CFOs Prepare For Their Crypto Education
There are some things that all chief financial officers (CFOs) have in common.
Digital and cloud-based technologies are now critical for finance leaders to optimize workflows in the back office. The pandemic has raised awareness of the importance of cash flow management and forecasting capabilities. Meanwhile, strengthening existing relationships with key business and banking partners has also become a top priority for CFOs across industries.
For the CFO of an organization operating in the cryptocurrency arena, these needs are no different. The way finance chiefs access the resources they need to accomplish these goals, however, can look quite different compared to the experience of CFOs at non-crypto firms.
Although there may be some uncertainties and unique challenges today for crypto CFOs, Natalia Radyushkin, the newly announced CFO of blockchain FinTech Ternio, said she believes that eventually, all CFOs will be working with blockchain and digital currency. As she told PYMNTS, crypto will certainly introduce some unfamiliar speed bumps for corporate finance leaders. But as the technology approaches ubiquity, Radyushkin noted that the barriers to accessing services and technologies to overcome those speed bumps will continue to shrink.
While adoption of blockchain and cryptocurrency is on the rise, significant doubt and skepticism remains in the market, particularly among traditional financial service providers. Further, because the emergence of cryptocurrency within the enterprise is a relatively new phenomenon, uncertainty continues to dominate in several areas of the financial back office.
Combined, these trends can make it challenging for CFOs to manage company cash when crypto is on the books, while also blocking access to financial service providers that could help overcome those challenges.
“Historically, it has been difficult for companies conducting business and cryptocurrencies to set up traditional banking,” Radyushkin said, noting that this particular pain point is exactly why Ternio came to be in the first place.
In addition to a lack of access to traditional financial service providers, crypto organizations can also struggle to account for digital assets on their books, as regulatory and industry guidance remains an evolving work in progress.
For Radyushkin, crypto is just like any other form of currency and can be treated as such in the accounting department.
“Digital currencies are a currency just like any other, so currency cash is treated as a current asset on the books,” she said. “I’ve been treating digital currencies as foreign currency.”
While crypto CFOs figure out the path forward, Radyushkin emphasized the importance of staying abreast of any developments in crypto regulation and standards development to ensure compliance in uncharted territory.
Embracing The Benefits
Today, many crypto CFOs are forced to go it alone when it comes to tackling the financial nuances of the industry. But Radyushkin pointed out that the market evolution continues to accelerate, meaning more financial service providers will continue to feel more comfortable servicing crypto businesses.
With understanding and acceptance on the rise, more organizations and their financial leaders will have the opportunity to take advantage of some of the biggest benefits of crypto, which Radyushkin said she believes outweigh any of the pains of operating with an emerging technology.
An early example of those benefits emerged amid the pandemic: Crypto organizations are digital-native, allowing these businesses to support a remote working environment without much disruption. Blockchain has also proven useful as more enterprises work to digitize and promote collaboration with key business partners in areas like accounts payable (AP) and accounts receivable (AR).
“The public blockchain allows for all the participants to have a real-time view of the transactions as they come in,” said Radyushkin, adding that all stakeholders within a single payments workflow — including those involved in reconciling, making or receiving payments — can have real-time access to information. “The ability to have full visibility greatly reduces the time for month-end close processes because real-time information is unaltered and is available immediately at your fingertips on the blockchain, 24/7, greatly improving the visibility and accuracy of accounting.”
With many organizations facing unexpected struggles to promote business continuity and collaboration in a remote working environment, blockchain may see greater adoption as CFOs consider the technology a remedy to their data and communication needs.
It may take longer to convince finance chiefs of the value proposition of cryptocurrency, but adoption is indeed on the rise as more financial solutions have emerged to help corporates and their finance teams remain compliant and secure while working with crypto.
Radyushkin said it’s important for CFOs to understand that crypto is not as scary as it may seem. As access to financial services grows for organizations working with the technology, and as industry standards and guidance become clearer for crypto CFOs, more organizations will be able to embrace the technology’s advantages.
“Blockchain is going to affect every business as money, as an asset, as smart contracts, as supply chain solutions,” she stated. “The CFOs of companies that have not been exposed to digital currencies now need to be prepared for how easy and simple it is to use digital currencies, and how much it simplifies the accounting process as well as the entire payments process.”