This episode features an interview with Katherine Edenbach, CFO of Emburse, a billion dollar platform for business expenses and vendor payments. Katherine has an impressive career of over 20 years in accounting and finance. Before coming to Emburse, she was CFO of Certify, Inc., VP of finance at CashStar and served in various senior accounting and finance roles at Fairchild Semiconductor and WEX, Inc. On this episode, Katherine talks about the latest in fraud trends, the renewed importance of cash management amid the pandemic, and how accurate data leads to better decision making.
This episode features an interview with Katherine Edenbach, CFO of Emburse, a billion dollar platform for business expenses and vendor payments.
Katherine has an impressive career of over 20 years in accounting and finance. Before coming to Emburse, she was CFO of Certify, Inc., VP of finance at CashStar and served in various senior accounting and finance roles at Fairchild Semiconductor and WEX, Inc.
On this episode, Katherine talks about the latest in fraud trends, the renewed importance of cash management amid the pandemic, and how accurate data leads to better decision making.
Quotes
“The CFO is no longer just managing finance and accounting. Really, it's taking that next step up and understanding how the numbers pull together and how you're going to drive strategy. Because obviously if you had bad data coming in, you could have a bad decision coming out. So it's important to understand accounting and finance, but the CFO also needs to have that strategic mindset.”
“We are definitely a data-driven company. We have a significant amount of both structured data and raw data. And we've been working really hard to pull that data into more of a usable format. That means making that data consistent and easily accessible. Because inconsistent raw data could be interpreted incorrectly. Using new data analytics tools is helping us drive visibility into spend patterns and identify areas for improvement.”
“Automating controls takes the onus off the finance team to sometimes be the bad guy or the enforcer. When you have the controls built into your systems already, there's no interpretation. It's the system that’s enforcing the controls and people aren't getting involved at all.”
Sponsor
The Invisible Vault is powered by the team at Kyriba, the global leader in cloud treasury and finance solutions, empowering CFOs and their teams to transform how they activate liquidity as a dynamic, real-time vehicle for growth and value creation. To learn more visit www.kyriba.com
Katherine Edenbach: The CFO is no longer just managing day-to-day accounting operations. Really, it's taking that next step up and understanding how the numbers pull together and how you're going to drive strategy. How are you going to grow your top line? What are you doing about your bottom line? How do you make decisions about what you want to do with the company based on what those numbers are showing you? So it's important to understand the accounting and finance, but really the CFO needs to have that strategic mindset.
Narr: Hello and welcome to The Invisible Vault. This episode features an interview between Katherine Edenbach, CFO of Emburse, and Bob Stark, Head of Global Market Strategy at Kyriba. Katherine has led an impressive career of over 20 years in accounting and finance. Prior to Emburse, she was CFO of Certify, Inc., VP of finance at CashStar and served in various senior accounting and finance roles at Fairchild Semiconductor and WEX, Inc. On this episode, Katherine talks about the latest in fraud trends, the renewed importance of cash management amid the pandemic and how accurate data leads to better decision making. But before we get into it, here’s a brief word from our sponsor...So please enjoy this interview between Katherine Edenbach, CFO of Emburse, and your host, Bob Stark.
Bob Stark: Hi, I'm Bob stark from Kyriba, Global Head of Market Strategy. And I'm joined by Katherine, Katherine hello, how's your day? Good. I think we're gonna have a little bit of fun here. We've talked a little bit before recording this, and there's some really interesting things about your story that I think the audience is really going to appreciate, but let's start with actually the basic question I like to ask all CFOs. Why finance? What about finance was intriguing to you? And I know maybe a bit of foreshadowing here that it kind of started at a young age for you.
Katherine Edenbach: I've always enjoyed working with numbers and making sense of data. And as CFO, you really get to dig into those numbers to understand what drives the company. You can use performance metrics to understand where we're strong and where there may be issues. And it's really satisfying to know that the insights that my team and I provide can have a meaningful impact in shaping the strategy and the direction of the company.
Bob Stark: Yeah. And that was definitely important during the pandemic. And I'm going to ask you a little bit about that in a moment, but let me ask you this question. In terms of having this interest, you had this interest in numbers, you were interested in providing that leadership to organizations. You saw something quite fascinating from a career path. What was your career path? How did you get to become CFO of Emburse?
