data in one place, a tight close and then again report what happened going backwards and then forecast what’s likely to to happen going forwards.

Madhurima Gupta (05:58):
Absolutely and you know, even at highRadius we’ve spoken to so many CFOs and we’ve seen that the changing requisites at CFO’s office, upgrading to new software be it in ERP or in accounting software is not always an easy task and not necessarily the most effective solution in the long run as well as it can lead to a whole new level of challenge. What is your thought on that

David Appel (06:20):
Leverage wise council, if you haven’t, if you’ve gone through this before, what your peer network is or your investors or you know, whatever industry you’re at, people who’ve been through it a couple generations ahead of you or like generations of deployment, that age and learn a lot of the lessons because you wanna begin with the end in mind on all this. You wanna set your chart of accounts correctly. You wanna be thoughtful in what your billing use case is gonna look like and give space to do it right without having to manage exceptions all the time. And then similarly, the revenue schedule that comes against this, you wanna be thoughtful in what your expense policies are gonna be and how you’re gonna manage cash going out. What the approval process is. And, and while this is happening is your hair is on fire because you’re doing multiple jobs at once as you’re in the earlier stage just try not to paint yourself in a corner because when you become later and you need to do IPO readiness, there’s so much around controls of complaints you need to have in place and segregation the duties and SOX 302 and 404 that come into place now you just don’t want to have yourself painted in a corner that you can’t put all that in place the nuance cuz there’s like, oh, millions of nuances of all this. I’m happy to talk to you personally or whoever your wise council is, but do that. But just remember you already know this but I’m gonna state the obvious, your job’s to manage cash coming in and cash going out and to be able to report what happened and then forecast what went going forward. And if you understand where you bring value to your customer and the business model and that’s your true north and then how you try to monetize a business model around that, it generally works out. And, I’ve had the pleasure, you said earlier I’ve been very humbled that over time the course of my career, my organizations that are in the business, over 2000 customers and so I’ve seen this time and time again, we know what the pattern looks like and that’s the pattern of success.

Madhurima Gupta (08:17):
And the other thing that I wanna talk about was integrations. You just picked on it for a bit. I wanted to understand that, you know, there are a lot of, mobility that are provided to businesses by ERPs to enhance their capabilities using extensions apps that exist on, you know, the sage marketplace. I wanted to understand that in your experience, do you think that accounting teams are utilizing this option to the full potential or not?

David Appel (08:43):
Let me just start with this. You, want a system of record. You want a system of record because that’s what you need in order to pass the audit and show you have compliance and controls. And then you don’t want the executive team arguing over whose data’s right, which I’ve seen happen many times. Zero’s pounding the table, my data’s right, had a customer success, my data’s right, had a product. My data’s right, cfo, my data’s right. And it just erodes confidence and trust because you need to have a shared consciousness as an executive team to truly be successful coming in. So against that backdrop is workflows. Sometimes you need an extension at the tail end. What HighRadius does and the accounts receivable capabilities that you pull on is a wonderful example of that. And you want to, the questions you wanna ask the vendors that are the two tie in is how mature is the API and how does the API work and how much do I the customer have to get involved in the maintenance of the API and how is it gonna get upgraded as both products are constantly getting upgraded and protect me, the customer from that. And you really want to dive into understanding what that looks like because ounce of prevention’s worth a pounded cure on pulling it in and simple things is what are the fields that are mapping back and forth to one another and how they identified and how they’re getting filled. Because again, you want the GL to be that system of record that’s pulling ’em all in because that’s what gets audited and does the report against it. There’s so many nuances based upon what application stack we’re talking about this Madhurima. But that’s the core advice because I’m doing this because I want to pay it forward to you, our listener and our viewer on what’s going on. So I just wanna give some practical advice on what you should do as you think about doing this for yourself.

Madhurima Gupta (10:25):
You know, when CFO’s office is considering to upgrade a solution in their accounting stack, what should CFOs, you know, definitely keep in mind to ensure that they create a stack that grows with their business and supports them in the long run?

