CFOs Embrace Role of Navigator as Growing Organizations Take Flight

In the face of ongoing market headwinds, the role of finance and accounting teams is increasingly expanding to oversee cross-departmental coordination and drive holistic business priority alignment.

“I’ve compared being a CFO to the idea of a navigator on a plane, in that you’re looking at a lot of things,” Jerry Fadden, chief financial officer at direct-to-consumer (D2C) insurance provider Kin, told PYMNTS. “You’re constantly making adjustments and covering a broad array of both operational issues as well as treasury and cash management issues, as well as capital planning — and, of course, financial reporting — both management reporting and external reporting.”

The pandemic has shown that long-lasting business disruptions can happen without warning, making it critical for business processes, particularly financial operations, and payment functions, to be well-managed.

Leaning on the Tech Stack

Driving operational resiliency across departments requires agile, modern solutions that can seamlessly communicate with each other.

“I’d say that over the years on the CFO job, there are more specialized systems that are used that are much more sophisticated than they might have been years ago that move beyond the traditional general ledger system,” Fadden said.

While the solution provider landscape used to be somewhat concentrated, today’s CFOs have a nearly unlimited suite of tools to leverage in enhancing and optimizing their operations, he explained.

As CFO of a fast-growing, venture-backed insurance business, Fadden is responsible for managing a sizeable internal workforce and an external client base, as well as ensuring that the hundreds of millions of dollars his company has received in debt and equity funding is put to good use.

“We’re well positioned for the next several years in terms of capacity and funding,” he said. “We typically use that capital to put downstream into our reciprocal insurance exchanges, which are the operating edge entities that manage the policies and so on. We typically like to push that capital downstream to fund growth.”

Still, given dampening sentiment across the broader macroeconomic landscape, Fadden acknowledged an ongoing shift from pure business growth to, as he called it, “a more balanced focus on growth and profitability.”

Driving Decisions With Data

Still, if it were easy to balance growth with profitability, everyone would be doing it.

So, what is Kin’s advantage?

“We’re really focused on data analytics,” Fadden said. “Other companies are as well, obviously, but at Kin, it’s a strong suit for us. So, our decisions tend to be rooted in really rigorous analysis. It’s a hallmark of our strategy. We have good analytical data both internally and externally.”

Kin is very much a payments business, as well as a document management business, because both are defined in the insurance policies the company issues, he said.

Those policies are separately defined in part by state-by-state regulations.

“From an accounting standpoint, we’re heavily involved in evaluating the attractiveness of a state and developing financial projects that take into consideration what our expected losses are, expected expenses, and what our growth might be in the state,” Fadden said. “It’s a full effort across the company, and one that we’re perfecting.”

As finance chief, Fadden is tasked with overseeing the multi-disciplined approach Kin takes to each state, involving the company’s legal and compliance teams as well as properly equipping and educating the field agents and sales office around each new geographical territory.

While some states maintain certain regulatory requirements around insurers issuing paper policies to their policyholders, Fadden told PYMNTS that high on Kin’s “future initiative list” is building out more use of digital and electronic payments.

“Most people are accustomed to debit or credit cards, and many of our customers will take advantage of the installment plans we offer,” he said.

As for any tips he has for young CFOs just getting their start in the business?

“The CFO role is a very fulfilling job, but it’s also a very demanding job in terms of the scope of responsibilities,” Fadden said. “The challenge can be keeping up with what technology is available, what services in the cash management and payments are — we’re always looking for opportunities to upgrade and improve our systems. But you can’t always be chasing the latest and greatest, these investments need to be aligned with organizational goals and building a stable, well documented, well controlled operating environment across departments.”

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