Strategy of Finance (SoF) Summaries - EP 005

Strategy of Finance (SoF) Summaries

Learn. Grow. Inspire.

Summary of Episode 5 - Being System Driven with Amit Kumar, Head of Finance CoE at Avataar Ventures.

Guest Intro

Our special guest for the show today is Amit Kumar, Head of Finance CoE at Avataar Ventures.

He is an accomplished finance expert who heads the Finance Centre of Excellence at Avataar Ventures. As a premier growth-stage VC firm, Avataar specializes in nurturing SaaS and B2B startups that are building in India for the globe.

Amit isn't just another Chartered Accountant. He brings to the table a wealth of experience, spanning over two decades, that he garnered from various multinational corporations and vibrant startups within India and beyond. His professional journey has taken him to GE, Oracle, Schweppes, Bosch, and Attune Technologies – a HealthTech SaaS company backed by Avataar Ventures itself, where he was the CFO.

For those of you who didn't know, Amit is also an entrepreneur in his own right. He founded LOGIQORE, a venture that offered fractional CFO and CFO advisory services to early and growth-stage B2B and SaaS startups across India and the ASEAN region.

Amit's mastery isn't confined to just one area. He has a knack for setting up and streamlining financial operations, expertly managing cash flows, and creating growth strategies backed by financial KPIs tailor-made for start-ups. From establishing new offices in multiple countries, to structuring company policies and procedures, to ensuring compliance, and even navigating the often tricky terrains of equity and debt financing, M&A, and JV setups in India - Amit has done it all.

Episode Intro:

In this episode, we deep dive into Finance with Amit, who leads the Finance CoE at Avataar Ventures. He unpacks a unique perspective from the vantage point of an investor, advisor, and consultant to the CFOs. Amongst other topics, we discuss how he thinks about the evolving role of CFOs, IT, and automation within Finance departments, the CEO <> CFO relationship dynamics, working with Investors, and his advice for emerging finance professionals.

Listen to the full episode here:

Guest Quotes:

"I firmly believe that company should not be people dependent, rather it should be system driven."

"Learning never stops."

"At the end of the day, you should feel satisfied that you have done something good for the company. [If] That part is there on each day you come back home, I think that's the job you should do."

"If you give something free, it has no meaning for the customer because he anyways does not value the effort gone into that product. If there is a charge for it, there is a value for it."

"Over the last 20 years, I think most of the companies have understood that, finance means much more than accounting actually. Accounting is only a subset of the entire thing what finance department can do. And a CFO is a guy who basically runs the show for them as far as finance and operations are concerned. So he is not a guy who has to only look at the numbers or the performance of the company after the performance has happened. He is a guy who has to also tell you that you are getting into this risk. The way the business is functioning, I think we can achieve these kinds of numbers."

"CEO understands the CFO is not a finance accounting guy. He is the guy who is basically my eyes and ears and helps me to understand where am I going wrong or is there a chance for me to go wrong or where am I doing really great."

"Saying no is very easy; anyone can say that. But giving a solution against that problem is what I think the modern CFO does and should do."

"I do believe in the three eyes principle, which I learned in GE, that the person who does the transaction, passes the transaction, and approves the transaction, they all should be different. So system helps you to drive that."

"Being a CFO does not mean CFOs don't have emotions. They do have as well. But the thing is they have to look at the company as a whole, not look at individuals. So when I am given a choice, I go with the concept, can I save the company? And if I can save the company by cutting down some cost for the company, honestly, I will go ahead with it."

"Automation is needed honestly to me at every level. You decide what level of automation you need... don't go by the concept of what should be the framework for when to bring in automation. Should bring in automation as early as possible."

"A good CFO will always take that call as to, okay, now is the time to bring in a system for this company because I am losing visibility, I'm not able to give to the management the future vision of this company because I lack on these systems. That's where you bring in things in the company."

"So I feel convincing the board or the CEO is not a challenge till the time you can show future things about it, transparencies, compliance, visibility, all these factors into it, plus savings on cost based on the data you get from the system."

"Maybe it comes from an investor point of view, but yes, transparency and standardization is something every investor looks at. Transparency in the sense that provide right data at the right time and take investors as your friend. They will only help you."

Episode Summary

In this engaging conversation, Amit shares his experiences and insights into the evolving role of a CFO and the financial aspects of business operations. He underscores the importance of understanding each company's business model and aligning financial strategies accordingly while maintaining a balance between growth and profitability.

Reflecting on the evolution and importance of the Finance function, Amit emphasizes how modern enterprises are increasingly aware of the differences between the terms Accounting, Finance, and CFO. Amit ponders on the transformation of the CFO role over the past two decades, highlighting that modern CFOs are not just accountants but also strategic partners to the CEO. They analyze performance, identify risks, and explain financial projections and operational strategies. Further, compliance has become a critical part of their responsibilities due to regulatory issues and corporate scandals.