Katherine Edenbach: So I started my career in public accounting and I'll date myself here at Coopers and Lybrand, which then merged with Pricewaterhouse to become PWC. I earned my CPA there. And I spent about 11 years after that working at Fairchild Semiconductor, which was a publicly traded company. And I worked across all aspects of corporate finance. I did treasury, I did foreign exchange hedging, SEC reporting, Sox compliance. I worked in FP and A on earnings releases and I really got to experience so many facets of finance and accounting. I then moved to another public company that was focused more on payments, also doing FP and A and setting public guidance. But at these larger, more established companies, finance can end up getting siloed. And I wanted to try working at a smaller company where I could be more involved in different aspects of the company. So I joined a small VC-backed digital payments company where I headed up the finance team. I worked there for a few years until we were acquired. And then I joined Certified Inc. as CFO. And Certified would later merge with Chrome River, along with several other acquisitions, we would form Emburse.
Bob Stark: That's a really good story. There's a lot of different touch points there. I see some links between you mentioned treasury, risk management, payments, but also FP and A crept up a couple of times in your description. So would it be fair to say that FP and A is a very important part of the CFO's remit or at least having that experience really prepared you?
Katherine Edenbach: Yes, I would definitely say that. I mean, understanding the data, not just the accounting, but how those numbers roll up the different metrics that are portrayed, and how you can use those to determine company performance and guide company performance is really important.
Bob Stark: It makes sense. It's a very emerging area for a lot of different reasons. And certainly in the past 12 months, being able to predict what is our cashflow going to look like as we exit the pandemic or even when we're in the midst of it was critical. Let's talk briefly about Emburse. And by the way, I think Emburse is a fantastic name for the organization. I actually wouldn't mind hearing the story behind that name and I think the listeners would as well. So maybe, let me ask you that first. Where did Emburse come from?
Katherine Edenbach: Sure. So Emburse has been formed, as I mentioned, by a number of different acquisitions that were brought together and we were really searching for what's the best name for this combined company. One of our smaller acquisitions, it was a card company and it was called Emburse. And the more we started to think about it, the more we start to look around for different names, we kept returning to this acquisition and its name Emburse, and how it fit in really well with reimburse and so many other aspects of our company and the payment side and reimbursements, companies spend, that we just, we got stuck on that name and it really just seemed perfect for the company. So it was really a small piece that ended up becoming the total company It seems like a great find. And because it logically fits with reimburse. That's what you think of when you think of Emburse. Sounds like that's the exact objective that you were going for. And it was nice that you found that name within your organization. Already maybe saved some of the challenges of rebranding. So in terms of at Emburse, my new favorite company name, what's your favorite thing about being the CFO of Emburse? I realized it's a very wide question, but what do you find most interesting?
It It might sound a little trite, but really my favorite thing about Emburse is the people. I work with a great leadership team. We come from different geographic areas. We have different backgrounds. We have a lot of different viewpoints. Which I feel like makes for a stronger executive team. But we all work well together and we're all invested in the company and we all really want to see the company succeed. So I think having that, executive team is one of my favorite things about the company, as well as my finance and accounting team. So I really have a great team that really pulls together. We've got a complicated company. We're acquisitive, so we're constantly bringing in new acquisitions. There's always something going on in the finance and accounting side. There's always something we need to streamline, we need to build. And so it's really great to have a great team that can support you and really continue to make that progress.
Bob Stark: Yeah, that's a great answer. A lot of people, when they answer, talk about the team, it's so important these days. Especially important when everyone's remote and in different places, it makes it that much more challenging, but important to rely on your team and trust them. Let's talk about the next segment, Cash Crossroads. So in this segment, we'll talk a little bit about cash and liquidity. Specifically for you as CFO, we are emerging from the pandemic now, but thinking back to when that started, what changed for you at the onset of the pandemic in March of 2020?
Katherine Edenbach: So we had a lot of changes at the onset of the pandemic. So the majority of our accounting, finance and billing team were all centrally located in Portland, Maine. So the shift to a remote workforce was a huge change. In addition, the pandemic really shifted our priorities to focus more on cash management, spend visibility and spend control as so many of our people were remote and have never been before.
