The Merging of Finance and Operations in the C-Suite -- Kenny Jen, Startup Finance Advisor at Pilot

Kenny Jen is a member of Pilot's CFO Services, where he advises startups at various stages on finance, fundraising, and strategy. 

Before joining Pilot, Kenny managed product development, supply chain, and strategic finance for a consumer goods startup in Los Angeles. Before that, he was an investment associate at a venture capital fund. 

Kenny has consulted companies in a wide range of industries, including health and wellness, SaaS, CPG, marketplaces, and retail.

In this episode, Kenny speaks about the role of finance and the CFO. He believes the role has changed over the last 5 to 10 years from data collection and accuracy to systems building and interpretation of that data. 

He sees the role of finance and operations coming together, with CFOs and finance teams becoming a part of the strategic element and working closely with operations. Kenny mentions that the most exciting innovation in accounting and finance is around automation and streamlining manual processes. He highlights the challenge of balancing execution and data collection with the processing time and brain power to interpret that information. 

Transcript

00:00:07.669 --> 00:00:14.799
Welcome to the CFO Corner. My name is Nick Ezzo and I'm your host. In the CFO Corner, we sit down with CFOs and corporate finance professionals to hear about the innovative.

00:00:15.015 --> 00:00:28.079
Approaches and technology they use to scale and grow their organizations. They share the challenges they're facing with mundane repetitive tasks and they give their takes on what they'd like to see in the corporate finance function that can help CFOs achieve a stress-free working life.

00:00:29.302 --> 00:00:41.149
Today, I'm pleased to be joined by Kenny Jen, who is a senior manager at Pilot CFO Services Division. He's going to talk with us today about his thoughts on the role of finance, corporate finance and the CFO. Welcome Kenny.

00:00:41.779 --> 00:00:55.003
Hi Nick, great to be here. All right. Kenny, first question for you. In your opinion, how has the role of the CFO or finance people in general, how has the role changed in the last five to 10 years and where do you see that function heading in the next five years?

00:00:55.769 --> 00:01:10.334
Good question, Nick. So just full disclosure, my experience in regards to this view as well as the questions after usually relates to the fact that I had a lot of experience within the CPG space and the consumer industry. So that kind of geared towards in those directions and the unique.

00:01:11.139 --> 00:01:22.779
Nuances regarding those. So in my view, the role has transformed in terms of transitioning from something of which involved a lot of data collection and accuracy and now a lot

00:01:22.779 --> 00:01:32.739
more is around the system building around those processes and gradually moving towards the interpretation of that data and actions associated with it.

00:01:32.739 --> 00:01:49.683
So I think what's super interesting is you're really starting to see that melding of finance and operations come together as the data becomes more accurate and there's a lot more interpretation around it of really understanding what's going on on the ground floor and what are the numbers telling us.

00:01:50.139 --> 00:01:57.110
And with that kind of information, you're really able to take that and lead to actual insights if not also the.

00:01:57.992 --> 00:02:08.273
The tracking and execution of it at the same time. So now you're starting to really see CFOs and a lot of members of the finance team be part of that strategic element.

00:02:08.412 --> 00:02:20.624
And also understanding what has happened and to work really closely with operations to understand what we can do in terms of tactical actions to improve operations or to discover more insights and so on and so forth.

00:02:21.492 --> 00:02:33.983
Yeah, that's interesting. Cause I see that happening over the last five years as well. the fact that there's been a rise of business operations, finance operations, and it's transformation as a role within the organization.

00:02:34.052 --> 00:02:40.132
Folks who are tasked with literally helping finance people put together a technology stack that will help them reach their business goals.

00:02:40.132 --> 00:02:47.812
So while we're talking about technology, what are some of the more disruptive technology trends that you've observed over the last few years in accounting and finance?

00:02:47.812 --> 00:02:57.512
Yeah, so I'd say the most exciting parts that I see in terms of the innovation there is around automation, just the manual process side of things.

00:02:57.512 --> 00:03:09.312
I think a lot of the work associated back in the day with finance and accounting functions was really taking documentations and being able to translate them across different platforms or make sure that everything's talking at the same time about it.

00:03:09.312 --> 00:03:23.055
So most of it is really related to reconciliation, right? And now you're seeing a lot of that technology really try to make that process as seamless as possible. So now it's more so clicking a button and trying to make sure that everything talks to each other at the same time, maybe a little bit of time on quality checking.

00:03:23.460 --> 00:03:39.025
But I think that's the area where I see the most amount of room for improvement in terms of the function in those roles because the more we're able to condense the time related to that, the more we're able to really start thinking about what those numbers mean.

00:03:39.092 --> 00:03:43.372
And the tactical red flags associated with it.

00:03:43.372 --> 00:03:58.001
I think one of the biggest challenges that I see in regards to roles like these is that balance between the execution of the data collection and then being able to have the processing time and brain power to interpret that information.

00:03:58.332 --> 00:04:03.772
I think those are two, those two things really do fight each other in terms of a person's time.

