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How AI Is Reshaping the CFO Role with Brad Wolfe of Wolfe Packs Consulting 7-14-26
00:14:57
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- [00:01]
Grainger Announcer
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- [00:30]
Scott Becker
This is Scott Becker with the Becker Business and Becker Private Equity Podcast. We're thrilled today to be joined by Brad Wolf. Brad's got a fascinating thought process around artificial intelligence and capital allocation and a lot more. Also an operational cfo, a Northwestern Kellogg graduate. I live about five minutes from Kellogg, so very familiar or at least from Northwestern. Brad, take a moment and tell us about yourself and this concept of AI strategy is a capital allocation concept.
- [01:04]
Brad Wolf
Yeah, no, happy to. Thanks for that intro. Yeah, I've been I've been a long time CFO for private equity for the last 25 years and CFO longer than that for small cap, mid cap, large cap public companies, private equity backed companies. I used to write flaw a long time ago and did M and A work. I also ran a consulting office of cio, office of CFO process improvement firm for about four years before becoming a cfo. And technology has been near and dear to my heart. I think technology underscores all the finance functions and I think AI has just accelerated things and issues that were present before AI showed up. AI has just moved those to the point where you really can't ignore them. And I think AI is a capital allocation, it's not a technical technology so it's not really shouldn't be treated like a technology and it shouldn't be treated like a compliance though it does have compliance and technology aspects truly capital allocation, which means you have to do a return on investment and you have to judge it versus all the other capital allocations you'll make inside your company and
- [02:12]
Scott Becker
talk about what are you most focused on and excited about. Brad, what sort of gets you going in the morning. Tell us about the Wolfpack and are you a Wildcat fan?
- [02:25]
Brad Wolf
I'm definitely a Wildcat fan. I would love to see the Wildcats do well. That has not been a history of them doing well, but I hope spring's eternal. What excites me is I think I've spent the last 25 years trying to get the lead to cash process the order to cash process automated using CRMs billing systems ERPs and data warehouses, AI is finally going to automate the entire lead cash process or order to cash process. It's also going to fundamentally change the way that, that data flows. Because of that, today's CFO really can no longer be a backward looking kind of waiting to report what happened. You have to move up the stack and you have to be actively involved in, in the setup of AI, the data architecture because you're certifying all the numbers that are coming out. And the thing with AI, because of its speed and its power, the ability to create liability and create problems is exponentially bigger in the world of AI. And as a CFO who has to sign agreements for debt equity, if you're in a public company, public signings, audits, et cetera, you're on the hook to make sure that those numbers are accurate and they accurately reflect the financial condition of the company, which means you have to be involved on the front end because that's where the numbers are being generated, that's where the liability is occurring.
- [03:58]
Scott Becker
Thank you. And talk a little bit about what's going right with AI in the CFO role and talk a little bit about your day to day perspective. Are you an outsourced cfo, full time cfo? What do you do to sort of what, what do you do day to day?
- [04:15]
Brad Wolf
Yeah, so I'm, I'm a, I'm an operating partner for three private equity groups. I will come in and be a, an interim CFO if they need it. I will also, I also work very extensively with our portcos on AI and AI strategy. I run our shared services model. Assured Service model was really set up to test AI and so we've tested, I won't say we've tested everything, but we've tested a lot of the automation on the lead cash, including all the accounting, ERP, billing, etc. It's exciting times because it's going to, like I said, fundamentally change the world and fundamentally change the accounting process. I think what's misunderstood in the market is people think accounting is closing the books and reconciling AP and AR, which it is. But you have to understand 70% of the data that comes into an accounting system comes upstream. And that data, if that data isn't accurate, it doesn't have data integrity, data accuracy. Your accounting department spends the vast majority of its time reconciling other systems and reconciling data that they don't control. What AI is doing is it's moving the entire lead to cash process into the control structure because AI makes instantaneous decisions. And the final point I'll say is for the longest time, last 50 years have been three systems that have been running. There's been a sales system, an operating system and a financial system. And they ran at different speeds and therefore you could have them run differently and you can have them reconcile. What AI does is AI is compressing those three systems into one and they run real time, which means there is no reconciling what happened after the fact. There is setting the controls up on the front end and monitoring the system to make sure that the data output is accurate at the point of entry. That's really exciting. I've been trying to do this for 25 years. It's finally going to happen. But it fundamentally changes your work. I think that's what the next five years will be about. And I think the final thing, I'd say they say, well, we've automated this. Claude came out with so and so. Yeah, Claude automated, or what they're talking about is automating like 10 or 15% of what a finance function actually does. And the reality is, without the other 85%, those automations are tools that you could use, but they don't automate the function. And when they say that, there's a lot of hype out there. And the hype definitely exceeds the reality of where we are.
- [06:59]
Scott Becker
Thank you very, very much. Take a second on a great CFO today. What is a great CFO today to? How do they contribute? When you think about operating at the top of their business as a cfo, what does that look like?