Bob Stark: It's interesting how centralized you were. I can appreciate what that was a shock to the system, so to speak. But also touching on liquidity challenges. And I hear this from a lot of organizations. I remember at the time there were organizations I talked to that were saying the travel and hospitality area, they were being asked daily. Sometimes more than once a day whether they had any liquidity challenges or what their forecast and projections, the FP and A side of the business, what they were seeing. Were they having to change their accounts payable processes just simply because they had to be very specific among how much they could spend regardless of the invoice that they had out there. So there's a lot of different things floating on. It sounds like you're touching on some of those. Is there a biggest liquidity challenge? Maybe that's a difficult question to answer but I'll ask it anyway, just for fun.
Katherine Edenbach: So I think for us, one of the reasons that cash management became so much more of a priority in 2020 was because cash receipts from our customers started to slow as many companies began to conserve cash because of the economic uncertainty. And no one knew how long the pandemic was going to last or what ramifications it was going to have on the overall economy. So people really started to sort of sit on cash a bit and dole it out a bit slower. So as we managed cash, what we were really doing was we were looking at the timing of our cash inflows and we did try to shift customers to pay electronically, because that obviously makes your cash inflows much more predictive if they are paying electronically. On an expense perspective, we really tried to use our sort of AP and invoice tools to make sure that we had visibility into invoices in a timely manner, and that all expenditures are approved and within budget, which helped eliminate any surprise and expenditures that weren't anticipated during our cash planning. So that's really what we were focused on, was sort of matching those cash inflows with the cash out flows.
Bob Stark: That's a very important point and it really highlights that need for great visibility, really good cash forecasting. And if I dare say, precision, so that you can be confident that the choices you're making are reliable ones, they're not going to be wrong the next day. It seems like that was a very important theme within what you were trying to do.
Katherine Edenbach: Definitely.
Bob Stark: You were saying that there's, I guess the way you describe it, There were some similarities between what you experienced at the start of the pandemic and maybe some of the things that we saw 2008, 2009, in terms of, do we have enough liquidity? How long is this going to last, as you said. Did it feel different than what you'd experienced at say the credit crisis back in 2008, at least at the outset of the pandemic?
Katherine Edenbach: It did feel different. Back in 2008, I was working in manufacturing and we dealt with the credit issue at that point, we had a lot of layoffs. But I felt like it was something people had experienced in the past before. The pandemic, no one had ever really experienced something like this before. And no one seemed to know what those ramifications were going to be. And so I think people were afraid. I had never experienced where schools had closed for a period of time. People were home, daycares were closed, schools were closed. So it was a different environment than just the economy. It impacted every aspect of peoples' lives, not being able to leave the house. And so I do feel like it, it did feel much different than 2008.
Bob Stark: Yeah, very much agree. I've talked to other CFOs that said at first, the liquidity challenges seemed the same for about a week. And then suddenly you realize that you're in a very different position than you had been before, because of all those things, it's so much more wide ranging. So Katherine, let me ask you this, of all the good things that you've accomplished during the pandemic, what processes, what workflows are you going to keep? Like, what are the good things that you put in place that you think, oh, we're going to keep that?
Katherine Edenbach: So I, I do think there were some silver linings from the pandemic. On the people side, the pandemic taught us a lot about communication and flexibility. So in switching to a remote environment, we discovered it was so important for our team to stay connected. When you don't see your employees on a daily or even weekly basis, it can be hard to tell how people are doing. Are they stuck? Are they spinning their wheels? We didn't want people to get stuck and feel like they were at home and they didn't have anybody to turn to. So really making sure that we were in, not constant communication, but regular communication so that we knew what was going on with everybody. We knew if there were productivity issues or even sometimes personal issues with those people so that we could be there to lend a hand. And on the other side, it was also important to share successes. If somebody really got through a challenge or figured something out, we want it to be able to still congratulate them and say, that they had done a great job. So communication was really important. And so we implemented a number of daily check-ins, quick huddles, just so people could share. You know, what's a particular challenge they were working on? What's their major project? If they had any hurdles they were having difficulties with. And then if they had any successes as well. And it kept the team informed on what everybody else was doing. And it also made it easier for somebody to lend a hand, if somebody needed help. And we also learned to be a lot more flexible. So people were working from home, with kids and dogs and know we had people who sometimes were working early in the morning and then they had to take a break for a little while to manage some children. And then they were working again when kids took naps or after kids went to bed. And so I do believe we will see some more flexible schedules in the future. Maybe not quite as flexible as they were during the pandemic, but the option of having those flexible schedules will be there. And we most likely will not expect people to be in the office every day of the week.