00:04:03.772 --> 00:04:15.340
And so the more we're able to automate the processes regarding data collection accuracy and the immediate categorization of transactions, the more we're able to really look at the big picture and understand if, you know, what those numbers mean,

00:04:15.412 --> 00:04:20.948
if there's any red flags, if there's anything that we should be aware of and what we can do to improve our financial profile.

00:04:21.292 --> 00:04:42.292
Yeah, so what I hear you saying is that you've got these routine mundane tasks that are really kind of bogging people down and slowing down the work where people really want to spend their time at a higher level, providing insight and analytics and recommendations, instead of spending all their time copying and pasting and trying to make sure that there's no errors in the data. So you know that sounds like it's an area that's right for automation I couldn't agree with you more.

00:04:42.292 --> 00:04:53.923
So I'll ask the question the obvious question, our robots going to take away county jobs. I would say, no, not at all. I would definitely say that we're taking away the mundane.

00:04:55.103 --> 00:05:06.633
Execution-oriented tasks of which, you know, I think a good example really is the evolution of, say, the financial and investment banking where people used to have to draw the graphs and kind.

00:05:06.698 --> 00:05:17.033
Of use data on right out their data. And now you see that transition more towards utilizing technology to create more comprehensive and in-depth insights, but it doesn't mean that

00:05:17.033 --> 00:05:27.673
the profession went away. It actually just transitioned a lot more into the strategic elements of the job, which is, which at the end of the day when I talk with a lot of finance

00:05:27.673 --> 00:05:36.713
professionals and accounting professionals, that's kind of the direction they want to go in their career anyways. And so the technology actually allows us to focus in on, I would argue, the

00:05:36.713 --> 00:05:49.945
areas that most of us are much more interested in. And at the same time, it allows us to look a lot more at a infrastructure level rather than a process level as to the way information is collected,

00:05:50.153 --> 00:05:55.193
how we're doing it on a monthly basis. I think being able to become more of a system designer.

00:05:55.949 --> 00:05:59.433
And looking at things from a thousand foot view is kind of where the role is transitioning into.

00:06:00.531 --> 00:06:04.873
Yeah, so you work with a lot of finance people and you advise a lot of CFOs and finance teams.

00:06:06.873 --> 00:06:15.513
From what you're hearing when you talk to folks, if you could solve one problem, if you had a magic wand that you could wave it and solve one problem in finance and accounting, what would be that one thing that you would solve?

00:06:16.339 --> 00:06:30.113
Immediate magical context pulling for transactions. So you see something weird in the books to be able to click on it and then see the exact source of where it came from, how it got there and who inputted it, I think would save us just millions of hours collectively.

00:06:30.113 --> 00:06:44.313
I think a lot of work that becomes a big pain on in the accounting and finance function is when you have to do deep dives and really start helping with sourcing, you know, when you're doing either doing some kind of diligence or really trying to dive into why numbers are performing the way they are.

00:06:44.313 --> 00:06:54.788
Of the hardest things is really to look back at something, not know where the source is, and then have to connect the dots manually, looking at different sources, looking at different PDFs and that's really where I think a

00:06:56.021 --> 00:07:06.591
big chunk of hours just accelerate exponentially. And so if there was a way to really easily, and maybe it's really pulling the right technologies together in the APIs to quickly be able to click

00:07:06.591 --> 00:07:17.951
on a transaction and then the immediate PDF of which a person inputted that expense pops up right in front of you, that would mean the world to me. Yeah, I hear you. So any final thoughts,

00:07:17.951 --> 00:07:29.151
Kenny, before we sign off here on our podcast? No, I will say, I'd say I'd love to talk a little a little bit about the kind of CPG world and kind of what we've seen on the CFO side where.

00:07:30.473 --> 00:07:41.871
The biggest topic I would argue right now is really related to working capital. Now that we're in a much more cash constrained environment, there is a huge emphasis around the ability to manage your

00:07:41.871 --> 00:07:50.911
cash through not just your profit and loss, but then also your purchases. Now that becomes a lot more important aspect of the conversation because now in this world, because you're not

00:07:50.911 --> 00:07:59.391
able to necessarily get easily lines of credit or equity financing, you have to be able to understand where your cash is going. And so you might be paper gains, but then you could

00:07:59.391 --> 00:08:09.151
be cash losses simply because all that working capital, all that AP and AR is just sucking up all that cash and you can't run your operations. And so now I think CFOs really have to think a

00:08:09.151 --> 00:08:20.031
lot more strategically and have more tools in their hand to understand how they can allocate cash tactically on a week to week basis. Yeah. I mean, it sounds like a cliche, but we hear it

00:08:20.031 --> 00:08:38.111
over and over again. You know, cash is king. Cash is the lifeblood of every organization. And if you're not managing it, quite frankly, you know, you're not doing the service to your business that you need to. So with that, I'd like to thank Kenny Jen for spending the time with us today. I learned something today, as I always do on these. On behalf of Auditoria and the rest of the CFO Corner team,

00:08:38.111 --> 00:08:40.141
I'd like to thank you for listening and have a great day. Thank you. Take care.

00:08:43.440 --> 00:08:54.720
Music.