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Interview: How to Add Value in the Automation Era

Knowing how to analyze the data in an increasingly complex world is key for today’s CFO, says Livio Vicco of Avon in this Q&A.

Today’s CFO must be 50 percent traditional finance and 50 percent business-oriented to add value to the company, says Livio Vicco, executive director of finance for the Andean Cluster at Avon, in this Q&A. As a growing number of financial department roles are being automated or digitized, he says, having a strategic business vision is the way to add value and create growth for a business as a CFO.

Q: How are you innovating in the financial department?

A: We are currently working on data analysis to evaluate credit risks since we are a direct sales company with tens or even hundreds of thousands of new sales representatives each year. That’s where we are innovating in statistics tools and data that show behaviors to anticipate debt risk. They show us indicators that measure risks on microcredits for the new representatives.

The main changes in that respect began with the person who previously had my role. What [that person] did was build a risk unit [by bringing] in people with actuary backgrounds in order to analyze the payment risks of people according to their socioeconomic profile, location, etc. This helps the debt collection and sales teams define which risks to take and not to take when naming new representatives. This means you are no longer “blind” when new representatives enter the system and you can make a well-informed decision.

We try never to reject anyone. In case a potential representative has a higher credit risk profile according to their data and socioeconomic profile, what we do is give them a credit, but the first two orders must be paid in full and upfront. By paying two orders upfront, and the third on credit, the probability of that person trying to commit fraud is far less.

Q: Which technologies do you consider the most important for a corporate finance department?

A: The technology that I see having the biggest impact in the short term is artificial intelligence, such as automating processes. When you look back some 20 years, you had about 20 staff members in the accounting department, then it went to maybe just two in the company and 15 overseas in a shared service. Today it would seem it’s coming full circle where you will continue to have maybe one or two experts in the company, five robots doing the transactions and other accounting tasks, and instead of having a third party doing it manually, the third party would be for designing and maintaining the robots. You may not have a dedicated in-house team for this because it’s a highly specialized service, but you can hire it and add value to your administration processes.

Q: What cybersecurity measures do you have at Avon?

A: We aren’t as exposed to cybersecurity threats in the financial department. Cybersecurity is handled by the IT area, in terms of access to the database and the transactional systems.

We are starting to get into e-commerce, which in the future will need its own cybersecurity system to safeguard consumer and partner data and in general everyone who carries out transactions through the sales site.

As of today, our cybersecurity is more on the traditional side, protecting the systems from external attacks, phishing, and everything else that IT takes care of.

Q: What do you think are the main changes in the role of the CFO and where do you see the role evolving over the next years?

A: It used to be the role of an accountant [to be] in control of the processes, policies, and transactions. The added value was being in control, delivering balance sheets on time, and perhaps some commentary on the results and forecast.

The role has become much more strategic, taking part in discussions with marketing, sales, and the operation teams of the business in general. The CFO now seeks to add value by delivering analysis of the data and understanding the business in an integral way.

I think there are two roles that have the most vision in a business. The biggest is evidently the CEO, and the second I think is the CFO. So, 50 percent of being a CFO is having a solid financial background, and the other 50 percent is being a business-oriented person, if not, it’s more difficult to add value.

You can see over the years how many critical financial tasks are being automated or digitalized, so the CFO must add value to the business. I think that is the future of the role. The manpower in the financial department will be even smaller as more and more tasks become automated, and the CFO role will focus more in making the right decisions and bets thanks to financial analysis.

I think it’s interesting to see how the younger generations are more prepared for these changes. They are showing a much more integral vision of the business, and not only the technical accounting or financial aspects of the role. They are more willing to support the business from that point of view and not just stick with their transactional role, which is still there, but we have to keep in mind the technologies that will be available in 10 or 15 years.

I remember when I began, there were 20, 30, or even 40 people in my department processing the paperwork, and now there are three or four. In the future there will be three or four but with machines doing the work. When you put it in perspective, it doesn’t make sense that all of the potential from professional and technical training is used only for typing numbers into a screen, when that same task can be automated with a transactional system like E1, SAP, etc. The work of one person was to create invoices in a system, but a person, with the potential of their brain, is suited for far more complex tasks, and that’s what we are seeing—more complexity in competition, more complexity in the world, more sophisticated tasks—and that’s where the CFO will add value in the near future.

This interview was conducted by Latin Trade for Council of the Americas.