On the business side, it really just strengthened our commitment to virtual and automated processes that could be managed from any location, because we've seen a pandemic now. Do we know if something like that will occur again or potentially something else? And having those virtual and automated processes that you don't have to be in the office to manage are super, super important.
Bob Stark: And it also sounds like digitalization was incredibly important. You'd mentioned before, around going more towards electronic and digital payments, I guess maybe death of the check has been accelerated by many organizations because it was so manual and difficult to pay that way, difficult to receive that way. So that's another angle I imagine that is probably a nice, best practice that you're able to implement.
Katherine Edenbach: That's true. Definitely.
Bob Stark: All right. Let's switch gears completely. And talk about a really fun question. Hopefully you find it's a fun question too. And it's in our series called The Playbook. So first question, strategy in there in your playbook. What does risk management mean to you? I know it's a big term that means a lot of different things to a lot of different people. But for you as CFO, what do you think of when you hear risk management?
Katherine Edenbach: So Our biggest area of risk management today is really around cyber security and phishing attempts. Making sure that our employees are well-educated and know how to identify phishing. And establishing controls around where we know that those fraudsters might try to get in. So we have a number of controls around approving invoices and around outgoing payments, especially payments with new or different banking information or changes to invoice addresses. This year, we're also going to be adding a credit component to our card product. And obviously that will bring a whole different realm of potential risk management along with it. So we are anticipating that coming as we move through the year, but as of today, our biggest areas is really that cybersecurity and phishing.
Bob Stark: Yeah, it's so big these days. And I know it's, It's gotten worse. I've seen a variety of studies that suggested that fraud was certainly very apparent, especially on the payment side for the last five or 10 years, at least. There's been different ways to accelerate that, preying and organizations that maybe had inconsistency in their controls from when they were all in office to when they were, let's say, not in the office. And that's, whatever that continues. Like, whether there's an element of hybrid work, that threat will continue to accelerate. I know there's a lot of different ways to talk about fraud. Are there certain best practices that you think that other CFOs could benefit from?
Katherine Edenbach: I think education, as I mentioned. Education of your staff and building in those correct controls. staying on top of fraud trends, what are the ways that people are trying to fraudulently get at you at this point in time? And I also find automating controls, where you can. So that really takes the onus off the finance team to sometimes be the bad guy or the enforcer and managing the controls. When you have the controls built into your systems already, there's also no interpretation. It's The system is enforcing the controls and people aren't getting involved with sort of manipulating those controls. So I think anytime you can automate a control. It's a really great thing, too.
Bob Stark: Yeah, the human quotient is generally the weakness, as you said, I mean, the phishing schemes, the BEC schemes that you see, it's all, because there is a breakdown in controls because someone genuinely did something that they shouldn't have. Now, whether it's their fault or not, there's obviously lots of, sort of urban myths and stories out there that you think, well, how could that have happened? How could I have stopped that? But in general, there's a breakdown in the control. And anything you can have that can screen and ensure that internal governance or compliance with your payment policy, if you can automate that and take the human quotient out, you put yourself generally in a better position.
Katherine Edenbach: Exactly.
Bob Stark: It kind of leads in the next question I had about being data-driven. And I saw an interesting statistic actually, that was around CFOs that were surveyed. It was actually from Harvard Business Review. And those CFOs in that survey said that 90% of the volume of data that's collected, used, has increased dramatically over the past two years.
That seemed consistent with what you're seeing is to this quest to become more data-driven.
Katherine Edenbach: Yes, definitely. I mean, there's always a call for more and more data. And we are definitely a data-driven company. We're a spend management company. We've grown by acquisition. And as a result, we have a significant amount of both sort of structured data and raw data. And we've been working really hard to pull that data into more of a usable format. And sometimes that means, we're consolidating multiple Salesforce instances. We're getting everyone onto the same ERP platform, we're trying to get that data so that it's consistent and that it's easily accessible. So that we can really pull it and make sense of all the data, because obviously just raw data that's not consistent could be interpreted incorrectly. And internally we've also begun to use some of our more, our newer data analytics tools to help drive some visibility into spend patterns and hopefully help us to identify some areas for improvement.
Bob Stark: Yeah, that's a fantastic objective to go after is to make sense of the unstructured data, find patterns, be able to visualize and then make better decisions. I know it's early days for some of the technology out there, but do you find that there's a potential role for machine learning, artificial intelligence, maybe not today, but going forward to help you make sense of some of that?
