Episode 9: Why a digital-first approach is necessary for CFO Office automation

Madhurima Gupta:
Hi! Welcome to the Mid-Market CFO Circle podcast powered by RadiusOne. I’m your host, Madhurima Gupta. We hear you mid-market CFOs, and we’ve got your back. Every Thursday, we bring you the CFO Circle podcast with your peers, where we discuss the challenges you face and how you can leverage emerging technologies to solve them. Today, we have with us Bhaskar. So Bhaskar is currently working as the Chief Financial Officer at SellAnyCar.com, where he contributes to strategic decision making, group reporting, subsidiary consolidation, cash flow management, fundraising, managing legal cases and negotiations with customers. With his immense expertise in finance and technology, he supports founders, CEOs, board on his teams by giving them value-added recommendations, and he always recommends them to look at the bigger picture to achieve business goals. Welcome to the show, Bhaskar.
Bhaskar Kumar:
Thank you, Madhurima. Thank you for having me on the show.
Madhurima Gupta:
So Bhaskar, today I wanted to talk about how growth-focused CFOs influence in fueling business growth for to-be enterprises. And in order to get started, I first wanted to understand, in your opinion, when is the right time for founders of businesses to hire finance leaders?
Bhaskar Kumar:
I think that’s a million-dollar question. It’s a very tricky question. Yeah. And I feel it’s a very subjective thing to the business and the industry, uh, the businesses and what is the growth plan and vision. And they’ve, uh, they have achieved a product-market fit and the growth plan is big. And so it’s a good time to hire a finance leader. It’s a very good time to hire a leader and I feel the cost of a finance director or a leader is high, yeah, upfront cost, but you can recover the cost within a year because he adds a lot of value to the entire chain.
Madhurima Gupta:
Absolutely. And how about, um, you know, the companies that are already growing, right. They are there at a certain point where they have a couple of people on the CFO office team and they’re, let’s say scaling at a level that they expect to become enterprises soon. So at this point, when in the cycle, would you say, is it a good idea to have a chief financial officer in?
Bhaskar Kumar:
I think growth, uh, growth. There’s a lot of euphoria in the growth, yeah in the startup culture. Yeah, which is good. But at the same time, it’s very important, which I learned from Charlie Munger, one of the principles, which I learned, you know, and I’ve seen the leaders, they apply that- what not to do. You’re not to make a bad decision, you know, that, what he says, Charlie Munger is an inverse principle. What not to do. And if you don’t do wrong things, then you, you will do one right thing. Yeah. Even Steve Jobs used to, uh, practice the same principle. Yeah, so what not to do. So a finance leader would help you in not making wrong decisions, invest in looking at the wider uh, he will help you in getting a wider scope of revenue opportunities. And he will tell you no, on certain things, if it doesn’t make sense in terms of financial visibility and growth.
And I think, and any growth, I think it comes with a, uh, there are two parts to a growth. One is a CapEx. You need a lot of investment and there’s an incremental operating cost. Yeah. There’s a lot of higher manpower and marketing, and other things operating. So a finance leader would, uh, a CFO would help in both these fronts and in optimizing your spend and to bring in cost efficiencies. So that is one growth. And the second part I would say is, now a growth needs funding. Uh, either you need equity financing or renew that debt. So, an experienced leader who understands the business can sell the stories to the investors. He can answer those questions and he can ensure there’s a timely arrangement of funds. He can structure good deals, with the investors or the bankers to fuel growth. And the most important along with this is the digital side.
I think that is a thing which the organizations, they miss. They talk more about the product and the marketing. Yeah, which is good, you know, which is on the external side. But to achieve that you need a platform of uh, new-day digital platform, which is an ERP and digital solutions. So you need a CFO who can build those digital solutions across the spectrum of business. Either it’s a manpower requirement, your procurement, your inventory management, then your collection side, your payment solutions. Yeah. If they all are integrated together, then you can scale up. Then you can achieve growth.
Madhurima Gupta:
Absolutely. I completely agree with you Bhaskar. Now let’s say that, uh, you know, a company, an organization has got in a CFO, right. Now, how should this CFO, uh, ensure that, that it takes up modern approaches? Like you mentioned, you know, you should have an ERP, should have digital solutions that help, uh, you know, fix processes, right. So what steps should a modern CFO take towards, let’s say people, process, and technology so that the CFO office becomes growth-focused?
