A recent study by Harvard Business Review suggests companies expect finance teams to be more strategic, collaborative and automated. Increasingly, businesses are requested to provide financial details quickly and support leaders in achieving their goals. Finance professionals are, however, facing the pressures of daily administrative duties, which means fulfilling this strategic role is more challenging than expected. Many industry professionals believe it’s time for finance teams to automate tasks and start focusing on core strategies.
Finance teams have a tradition of utilising new technologies that make the technical aspects of their jobs faster and simpler. Tech-focused businesses and associated C-suites are adopting automation to accelerate their efficiency and performance. The affordable and improved technology will likely transform the function of a finance team.
Many industries are adopting automation within their accounting teams. Businesses have automated processes delivered by their finance teams, such as financial close, accounts payable, financial planning and analysis. While automation impacts accounting services, there is still much to be done in this industry. According to a Deloitte report from 2020, over 75% of respondents said their business accounting processes are predominantly manual or require significant manual input. Under 4% of respondents suggested that their business has implemented robotic process automation (RPA), while around 2% had integrated machine learning and artificial intelligence (AI).
Considering the existing economic and financial conditions, geopolitical uncertainties and increased inflation, finance teams are under further pressure to raise their performance levels and focus on their corporate strategy. The Harvard Business study suggested that 89% of finance teams can provide unique and valued input on business challenges. A further 83% believed there is a potential risk to their business if the finance team doesn’t contribute to the overall strategy. However, many believe that finance departments are held back by basic tasks, which prevents them from adopting this more strategic role.
Automation doesn’t necessarily remove humans completely from a process, but it enables machines to focus on repetitive work. While professionals can increase their productivity and drive key business objectives. If finance teams spend a large portion of their time on manual activities, they lose the opportunity to explore data and deliver high-value insights. By automating tasks, finance teams are in a stronger position to add more value.
In finance, automation enables businesses to identify missing payments and remove potential errors. Automation can improve the analysis of customers and reduce or eliminate findings that can lead to poor decision-making and planning.
Applying automation to financial close
In a Trintech survey, over 50% of financial professionals said that meeting deadlines and timescales were the biggest challenges in the financial close process. Manual processes and reduced use of financial automated solutions can impact the ability to generate insights, particularly when working in a remote or hybrid environment. According to EY, over 60% of CFOs said their closing process is manual. When asked what stopped businesses from implementing the most efficient financial close, lack of automation and manual errors were considered notable factors. There is a growing recognition that manual activities and a lack of automation directly impact the challenges experienced during financial close but many are yet to have a solution to this issue.
Automation presents several benefits, but there are challenges related to the implementation process. Businesses must understand these issues and be prepared to create the necessary solutions. Before launching automation, companies must determine whether to automate their existing workflows or restructure them. Prioritising areas for automation must focus on repetitive tasks that are more likely to incur errors and recurring costs. Financial operations represent the core of many businesses, especially if these changes can be risky. Some solutions require organisations to invest considerably to implement the necessary changes to their systems.
One of the biggest challenges to overcome is the underlying fear of employees and getting them to invest in the automation process. Some finance members may be concerned about being replaced by automation and other technology. Others may be worried that their team is piloting automation for the rest of the company. It’s critical engaging with employees to eliminate any negative perceptions of the process and highlight the benefits.
With further technological advancements, businesses may fall behind their competition if they fail to recognise the benefits of automation. Shifting from manual to automated processes can be very beneficial, increasing performance, saving time and reducing the chance of fraud. Finance teams are now a central part of business operations. The CFO today is directly associated with key strategies. As technology becomes more sophisticated, businesses can automate more activities.
Finance teams are dependent on the continued availability of accurate data. Leveraging data solutions and other technologies are signifcantly beneficial for forward-thinking businesses, creating more insights and widening capabilities.