- [07:15]
Brad Wolf
Yeah, I think it's the same as it's been in the past. It just accelerated. A great CFO is strategic and he's on the front end. The difference between being a controller and being a CFO is a CFO is a business partner to the CEO, to the board on the front end, looking into the future and saying, what if 6 months, 18 months, 36 months from now, 5 years from now, based on a wide variety of variables, what are the possibilities? And how should we set up our capital structure? How should we do our capital allocations that take advantage of opportunities and avoid risks? That's been the job for a long, long time. The speed at which you have to be involved. Now, it used to be that transactions move more slowly, etc. Now AI is making it to where everything is going to be real time, which means your CFO has to be on the front end, has to be involved in the architecting of the data. Data, actually data Integrity has to set up the controls. The control surface now is going to be 100 or 1000x. The risks are going to be much greater. That's going to affect your insurance, your dno, it's going to affect the value of your company. If you're in the private equity world and you're preparing for an exit, getting all of that squared away and ready for exit is going to be going to have a huge impact on your valuation, both positively or negatively, depending on how you do it. So I think it's a very exciting time, I think for the, the CFOs out there that look at their job more as a backward looking. I think that those jobs will come to an end. I don't think there's a future in that, but I think for the forward looking CFOs that are on the front end, which I've done my whole career, I think it's very exciting times. Lots of change coming, lots of things in the market, lots of hype in the market, also lots of people with lots of opinions. But the final thing I'll say is, as revolutionary as AI is, AI fundamentally does not change the fiduciary duties or the control structure of a cfo. It changes the way you institute those. But I see people all the time come out and say, oh, we have to come up with whole new corporate governance, whole new controls. No, no. You use exactly the same things you've always used. You just apply them just like we've done with every other technology that's come out in the last 50 years. You apply the same standards, the same rules to the new technology. You're not going to invent a brand new control system. In fact, you can't do that because it's dictated by gap, it's dictated by statute, it's dictated by law. So you have to learn to apply it. I think there's a lot of misinformation out there and I deal with it every day. I do a lot of consulting and I have people say all kinds of crazy stuff to me and that's just, just incorrect.
- [10:17]
Scott Becker
Thank you. And when you talk to CEOs, how do you talk to them about thinking about the financial function in the business, the CFO role, how much of it is FP and A versus just getting the books closed correctly, getting accurate advice? How do you, how do you think about advising CEOs on hiring CFOs?
- [10:38]
Brad Wolf
Yeah, well, you know, I think you've got to look at things as this kind of 1, 3, 5 year time frames right. In the immediate term, things are changing, but the job remains the same. As far as the job goes. The closing of books is a function of three things. It's a function of automating your lead to cash process, which is going to happen, but it's going to take time. It's a function of having data integrity, data accuracy, which means clean data, which means good processes that you have to control and then you can put AI on top of it. I think the biggest thing I say to CEOs is most, and I've been in the lower middle market now for 20 years, lower middle market is $500 million or less for me. You can't put AI on top of bad processes and bad data. You can, but if you do, all you do is you get more bad data, more bad reports that look very, very good, faster. So one of the things is trying to ground them in. This is a, this is more of a marathon than a sprint and you have to prepare for where AI is taking you. And it's going to be a, a, you know, three to five year journey. And, and then I think what's going to happen is the, the closed process itself is going to become, it's going to move up. Meaning instead of closing the books and getting your financials, you know, five or seven days later you're going to get, you know, financial information. Day one, right? That's going to come out. As far as FP&A, the AI makes the production of FP&A almost instantaneous. What it doesn't do though, is it doesn't tell you what you should really focus on and what it really means. And that's where the fun part is for the fpa. I think FPA will become half the job. The other half the job is going to be the accuracy of the information, the data architecture, the controls, all the inputs. If you look at it as a machine, it's got inputs and then it functions got outputs. I think finance is going to be focused primarily on making sure the inputs are accurate, making sure the machine works correctly. And then when the outputs come out, you're going to be able to produce almost infinite outputs. But that's of no value to you. So you're going to have to determine what are the key outputs, what are the key KPIs, what are the key things that you're going really want to see. And I think it's going to collapse. The FPA function is going to become the analytical arm for the entire organization because AI collapses everything together. So there will not be different analysts in different groups. I think they'll just be an analytical group. I think that's, that's where we're headed. I think it's going to be exciting times. More change than, than I've seen in my career.
- [13:26]
Scott Becker
Literally. Remarkable. And Brad, take a moment and tell people where they could learn about you, how they could connect with you. Tell us a little bit about where people could reach you if they want your advice or help if you're in what you do.
- [13:40]
Brad Wolf
Yeah, no, great. Thank you so much. You know, you can visit my website, which is wolfpacks.com My contact information is there. You can email me, you can call me or there's a sign up there if you want to talk to me. I do a lot of advising for lower middle market companies, private equity groups, spend a lot of time with sponsors and boards advising them. And I've got about 50 different packs I do now because it depends on the topic and the board, what we want to talk about. And I'd say for the first time in my career, almost everything is changing. Everything's changing all at once. But foundationally, the precepts of how you run a CFO function that the concepts, the principles remain the same. The way you do it is very, very different. But the principles remain the same. And I think it's going to change the rest of the organization, not think it is changing the rest of the organization. So that's my advice to the CEOs. And sometimes I think this amount of change, people have to absorb it in stages. I can tell you where we're going to be five years from now or where I think we'll be five years from now. But sometimes I think people have to absorb that over time. And I think it's going to be, I think it's going to be a five years of change for the economy, not only just the CFO function.
- [15:05]
Scott Becker
I think that's really well stated, this concept that it's going to be adopted over time and not all at once. I just think that is so right on. I want to thank you so much for taking the time to join us today. What a pleasure to visit with you. Incredible what you do, Brad. And go Wildcats. Thank you so much for joining us.
- [15:21]
Brad Wolf
Go Wildcats. You bet. Thanks so much, Scott.
- [15:23]
Scott Becker
Thank you.
- [15:27]
Grainger Announcer
When you're a maintenance engineer in a beverage manufacturing plant, you keep production lines moving and quality on track because there is no room for slowdowns. With Grainger's vast selection of high quality motors, sensors, belts and hard to find parts, you can get what you need fast and all in one place, so nothing gets in the way of getting the job done. Call 1-800-GRAINGER clickranger.com or just stop by Granger for the ones who get it done.