We’re Ellen and Simone. After 36 years in finance, we’re ready to share what textbooks won’t tell you.

💛 Welcome to The CFO Playbook – your practical guide to real-world finance insights. A bi-weekly newsletter we’ll send out every other Thursday. The full read will take approximately 5 minutes. If you’re enjoying the newsletter, we’d greatly appreciate it if you shared it using the “Share the Newsletter” button at the end of this email.

📖 READ OF THE WEEK

In this edition, we cover:

• Why defining processes matters before choosing automation

• How to identify automation potential in your current workflows

• The step-by-step guide to process mapping and improvement

• The top 3 finance processes every company should streamline

Well, process sounds so 90s…

In our fast-paced, data-driven world, you might think processes are old news. But here's the truth: They're more crucial than ever. Why? Because as our data volumes explode and automation becomes the norm, we need a strong foundation to build upon.

The Unbreakable Bond: Processes and Data Quality

Good processes are like the secret sauce of data quality. They ensure everyone speaks the same language, follows the same steps, and produces consistent, reliable data. Without them, you're building a house of cards that's bound to collapse.

Processes don't need to be complicated! The key is to keep it as simple as possible

Let's be real - nobody reads your 10-page process documentation in Notion & Co. Always make sure your processes are concise and easy to understand. Hint: Tools like Claude; Co-Pilot and ChatGPT are a huge help here and we are a big fan of one pager process documentation!

When Processes Go Wrong: The Hairdresser Platform Example

The Scenario:

• Hairdresser booking platform

• Subscription + transaction-based revenue model

• Started with simple spreadsheet billing

The Pain Points:

• Rapid growth to 5,000 contracts

• Tens of thousands of transactions per month

• Manual billing process no longer manageable

• Billing errors and incorrect invoices

The Root Causes (some of them 😀):

• Sales team using various creative discount models, e.g. free booking packages (with 500 transactions included in subscription) and transaction-based discounts

• Resulting in up to 50+ different billing variations

The Solution:

• Implement processes early

• Keep processes simple

• Prevent legacy customer issues through early standardization

• Focus on streamlining for automation potential

Automation: Process first

Automation is the buzzword of the decade, promising efficiency and scalability. But here's the catch: Automating a flawed process is like putting a racing engine in a broken-down car - it doesn’t really make things better.

Well-defined processes, on the other hand, are the perfect foundation for automation. They provide clear steps, defined outcomes, and consistent data. Exactly what automation tools need to work their magic. 

Why do tool implementations often fail?

Simple: Most skip defining the process first. We've seen this repeatedly. Companies buy tools hoping they'll magically fix everything. Spoiler: They won't.

Real-world fail: Companies paying for Accounts Payable (AP) automation tools but still typing invoices manually because they missed basic setup requirements - like creating a dedicated invoice email inbox so the OCR/AI can actually do its job.

Do this instead:

• Define target process first - and talk to existing customers on their underlying processes. Tool vendors will always say "super easy to implement"

• List requirements

• Pick the right tool

• Implement properly - including process!

Remember: Your vendor won't send their Accenture team - implementation success is on you!

Coming Soon: In one of the next Newsletter a Step-by-step guide to proper Accounts Payable automation from process design to tool selection.

Practical Guide: Mapping Your Current Processes

Want to optimize and automate? First understand where you are. You don't need to be a consultant for a basic process check.

Process mapping = documenting your workflow from start to finish. That's it!

Step 1: Map out your key processes 

• Talk to the Sales, Operations, Data and Finance team.

• Document current workflow steps from order to cash:

  • Sales (e.g. quote creation)

  • Fulfillment (e.g. setting up the hairdresser on the platform)

  • Billing (e.g. creating invoices based on subscriptions & transactions,)

  • Payment collection (e.g. dunning process)

• Map out:

  • Data flows (e.g. customer information, subscriptions and transactions flow into the billing system)

  • Tools and systems used for each step (e.g. Hubspot as CRM, Stripe as billing tool, Netsuite as ERP)

• You might find that different people have a different understanding of the same process which usually means you don’t have a clear process.

Pro Tip: Use tools such as Miro (great for collaboration), Microsoft Visio or Lucidchart to visualize the process flows. 

Step 2: Identify bottlenecks and manual interventions

Highlight points where work piles up or requires manual handling, such as sales reps manually entering data from email inquiries into the CRM system.