Katherine Edenbach: I think definitely. We do use a little bit of AI in our products today, sort of behind the scenes to intelligently route expensives that have been determined to be risky based on machine learned models that are constantly evaluating sort of audit performance feedback and new trends. We aren't using a ton of AI in the finance organization today. But as we're going to be consolidating all of our legal entities onto one invoice and one spend management platform, hopefully by the end of this year, we do expect that there may be some AI that'll be involved in some of our more complex workflows as we attempt to automate some of our processes and really take that human element out.
Bob Stark: Yeah. Well, your approach makes a lot of sense. You want to understand what data do I want to be part of this analysis first? Once you organize the data, you're in a great position to leverage some of those tools, but I've seen so many organizations make mistakes where they jump into, oh, we're going to use AI for this, but they really don't understand that, just like any algorithm, it's as good as what you put into it, which is the data. And if you don't understand what data you're trying to draw conclusions from, whether it's a person or a machine learning, you're going to get an output that maybe isn't what you thought it was.
Katherine Edenbach: That's exactly right.
Bob Stark: Let me ask you one more question about strategy. So customer experience is one area that gets talked about by many CFOs, some being so bold as to say that the customer is the only thing that matters. Which actually, maybe that's not so bold. That actually makes sense logically. But what is a bit new and breaking is the CFO's role in that, since you're not typically managing teams that are directly interfacing with customers, signing contracts, those sorts of things, they're just not typically part of finance. Is there a role for the finance team to help deliver a great customer experience?
Katherine Edenbach: Oh, I think so. Definitely. So the accounting and finance team handles all the billing and collection. So often there's a direct interaction with the customer. May not be the most important person at the customer, but there is a direct interaction with the customer. And obviously it's important for billing to be accurate. You don't want your customer complaining that you're not billing accurately. And you want any interactions with the customer to be professional, especially if you're looking to maybe collect funds, because the customer hasn't paid. You don't want to be too aggressive in that standpoint either. So accounting and finance really does play a role in delivering the customer experience. It's just a little different than perhaps the engineer who's designing the software that the customer is using, or the customer service person who directly interacts with the customer on a regular basis. But we do interact with the customer.
Bob Stark: Yeah, as you do a great job on the accounts receivable side, then that certainly can potentially stimulate better retention or perhaps even them doing more business with you. So, yeah, you're an important cog in that wheel, which is well said. All right. So let's talk about the future, which I know is obviously a fun topic, and we can have a little bit of enjoyment with this one. When you became a CFO, your path was initially through the accounting side, worked for what I guess is now a through integration, a big four firm. Are there different paths to becoming a CFO now than the path you took?
Katherine Edenbach: I definitely think there are. I think there's always been different paths towards becoming a CFO. I was actually on a call before this one where one of the CFOs had been the chief legal officer and have moved into the CFO role. And I thought that was really interesting. I mean, the CFO needs to understand the numbers and they need to be a strategic member of the executive team. And you can do that without necessarily understanding the technical accounting, but different CFOs are then therefore going to need different sort of supporting staff or supporting team needs. If you're a CFO without a strong technical accounting background, you'd run a really solid chief accounting officer or controller to really help you manage that side while you're dealing more with the strategy and the public face of the company. But so I do think there are many avenues you can take to becoming a CFO. You really just need to have that strategic mindset. You need to understand the numbers and how they show and predict company performance.
Bob Stark: Yeah. And you sort of alluded to this before, especially with your touch points, where you touched on treasury, you touched on risk management, like you had these experiences going in. Is it important to have some exposure to those? Or can you compensate by having the right people, if you haven't had that direct experience?
Katherine Edenbach: I do think you need to have some exposure or interaction at least with working with those groups so that you do have an understanding of how treasury works. I think if you can get as much experience as you can developing a strong overall understanding of the company, and that would include the finance, the treasury, the accounting side, as well as the overall business and industry that you're operating in and understanding how finance and accounting can support operations and the decision making process that helps both company growth and strategy if you can fit all those pieces together.
Bob Stark: A point you just made around strategy makes me wonder about how much more important that strategic side is than it used to be. Is it fair to say that I don't want to say a chief strategy officer because that's a whole different role, but that strategic element is much, much more critical than it was a decade ago.