Bhaskar Kumar:
In terms of people, I think the CFO is dealing with a lot of people, you know, it’s more of the leadership quality managing his team, managing all the internal stakeholders and the external parties. External parties are your bankers, the compliance, auditors and the approach for all three of them, basically a team you need to train them and empower them and delegate them, which is very important. Yeah. Train, empower, and delegate. And with the business heads and the CEO are, uh I think it’s very important to build up a relationship of trust and a relationship of collaboration where you collaborate with them. And the third is an execution of speed. Do things at a fast pace and execute projects, what business wants and do it at a speed, you know, because we are living in a very fast pace to hold, you know. And on the technology side and on the process side, you know, the processes have to be very simple.
It’s simple layers of approval. Yeah. And where we can make quick decisions, the business can make quick decisions at whatever layer it is either at my level or at down the level or at a senior level, right. The way the decisions can be made quick. So we can, we know what to do and what not to do. So within six years, we tripled our revenue from 5 billion to 15 billion. In just six years, which is very difficult to achieve such kind of growth. And the reason was we got a CEO at the top, Mr. Tim Clark, and the mantra was to leave behind the past. And it was, uh, new systems, new processes, new people, everything was new because he believed it’s very difficult to change the old yeah. People with the old mindset. So create something new because the old bring baggage with them. And there’s a friction. Yeah. There’s a friction. And the challenge is there with that mindset? Well, so, so he went with the mantra with Sheikh Mohammed’s mantra, who is the president of Dubai, right. And it’s owned by him. Dismantles the old and create something new. So there were new people who were hired, new systems which were implemented, and it’s a new mindset with which you run the organization and the results were extraordinary.
Madhurima Gupta:
So you just mentioned that you worked with giants like Emirates. You’ve also worked with Damac properties and right now you’re working with SellAnyCar.com. Right. So in all of these organizations, what has your key learning been from, uh, I mean, your key learnings from your experience that you think held these businesses cater to the growth?
Bhaskar Kumar:
I think it’s a very simple learning, which I found, especially with Emirates and other entities, even I researched, I read a lot about Amazon, Google, Facebook, or other companies. You know, my curiosity was how, why they became so big. Why not others? Yeah. So why only these few, one or two percent of the world’s organizations? The reason was they followed a principle and there are three principles. They follow a three P in an order. People first, product second, and profit, it comes last to them. And the others, they think it the other way, profit first, product, and then the people. Yeah. So that is the way they are. People first for me is what I learned at Emirates. People first is employees, customers, and vendors. Basically, the mantra was to keep all the stakeholders happy. It’s just not the investors. Everybody’s a stakeholder. So the employees are happy.
They feel safe and secure. They feel appreciated. And they do amazing things. The physical, emotional, and their mental needs are completely taken care. When I used to work for Emirates, uh, it was like fun going at seven o’clock in the morning to the office. It was fun. You know, never, was it like going to the office. And the customer is, again, the people, because these employees, they sell to the customer. So you have to understand the customers. So everybody’s serving the customer, even everyone in the organization. Right. And the third is that customer empathy is important to understand what they want, not what I want to give them, but what they want. Yeah. So that is the second part. And the third is the vendors because they are the service providers. So we, so they don’t try to squeeze your vendors. Yes. We need to do that negotiation.
Right. But don’t, uh but they’re also an equal party to the whole success because they serve your customer. So people first. And then the product, they developed a product, a product, which the world had not seen. They created new experiences for customers, which the world had not seen. So continuously Emirates innovated their product continuously for 10 years and invested millions and millions of dollars. And to support that product, you need digital power. So they created that digital power and systems to connect 150 cities sitting here in Dubai. Airports, tracking 250 aircraft all across the globe, wherever they’re flying to. Provided 24/7 support to the customers, millions of people. Yeah. So, that was it. And internal processes and systems to accompany a size of 25 billion dollars with 70,000 employees and millions of customers. So the systems and the processes were created and they were updated every day to serve the customers in the best possible way. And third is your profit. As I said, the profit was just a byproduct. Profit was a byproduct. We never thought about profit. Yes, profit, we think about profit at the budgeting stage and even at the month-end, but the priorities were the people and the product and then profit came to us.
Madhurima Gupta:
And if I talk about, you know, the financial processes particularly, right. So what were the certain challenges and how did you solve those financial challenges extraordinarily?
Bhaskar Kumar:
Financial challenges, because any organization which grows, and uh we had a 90-degree growth, it was not a 45-degree growth. We grew 90-degrees from 5 billion to 15 billion dollars, in six years. You get an annual growth of 25%. So the challenges that were major were change management because the change management is basically to handle the change management in terms of implementing systems implementing, uh, then on the cost side, on the investment side, because business, they are very euphoric about things they want to do. It’s very amazing. Yeah, we want that euphoria, but at the same time, you, me, and the others as a finance partner, we need to contain that and strike a balance between growth and risk. But on the other side, you know, uh, the challenges of growth as we grow very fast, and then I remember in 2008/9 when there was a financial crisis.