Step 3: Scale Check & Target Process

The million dollar question: Could your quote-to-cash process handle 100 new customers tomorrow? If not, map your target state - then make it happen!

Step 4: Assess automation potential (aka our favorite step 🙂)

Analyze which manual tasks could be automated based on their rule-based nature and repetitiveness, for tips see also below.

The 3 Essential Finance Processes Every Company Needs

Quote-to-Cash (Q2C): Your company's money pipeline: From customer quote to cash in the bank. A clean process means faster payments, fewer errors, and better cash flow.

Integrate your CRM (like Salesfore, Hubspot), Billing (Stripe and Co.) and ERP/ Accounting tools: It’s key to make your systems talk to each other!

Smart Automation:

• Smart quote generation that pulls real-time pricing and customer data

• Auto-triggered approvals based on your business rules

• Automatic invoice generation and payment matching

• Revenue Recognition (e.g. ARR to Revenue to Cash)

Record-to-Report (R2R): Turning your daily transactions into clear financial reports. The goal: Less data entry, more business insights!

Key elements:

• Daily transaction recording

• Data consolidation

• Financial reporting

• KPI monitoring

The goal: Clean books and clear insights for decision-making.

Let your accounting team own this process, they know best!

Purchase-to-Pay (P2P): From buying to paying: Managing all your purchases from order to final payment. Making sure you get what you need and pay correctly.

• Two-way matching without the headache (PO-invoice)

• Automated payment scheduling and execution

• Real-time spend analytics and budget tracking

But wait, does every company need a proper P2P process? Certainly NOT!

If you are a smaller software company with lower invoice volumes and more basic supplier relationships, you will go for spend management tools such as Pleo or Moss for simple approval workflows and invoice payment processing. Bonus: Moss also offers an easy-to-implement procurement process - perfect for smaller teams!

🔮 Navigating AI: Your Finance GPS

OpenAI is giving us personal agents

YAY - The copy-paste era is officially over

What changed:

ChatGPT can now see what you're working on in your apps, so no more copy pasting or switching between screens.

Why this is big

OpenAI's latest update starts with coding apps, but here's the exciting part: Soon, AI will directly help you in all your work apps - from writing to spreadsheets.

Imagine: Instead of copying your Excel data into ChatGPT for variance analysis or forecast calculations, AI will directly analyze your spreadsheets and suggest improvements in real-time.

Mac-only for now (Windows version coming), requires ChatGPT Plus. 

This isn't just about saving clicks - it's our first look at truly integrated AI assistants. And that's where things get really interesting.

What this means for your day-to-day productivity

Think about how often you copy text into ChatGPT - whether it's a report that needs polishing, an email that needs improving, or data that needs analyzing...

Soon, you'll get AI help right where you work, no copying needed.

Sources: OpenAI

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Let’s find your perfect match!

🕵️‍♀️ EASY QUESTIONS - DIFFICULT ANSWERS

READER QUESTION OF THE WEEK

Reseller Commission Accounting in SaaS

Question: As a growing SaaS provider, we're exploring partnerships with software resellers. While we maintain direct contracts with end customers, these resellers would act as brokers and receive an annual percentage of our revenue. What's the most appropriate way to book these ongoing reseller commissions?

Options we're considering: Revenue deduction, Customer Acquisition Cost (CAC), Cost of Goods Sold (COGS)

Answer: We've frequently discussed this with auditors and investors - here's our take:

For higher commissions, it makes sense to either deduct directly from revenue or book under Sales & Marketing (S&M). For smaller commissions (15-30%) that only apply to initial contract periods, I recommend booking as customer acquisition costs under S&M. After all, CAC is about acquiring customers through channels - whether that's Google Ads or a partner, it's the same principle.

Cost of Goods Sold (COGS) is trickier - while usually using this for hosting costs like AWS etc., adding a higher cost position here could significantly reduce your margin and need explanation to investors - and let's be honest, everyone wants to show good gross margins.

Bottom line: Keep it simple and transparent. If the commission is primarily for customer acquisition, treat it like any other acquisition cost under S&M. This approach is both logical and widely accepted by stakeholders.

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UPCOMING

• ERP Implementation Best Practices

• Finance Tech Stack

• …and many more

CLOSING REMARKS

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The CFO Playbook reflects our personal opinions, not professional advice.