Katherine Edenbach: I think that's very true. The CFO is no longer just managing finance and accounting day-to-day accounting operations. Really, it's taking that next step up and understanding how the numbers pull together and how you're going to drive strategy. How are you going to grow your top line? What are you doing about your bottom line? What are your margins doing today? Which products are more profitable than others? How do you make decisions about what you want to do with the company based on what those numbers are showing you? And also making sure you're interpreting those numbers correctly. Um, Because obviously, as we talked about earlier, if you had bad data coming in, you could have a bad decision coming out. So it's important you know, to understand the accounting and finance, but really the CFO needs to have that strategic mindset.
Bob Stark: So if I hear it right, there's words like insight having business intelligence that are very critical, but it also sounds like you're saying it's a shift from being reactive, maybe the CFO of old, to being proactive and really being, having a seat at that table as opposed to just responding to questions and queries.
Katherine Edenbach: That's exactly right. Instead of it just being sort of a looking backwards role, what happened? It's understanding what happened while at the same time, using that to be able to determine how you're going to go forward.
Bob Stark: That's a very different landscape than it used to be. But I think very interesting for those looking to become CFOs in the future. Given your experience and partly your pathway, but also what you observe and what you see now as being a CFO and your strategic role, your seat at the table, what do you recommend for those that would like to become a CFO?
Katherine Edenbach: So I think as we talked about earlier, just getting a real broad range of experience, whether that's in accounting and finance or across the company , Um, making sure you have a solid understanding of the company. Where are the revenues coming from? Where are the costs? As well as the company, the overall business, and then also the industry in which you're operating in, right? Because that is really important too. And those are the biggest things you can do so that you can later make those strategic decisions.
Bob Stark: That makes sense. I think complemented with the experience that you suggested is important to have in some degree or another, around having treasury understanding. Even to your point earlier, having a good, comprehensive view of what risk management is because it's not just FX and interest rates, like it may have used to be. There's fraud, there's certainly country-specific risk, there's elements of supply chains that you say the CFO needs to be aware of all of those things. And have a proactive view on how they impact the organization.
Let's talk briefly about technology. You've made a really good observation around the fact that you're looking to integrate different levels of technology, make the ERP more central, make sure that the data is actually shared. So, I'll use these words, you have a single source of truth and it makes it easier to provide that insight analysis rather than having your team spend time chasing information in disparate systems. Are there certain technologies, maybe it's not necessarily the technology itself, but just, I'd like to be able to do this, that you have your eye on, or you'd like to see emerge. I know there's a lot of technology tools out there. So I'm interested in your thoughts. What's coming, or what would you like to be coming that could help?
Katherine Edenbach: So I think any technology that really helps drive the automation of manual processes today. So less manual processes, as we've talked about means less of a chance of human error and allows finance teams to better scale and to be able to focus on higher level tasks that add more strategic value. And that aligns with inverses goal, which our goal is to humanize work by automating manual tasks, so that they can focus on what matters most. And that may be more rewarding work. It could be more time at home with your family or community, but really relieving a lot of those manual efforts so that you can focus on the higher value stuff. So I think anything on the emerging technology side that allows us to reduce those manual processes and automate, and scale are things that we'll be interested in going forward.
Bob Stark: Yeah. And there's something you said in there that I think is really valuable and it's around productivity. So as you said, productivity is extremely important. It gets you from manual to automated, which then frees up time. So it's not necessarily that productivity has the value. It's what you're able to do with that productivity, i.e. the value-added tasks. In, I guess we'll say finance in general, but let's just say treasury accounting payments, risk management, what are examples of value-added activities in general that you think here's what you should be aiming towards to build a business case for automation in the first place?
Katherine Edenbach: Right. And I mean, there's lots of examples of this across finance and accounting. On the general ledger side, if your team spends so much time manually booking journal entries, getting the data into the system, closing the books, okay, the books aren't finally closed. There's not a lot of time to say, okay, let's take that output and look at those numbers. What are they telling us? Are they telling us that we're spending too much money here? Are they telling us that we're missing out on revenue there? Are they telling us these expenses look really weird, something's off? If you spend all your time doing the work, there's not a lot of time to re review that output and figure out where you can make improvements, where you might be able to drive more revenue or drive more profitability. And so you can see that across the board when people spend a lot of time on manual efforts. There's usually not a lot of time reviewing whatever that manual effort produced and really figuring out what's important to the company from that output. And I mean, I think that can be done in FP and A, that can be done on the accounting side that could be done on the treasury side. So if you can eliminate how long it takes you to do those jobs, then you have so much more time to look at what's coming out and say, does this make sense? Is there room for improvement? Is there a different way that we could be doing this and really help the company to grow either from a top line perspective or profitability perspective, or just really to become more accurate and really drive those processes in a better way?