Yeah. And so there’s a challenge of cost efficiency because, on the airline, it works with only 6, 7% bottom line because of the fixed costs, because the costs are very high, the fuel costs is 35-40% and is a very variable cost. It’s a very variable cost, very sensitive to all the external things in the world into external things. You know, so it’s cost controlling cost in such a large organization and working with business. And we have done the guys that the businesses, they have done some amazing things and I have the opportunity to partner them and using the cost.
Madhurima Gupta:
Okay. And, uh, the businesses that Emirates was in business with, um, you know, for smoothly running the airlines and everything, how did you manage your, um, accounts receivables, accounts payable? You were saying that you would always pay out your vendors in advance at the beginning of our conversation. So how did you make sure that all of this was, you know, taken care of? Did you implement automation solutions back then? Or was it totally done manually?
Bhaskar Kumar:
Yeah. That’s a good question. Even though Emirates was digitally savvy before I joined in, uh, but still, uh, with this big growth coming in. So there was a legacy system. As I said, so the mantra was, dismantle the legacy system. So a 20 year old system, was just given up within a second, and that decision was made, we’ll implement a new system. And that was called Ultraman from USA, which was a pioneer in the airline industry. And I was a part of that implementation over two years. So that was a pioneer. And that changed the whole, that was a game changer for Emirates connecting, as I said, 150 offices, airports. And that system, we created a FinTech solution to thousands of vendors, across 183, uh, I think 183 offices, uh, cities in eight continents, making payments in billions of dollars to thousands of vendors on time, thousands of vendors.
So that was a FinTech solution, which we created. So that payment gate, that, that system Ultraman will integrate with our Oracle system, the finance system, and from finance, we used to manually make payments through checks, you know, through checks or wire transfer. And then we integrated with all our banks wherever possible. And that goes with a click of a button, you make a payment to a vendor. We do a three-way matching into Oracle in Ultraman. It gets transferred to Oracle automatically every minute. And from there, once everything is finalized, it goes into HSBC or City bank, and the payment just goes away. There’s nothing manual. And those were millions and billions of payment seamless. So that is a way, I think the people side, which I said, the three P the people, the vendors that is the way they were kept happy, and they always wanted to work with Emirates because Emirates pays them good money.
They pay them on time. And so everybody’s very curious to always work with Emirates. Then on the revenue side, we had an in-house system, which was by developed by uh , in our system called marketer. So they developed this system revenue, which, uh, does we, we have got hundreds and thousands of flights. So where you can record all your revenue, a revenue of 25 billion per anum, or monthly, you’ve got a revenue of $2 billion. So that is coupons, basically those flight coupons, where you can capture that, integrate that, and the system does all the calculations of revenue. You can imagine it it’s a booking if it is an advance. You can do rescheduling of your tickets, right? You get a refund, you get a discount and whatnot. A passenger can have any permutation and combination of transactions. And with millions of people, you can imagine the complexity it brings in. Yeah. And that Marketer system, which was developed by Emirates in-house team, they did that. And that those numbers every month were integrated into Oracle. And the beauty of Emirates was they invested heavily into things. One was on the human capital. Yeah. And the second was on technology. So with this size, we, by the fifth of every month, we will close our finance books, 150 offices within Dubai, everything by the fifth of every month, all the finance books are closed. And then the internal reviews and everything. And it goes to this senior management by 10, 11, it goes to the senior management with this volume and size because they invested so much in technology and on the digital side.
Madhurima Gupta:
Absolutely. So at SellAnyCar.com, what are your priorities right now? So out of these many lists of things that you, you know, have to implement, I understand maybe ERP implementation is one thing, but what is the main challenge today for you and how are you thinking of solving it, given your, you know, diverse experience?
Bhaskar Kumar:
So see, the main challenge is I think the management is very clean though, uh, is very keen to make it to a digital thing. So that is a blessing. Yeah. That is a blessing. And the challenge is to quickly deliver that work with the IT team and with our in-house IT team and the vendor, and with my team, everybody working together as a team and deliver the product ASAP. That is one. Uh, and, and it’s a big task. Yeah. Because you have to integrate all your CRM system with the finance system, which is quite a challenge, you know, integrating all the operational financial data, moving into an ERP. And it is quite a uh that is called a migration of data, which is quite a challenge here. But, uh, I’m confident here, together we will crack it. And second, we are looking for a payment gateway solution.