David Appel (10:38):
We’ll just choose sage intact there. That’s, you don’t have to think any harder or longer about it than that. Let’s just break it down into three buckets. What do you want the chart of accounts to look like and what the dimensions that you want? And you know, department, class, location, you know, whatever unlimited amount of dimensions that you want on every journal entry that’s coming in because the more they just come in and self populate and all that’s automated for you, the better your close is gonna be. That’s all number one, charter accounts. Number two is what, beginning with the end of mind, what’s your reporting look like and what is really the key metrics and OKRs or the business today and likely in the future? And so what’s the data that you need and in the system and where that’s coming from. And then what’s pushing that data in? So it’s beginning with the end of mind on recording and following the data backwards in order to understand what the setup should be. And then number three is what’s the critical processes you need to drive revenue coming in and coming out? How much that’s and what’s that tech stack need to look like? And be thoughtful about like building a house. You don’t, you don’t build the home that you’re gonna live in willy-nilly. You plan it out with an architect in one of this you’re trying to do based upon how it’s gonna get used. When we built our home that the term the builder used was, how are you gonna people, the spaces in your home, the living room, the dining room, and the great room and and others. And so it’s the same thing with you instead of how you gonna people spaces as what, how’s data coming in and how’s data coming out and how are you gonna use it? And be thoughtful on that. So those are the three things, chart of accounts, what reporting looks like and then how the data’s gonna flow through the system based upon what you need to in the business.

Madhurima Gupta (12:21):
Now with that, we come to the conclusion of the episode, but before I let you go there, three things I wanna ask you. The first one is, what according to you should be the top priorities of CFO’s office in 2023?

David Appel (12:34):
So you want, it’s all about your people that you’re empowering in order to run these stacks. There’s so much confusion, chaos happening right now and lack of clarity and what does cash look like and what should you do on your staffing levels and just having great team that’s supporting you with pulling those decisions together. That’s number one.

Madhurima Gupta (12:55):
All right. Is there anything else that you’d suggest, CFOs should have on top of their mind

David Appel (13:00):
Be joined as a team on the big decisions you have to make and deal with the tough decisions with empathy, what you have to go through? Because profitability is so key right now with maintaining cash and how you’re gonna have really cash runways. We’ve been flush with cash, for so long and, I, you know, who can forecast the future, but I certainly hear a lot of people saying, be smart on your, your cash reserves right now. So, and everybody who’s listening already knows that. So, if I’d put one thing on top is, is have a great forecasting tool with how you’re trying to really try to estimate out what your scenarios look like. I spend a lot of time with our customers on that, with what our capabilities are and some of our partners on really trying to learn a lot of modeling and forecasts and they’re doing it though not in isolation. What is the CFOs, the business model architect talking through the implications to the business models with the other executives on the team, the stakeholders with how to guide the company.

Madhurima Gupta (14:05):
Are there certain health metricses that you would recommend CFO’s office to always stay on top of?

David Appel (14:10):
Again, it’s motherhood and apple pie of just what’s happening with cash, what’s happening with customer retention, what’s happening with customer upsell, what’s happening with the growth rate? But then all the more so, cause I focus on tech companies is where’s gross margin? Where’s your biggest drag on earnings that you can tackle and put in place? A lot of companies do acquisitions and most acquisitions don’t work out. So it’s really be thoughtful in what your transition process is. If you’re going through doing some acquisitions, because a lot of companies right or wrong, there’s a, there’s an opportunity to purchase competitors right now that might not be as well managed if you’re gonna bring them in. There’s a whole component on, how you do good transaction transition to bring the companies in and do a really good job on that. There’s a whole set of best practices I and many other service providers have some insights in trying to deal with, but that those probably be the, the five that I’ve written with.

Madhurima Gupta (15:09):
Absolutely. And how, according to you, is emerging technology going to shape the future of CFO’s office by 2025?

David Appel (15:16):
Tremendous. I mean, who can exactly forecast the future? But you know, the whole point of machine learning is build a data stack and put something in to find the patterns and then what’s the best way to act on top of that. And our example, we’ve done that in several ways with ability do to continuous close where the GL is looking for what is a good transaction look like and it gets smart about what that is. And then when transactions that don’t fit the model pop up, they get flagged and we’ve saved customers hundreds of thousands if not millions of dollars of transactions. Mostly in error, really in fraud. But it does happen sometimes. And that’s just one example of many where things are going. The rise of APIs to make things ubiquitous are also putting it out there. And then the, advances in the fp and a stack on the, on what the technology looks like in order to do the forecasting with running multiple scenarios is really, those are just three and you go on and on what’s coming down the list. Those are certainly three that we’ve publicly stated in ours that we put a lot of investment in order to make our customers even more successful.

Madhurima Gupta (16:23):
Absolutely. I can’t agree more. Great. So I think those would be my questions for today. David, thank you so much for taking time and having this discussion with me. I hope you enjoyed it as much as I did.

David Appel (16:34):
Oh, it was my pleasure. For you, our listener, I’m happy. If you wanna reach out to david.appelsage.com, that’s david dot a p p e l@sage.com. We value our partnership with HighRadius. Thank you for asking me to do this, Madhurima, I hope it was helpful for your listeners.

Madhurima Gupta (16:50):
It was, it was. Thank you so much. And for our listeners out there, please stay tuned. We’ll be getting more folks like David on the show who will be sharing amazing insights with you.