Bob Stark: Yeah, I like that a lot. It really shows that there's a lot of software providers that are focusing on offering productivity and automation. With a business case, with an automation tool, with a software, you really are measuring the value of productivity as enabling finance to be a driver of business strategy. And if you don't have the productivity, you don't get the driver of business strategy. It's a great equation that you put together there.
Katherine Edenbach: That's true. And it can also allow finance teams to scale more appropriately as the company grows too, so that you don't have to continually throw bodies at a particular manual task, because you can accomplish that with automation. So it does allow you to, as your company grows to scale your finance team appropriately.
Bob Stark: I'm glad you said that. I'm more on the strategic and the marketing side. I don't like throwing bodies at a problem every time. I like hiring great people and you have to, but there's a balance that needs to be had there. So that's very well put together. Cause I think no matter what discipline, what area that you're in, it's important to understand that scalability is critical to growth.
All right, let's get into a fun segment called Quick Hits. So I'm going to ask you, it could be a short or it could be a long, in fact, we may even get into some interesting discussion on what starts as a fairly simple question. So the first one I want to ask you, because this is certainly a hot topic these days is digital currencies or cryptocurrencies. So your thoughts, the future of digital currencies for treasury and finance.
Katherine Edenbach: So I feel that for mainstream companies, there's just too much risk right now for digital currencies. And especially for those companies that may be public companies, the disclosure requirements are pretty onerous. So until that level of risk comes down, which obviously might also decrease the value of those digital currencies, I don't see it being a significant piece of treasury, finance and accounting for your mainstream companies. There'll always be outliers that will be using digital currencies, but I don't see it becoming a huge part of the mainstream, unless there's some deep risking involved.
Bob Stark: I'm fascinated by the fact that there's organizations that are putting significant amount of cryptocurrencies on their books. To me, unless that's your business strategy, where there's some, like the micro strategy is a world where they've pivoted their actual mission to incorporate cryptocurrencies and make that part of their system and network that they provide. But for the most part, organizations that are holding Bitcoin and other ones, They're doing so effectively making a bet. Because to your point, the infrastructure is just, it's not there. You don't have the liquidity behind the hedging instruments. It's like you're going into Europe and saying, I'm not going to hedge any of my exposure whatsoever. Just going to see if it goes up and down, except that it's not like a Fiat currency where maybe it goes up or down two or 3% in a bad day. You're talking about significant movements, like 10% potentially in a day. I can see your reaction as we're recording this, that's eye opening is the right word for that. It's petrifying.
Katherine Edenbach: Companies with that, that have significant liquidity and it's not as much of a risk for them. but I think with companies that are balancing liquidity needs, it can be a little too risky.
Bob Stark: Yeah. There's companies out there that are taking billion dollar plus positions in digital currencies. And as an investor, I mean, this is just my opinion. I always like to invest in organizations that are very focused, like I'm seeing the earnings per share reflective of what that business is, not the noise that they are exposed to currency or interest rates, or now digital currencies. If I want a digital currency play, I'll go invest in someone that's, market-making or providing digital wallets or some sort of exposure that way. I don't want my software company or my manufacturing company or my car company to be focused on this distraction, which maybe gets away from what finance's true position is, is providing certainty and protection.
Katherine Edenbach: That's exactly right.
Bob Stark: It's an interesting discussion. It's probably another conversation from today. But to address some of the things that you said in terms of there needs to be more infrastructure, there needs to be more liquidity, there needs to be utility for the currency for us to feel confident that we could actually use it and be able to get in and out of it. There's this promise of centrally backed government sponsored digital currencies, like China we're seeing that as an example, there's talks in other countries, U.S. amongst them. That suggests that there might be some promise because it brings along this de-risking to use your term. But until that happens, it's hard to believe that these cryptocurrencies that act pretty much as commodities because the supply and demand imbalance can really offer a value.
Katherine Edenbach: I still remember back in 2008, dealing with auction rate securities and having the bottom fall out of that market. So maybe that's what makes me a little hesitant on the digital currencies too.