Amit believes that CFOs and finance departments need to adopt a new mindset where they are integral to the team, contributing to the company's success. Historically, concerned that they would impede advancement or reject their proposals, business teams avoided the CFO. But now, with legal frameworks and compliant solutions, the CFO has become integral to the team.

Amit is an ardent proponent of systems and automation across the company. His philosophy is that companies should not be people-dependent; instead, they should be system driven. Every company can benefit from automation, and it’s the role of the CFO to judge how much automation is required for which area of Finance and when to implement it. He emphasizes that IT and automation have revolutionized the CFO's role, helping them adhere to regulations, streamline operations, and assign responsibilities.

When it comes to implementing IT automation, Amit believes there is no one-size-fits-all approach. Instead, he advocates for a case-by-case approach, tailoring automation to the specific needs of each company. There could be multiple factors to consider, including the growth period and complexity of the business. Further, he emphasizes the importance of integrating finance, IT, and HR departments when considering automation. He believes that the decision to automate should consider the unique challenges encountered by the finance department or CFO.

When convincing the CEO or board to invest in automation, Amit focuses on the company's benefits from automated processes. He emphasizes operational efficiency, visibility, transparency, and reducing manual processes. Real-time access to financial data enables improved decision-making and a deeper understanding of business trends. Amit recommends demonstrating how automation can provide simulations and scenarios to demonstrate its capabilities. He also advocates cost reduction through system-driven contract negotiations and expense monitoring. He believes articulating the benefits and cost savings will convince decision-makers to approve the investment. Additionally, he considers the long-term potential of automation, ensuring scalability and alignment with the organization's growth and objectives. Amit views automation as a continuous process, progressively expanding its capabilities and transforming it into an all-encompassing unified system. He believes automation can be deployed at any stage of a company's development, depending on its complexity and needs.

From Amit's perspective, the COVID-19 pandemic has significantly affected businesses. It demonstrated that a company can operate efficiently and effectively online. Finance departments can now conduct business remotely, increasing the mobility of finance professionals. Also emphasized by the pandemic were the CFO's cash management responsibilities. As a result of declining revenues, entrepreneurs have had difficulty raising capital. Investors are more cautious and seek information regarding sales growth and profitability. CFOs must stretch budgets to keep a company viable. They needed to cautiously manage expenditures, establish purchasing priorities, and make difficult choices.

As CFO, Amit stresses the importance of establishing open communication with the CEO and founder to comprehend their vision and expectations for the position. By aligning with the goals and objectives of the CEO, the CFO can effectively contribute to success. Amit advises the new CFO to adopt a proactive stance by anticipating and communicating potential challenges or roadblocks. Engaging in dialogue with the CEO enables the CFO to jointly identify solutions and strategies for overcoming these obstacles.

Regarding working with investors, Amit stresses the importance of transparency and standardization. He advises CFOs to view investors as partners and to provide them with accurate and timely information. Seeking investors' advice can yield insights and solutions based on their experiences with other businesses.

Amit emphasizes the significance of fostering a collaborative work environment and establishing a solid support network within the finance team. By delegating tasks and empowering team members, the CFO can create a cohesive and productive team capable of tackling challenges and dividing the workload collectively.

Amit's advice for emerging finance professionals who aspire to become leaders is to focus on continuous learning, building relationships, and maintaining an open mind. He emphasizes that there is always something new to learn, and one should never assume they know everything. He believes that a good leader actively seeks knowledge and uses it to support and guide others. He also emphasizes the importance of fostering positive relationships and working collaboratively with others, including non-finance professionals. Amit underscores the significance of assisting non-finance professionals, as doing so fosters trust and establishes the finance team as a reliable ally. In addition, he cautions against arrogance and encourages aspiring leaders to maintain an open mind. Accepting diversity and actively seeking varied perspectives fosters effective collaboration and leadership development.

About Strategy of Finance Podcast

A podcast on Finance People, for Finance People, by Finance People.

We celebrate the Profession and the Professionals in the world of Finance with Rohit Agarwal, Founder of Krayo. These unsung heroes mostly remain under the limelight but contribute tremendously towards company building. This is our endeavor to unpack their journeys to understand what moves them, get inspired by their triumphs, learn from their experiences, and, most of all, connect with them at a personal level. Visit us at https://www.strategyoffinance.com/.

About Krayo

Krayo is the Unified OS for Corp Spend, enabling profitability-led growth for its customers.

An all-in-one SaaS platform, Krayo brings together the whole journey of Spend: Buy (Procurement) >> Pay (AP) >> Manage (Asset Mgmt), with an intelligence-first and automated approach. It optimizes cash flows, enables real-time budget mgmt., provides complete spend visibility, scales operational processes, ensures policy adherence & compliance, and increases profitability. Visit us at https://www.krayo.io/.