Currently, we don’t have one, so I’m working with the Central Bank here to get a payment gateway solution where the customers when they want to pay us through a payment gateway, with the click of a button, they pay the money, comes to my account straight away within one hour, I get the money. And the third is that currently we make manual payments. Uh, we make payments manually to all our customers when we buy the car from them and we pay them and we have got a promise to pay them in 48 hours. And the company does that. So we pay to our hundreds and hundreds of customers every month. Yeah. Every month. So we have a promise that within 48 hours, they sign a contract within 48 hours, I’ll make the payment to them so that we do it manually.
It’s a very manual process. And the guys are doing a phenomenal job to do it manually in the bank portal and they do it. And so I’m looking forward to making a payment, digital payment solution, working with some international banks where I can make a digital payment solution and through a click of a button, I can pay the customer. Every hour, not every day. I can make a payment to them, every hour and as many payments they want. So that will help to scale the business. And we are getting into a new business model. A new business model, which is called carnet. So that will really help us to scale the business. I feel because, at the end of the day, the customers are happy. Today we pay them in 48 hours through the manual process. I’m sure with all this digitalization and everything, we can pay them every day, within few hours once the deal is done. They don’t have to wait for 40 hours. So the time would be reduced to maybe quite uh it’ll be quite less.
Madhurima Gupta:
Cool. Uh, this was a very interesting discussion Bhaskar. Before we, you know, wrap up the session. I had one last question for you.
Bhaskar Kumar:
Yeah, sure.
Madhurima Gupta:
If I had to sum up, uh, or if I had to ask you to sum up the top three tips that you’d like to give you peers and aspiring CFOs so that they can help their CFO offices support the, you know, the business growth, like you’ve seen at Emirates, Damac Properties, and even hopefully at SellAnyCar in the coming in the coming years. Um, then what would those three tips be?
Bhaskar Kumar:
Three tips apart from the financials skills I think everybody has got those financial skills. You know, they bring that experience more or less. I think it’s more, I think number one is on the leadership skills. I would say it’s on the leadership skills. Uh, leadership for me is just not others. It’s about managing yourself, how you manage yourself, your mindset, how you manage your mindset, your health, and the mindset and your energy levels too. And then how to connect with people and building trust with people, which is very important with your team, with your business, and with the external parties. Building that trust, that is very important. So leadership skills for me is number one. And number two uh. And in that number one, I would say to understand what business wants, you know, what your bosses want, what do the leaders want, understand their mode, be proactive in that process. Yeah. And proactively do things for them, you know, and help them make good decisions, you know, that will help to grow the business. So the leadership skills, I think that would be the number one and second, you know, look at the larger picture. If the culture permits you and don’t look at the short term, look at the larger picture, how by doing this, or by not doing this, this will impact the organization in a year’s time or in two years’ time. Look at the larger picture of things. Not at the short term. Yeah. I think that is very important. And number three, try to be digitally savvy. At every spectrum of the organization, make it digitally savvy. And, uh, finance has got that power to do that along with business, get them in your stride, get finance and business in this stride, and with your IT guys together, just make everything digital. The company will be flying high.
Madhurima Gupta:
And what are the top three areas that you would say or suggest your peers to automate today?
Bhaskar Kumar:
I think the top three areas, I would say that it depends again on the business. So the inventory in the supply chain and the procurement has to be super strong. If you have that, you can save millions, you can be efficient, you can manage your working capital efficiently, cash flow, and everything, you know. That will be for the eCommerce companies. And for the others, I think there are two parts to a business. One is your collection side. And one is the payment side. These are the two cycles. Yeah. For, uh, somewhere the collection side could be longer and the payment. So it depends on the length of your collection and the payment side. So manage that very well. Yeah. On the collection side, reduce your collection side. So you get the money quickly and on the payment side, stretch the payment side as far as possible.
Yeah. Keeping a balance, right. I’m not saying you pay him after a hundred days. I’m not saying that you negotiate and say to manage working capital. Yeah. And to see digitally and other things, reduce your collection side, increase your payment side, so that will improve your cash flow and make it a digital thing. Basically, the cash, the inflow, and the outflow make it a completely digital thing. And the number three is I would say, have a flat structure. The decision-making has to be flat. It cannot go, cannot keep on going. It has to be a flat structure where you can put your heads together and somebody makes a call.
Madhurima Gupta:
Great. So thank you so much for taking the time. This was a very interesting session. I’m sure a lot of people are gonna enjoy and learn a lot from it. So, um, you know, thank you for your time once again. And I wish all my, uh, you know, uh, viewers enjoy this session as much as I did talking to you. And, we hope to have you again on CFO Circle. And for our listeners out there, stay tuned. We’ll be back with more.