Bob Stark: Well, I'm glad it does make you hesitant for all those reasons, because CFOs need to understand these risks. I'm sure you get those kinds of questions. Most CFOs I speak with are getting questions such as should we be into cryptocurrencies? Should we be allowing our customers to pay us using these methods? I think it's very important to understand. Here's what they are, here's what we need for it to happen. And no, we're not there yet. Which are all very reasonable answers
Katherine Edenbach: That's right.
Bob Stark: Well, as I said, we could get into cryptocurrencies for a lot. Let's talk about something else since technically it's the Quick Hits section. So here's a question. Will there ever be a Chief Liquidity Officer?
Katherine Edenbach: I don't think there'll necessarily be a Chief Liquidity Officer? I think this role does exist today, especially in larger companies, but in different form as the treasurer. So typically the treasurer would report into the CFO, but I don't think there will be a separate C-suite role for a Chief Liquidity Officer.
Bob Stark: I like that take on it. I think it's important. Certainly the role of liquidity seems to be more prominent than it used to be. It used to just be cash and cash equivalents. And now it seems to be more of a strategy. So next question, artificial intelligence, we talked a little bit about it. And certainly Emburse actually does a nice job of embedding AI capabilities within your products. We also talked about the fact that AI is not quite ready for prime time in terms of having business applications and finance and treasury although we're working in that direction, getting things like your data organized in terms of here's the outcomes I'm looking for, here's the data I'm confident in having. But when we do get to this point for artificial intelligence being more mainstream, does artificial intelligence replace people, do you think?
Katherine Edenbach: I don't think so. I think it can augment people. It can help make things easier, but I don't think it ever fully replaces people. There needs to be an interpretation of that data. You need to make sure, as we've talked about, that the data going in is the accurate data and that what's coming out is being interpreted correctly. And that if you have bad data going in, you don't have bad data coming out. So I do think that there will always be a requirement of some level of people in the finance and accounting, because there are things that need to be reviewed, that need to be interpreted. And there are things that can be looked at in different ways. people often think that accounting and finance is black and white, but it's really not. There are a lot of shades of gray, just like there are in a lot of other areas. And so I don't think that AI will fully replace your accounting and finance teams.
Bob Stark: Yeah, I agree with you on that. I feel that there's a level of extreme automation that artificial intelligence, and in fairness, robotic process automation, the bots, can provide. But the replacement seems challenging to me. I'm sure there are some areas in organizations that that's not the case, that you can certainly provide a replacement and retraining. But yeah, finance is very... requires a lot of insight and intelligence and interpretation. But it can help.
Katherine Edenbach: Oh, definitely can help. Definitely can help.
Bob Stark: Yeah. Well, you made a lot of people happy with that answer. We're thinking, goodness, I'm glad that AI is not going to replace me. So well done. All right. Last question. And this is, I think an interesting one, because I've heard very different perspectives from different people. I haven't heard a consistence of answers on this. So I'm going to ask you. Are CFOs in your network peers or competitors?
Katherine Edenbach: I think we're peers. We're private equity-backed and I meet with a number of different CFOs that are portfolio companies for our equity backers. Were all primarily software companies. Different lines of software and different industries, but we're in the same sort of overarching umbrella of software. We're at different sizes and different stages, but we do get together and meet to discuss, common problems. Things that somebody may have seen, somebody else hasn't gone through yet. How did you handle this type of an acquisition? Have you looked at this new accounting guidance? So we have a monthly, what we call virtual coffee chat, where we just get together and we discuss a number of these items. So I really enjoy interacting with my other CFOs and I feel like it's much more of a peer-to-peer type relationship than a competitive one.
Bob Stark: It's nice to see that best practices become best practices by sharing. Here's what we saw, different interpretations, I think that's all the right way to look at it. So it's great you're able to cultivate a network like that and learn and progress. And I think that's very obvious why you've had some fantastic answers to all of these questions. I really appreciate your time, Katherine, as CFO of Emburse, you did a nice job. I still love the company name by the way. So thank you again for the backstory on that. I appreciate your insights and thank you very much for joining us on this podcast.
Katherine Edenbach: Thank you. I enjoyed talking with you today.
Narr: Thank you for listening to The Invisible Vault. If you’re enjoying the show, please take a moment to subscribe, rate and review, and share it with someone who you think might enjoy it. The Invisible Vault is powered by the team at Kyriba, the global leader in cloud treasury and finance solutions, empowering CFOs and their teams to transform how they activate liquidity as a dynamic, real-time vehicle for growth and value creation. To learn more visit www.kyriba.com.