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Why automating the finance function is critical for future growth

Fri, 27th Nov 2020
FYI, this story is more than a year old

In recent years, technology proponents have painted a rosy picture depicting the future of the corporate finance department. They believe its functioning will be revolutionised by a combination of cloud platforms and artificial intelligence.

Unfortunately, today's reality is somewhat different. As well as continually struggling with tedious workflows and manual processing, many finance professionals are still finding it a challenge to complete their month-end close.

To better understand this disconnect, marketing advisory firm Capstone Insights recently undertook a global survey to explore how organisations are using software to improve their accounting and finance functions.

The study surveyed more than 1,500 professionals working in the areas of accounting, finance, and executive management across eight countries and 15 industry sectors. The results were analysed by role and level within the organisation, the number of accounts under management, and revenue band.

Dissatisfaction in the mid-market

Of all the organisations covered by the survey, those in the mid-market bracket (with revenues of between $US100 million and $US749 million) expressed the greatest dissatisfaction with their accounting and finance functions. The reasons for this feeling of dissatisfaction are varied; however, three emerged as being key:

Smaller organisations enjoy better visibility

Obviously, smaller firms have smaller finance teams and these organisations tend to be more involved with their data at every point. They understand the data at all levels and are less likely to lose sleep over missing something because they have a lower transaction volume.

Bigger organisations have more resources

The larger firms have more established processes and often enjoy more robust discretionary budgets and larger staff headcounts that can be allocated to the accounting and finance area. These firms are also able to hire more specialists who have in-depth insight to optimise processes and procedures.

Mid-sized organisations often have growing pains

Firms in this category are likely to be dealing with increasing complexity and increased transaction volume, but are unable to yet rely on the benefits of scale and established processes that a larger organisation enjoys.

Manual processes still a challenge

The survey also shone a light on how the reality of automation is lagging well behind the promises of the technologists. Despite the widespread adoption of cloud-based solutions, a surprising number of finance and accounting professionals admit that they still rely on manual processes to complete their roles.

Within many organisations, important financial data is often collected and manipulated using spreadsheets and shared via email or uploaded to a shared drive. As a result, many organisations report that they have significant challenges when it comes to version control and accuracy during the month-end close process.

Of those surveyed, 63% reported extensive spreadsheet use in their monthly close. Because of this fact, many of the professionals surveyed said that, instead of focusing on giving high-level advice to senior management, they find themselves stuck chasing down errors, reconciling data, and trying to make decisions based on an assortment of often incomplete or inaccurate data.

Such ongoing reliance on tedious, manual processes in the finance function has many disadvantages, including:

Risk introduction: Manual processes increase the risk of inaccurate or incomplete data on which significant decisions are made. Compliance risks are also introduced that can have a significant impact across the organisation.

Wasted time: Widespread usage and reliance on spreadsheets and manual data reconciliation processes take up a significant amount of time. The results are also more prone to error and often need to be reviewed multiple times.

Restricted scale: Manual processes inhibit a team's ability to grow or cope with rapid change. This can restrict an organisation's expansion plans and could mean the opportunities are missed.

No advanced capabilities: Spreadsheets are not equipped with advanced capabilities or reporting, let alone security. This has a significant impact on the ease with which the finance function can grow over time.

Lower morale: Finance professionals want to have a positive impact on their organisation and not be bogged down in data entry and convoluted workflows. Employee retention goes up when staff are empowered to make a strategic impact.

For these reasons, deploying tools that help to automate the finance function should be high on the to-do list of every growing organisation.  By equipping staff with the right technology, they will be freed from tedious tasks and able to focus on higher-level activities.

Taking the time now to adopt these tools will ensure your organisation is best placed to grow and succeed in the future.

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