Automation in the Office of Finance

By Paul Mincer

In a November 2018 article titled ‘New technology, new rules: Reimagining the modern finance workforce’, management consultants, McKinsey, highlighted the role of CFOs and their teams in advising operational units on the value of innovation to the overall health of the business.

Finance is expected to use sophisticated analytics to measure and manage organisational performance in operational business units. But in a McKinsey survey only 13% of CFOs said that their own Finance organisations had automation technologies at their disposal. 

We are now 2 years on since that article was published, and one suspects that the figures today would probably be nearer 1 in 6, or maybe 1 in 5 at best.  We regularly talk to companies in the lower and mid-market space about their financial processes. When they are looking for a new ERP one of the common requirements is a system which will enable them to improve efficiencies through a measure of automation and reduce the turnaround time for producing month end figures.  Formal research also backs this up, suggesting that corporate finance teams typically spend around 80% of their time gathering, verifying, and manually consolidating data, leaving only around 20% for higher level tasks such as analysis and decision making. 

Optimisation of available resources is a key element in improving efficiencies. But many companies in those lower to mid-market spaces are focusing on only marginal improvements in order to protect the bottom line. However, there are recent stats that indicate that the higher the level of investment in streamlining through automation within finance, the greater the likelihood of translation into increased revenues overall.

We’re clearly many years away from complete robotic process automation (RPA) of the Finance office. Indeed, surveys suggest that maybe up to 60 or 70% is a reasonable target for some businesses. The diligent CFO will naturally need to manage the path to improved automation very carefully, but success will depend on determining the right business drivers, automating the right tasks, and then using the right people. The people with an agile, business focused mind-set, with an ability to be able to adapt to change in order to then implement the required transformation strategy.

For most organisations there are some obvious areas to focus on

  1. Transaction processing is a natural first port of call for CFOs looking to bring about transformation. Finance departments currently spend many hours processing and then analysing invoices. So, improved procurement controls, automation of processing, and then analysis by exception can then help to provide a faster turnaround time. This can: benefit approvals; highlight discrepancies and coding anomalies more efficiently; and improve the overall visibility and confidence in costs flowing through the business.
  2. Reconciliations are also, undoubtedly, the bane of many accountants’ existence.  Usually these are repetitive tasks involving data from different sources, maybe even across multiple group entities.  Therefore, tools that can automatically consolidate across systems, mapping across multiple charts of accounts, and then enabling true collaboration across platforms (and in some cases time zones using cloud technology) can drive greater accuracy. Again, this instils confidence in the numbers being reported, often in a far shorter timeframe than would otherwise be possible.
  3. More and more companies are also moving towards powerful analytical tools as a substitute for traditional spreadsheet-based report packs – the days of waiting for some far-flung office to report its monthly numbers are surely over when you can instead use tools that can connect directly and quickly to any given Finance system, even if it’s a completely different system to your own.  IT automation also ensures that these systems are also backed up far more effectively and are also far more secure than legacy spreadsheet models.  Many systems also need to enable companies to demonstrate compliance, either with local accounting standards, or from an industry perspective. Being able to monitor targeted events, and then being able to act on alerts, is key to establishing that the right controls are in place.

The good news is that, to a certain extent, the future is already here, with any ERP worth its salt enabling automation. Areas such as: integrations with external systems for both transaction and report processing; imports and approvals of invoices and journals; and auditing and workflow options all support automation processes. 

However, moving into the (not too distant) future, RPA will enable a CFO to take more immediate control over unusual events. RPA designed to automate processing even further and then provide more sophisticated analytics and identify spikes of activity or irregular trends will improve the accuracy and speed of reporting in order to better assess and impact the overall health of their business.

New innovations designed to optimise finance functions are appearing all the time, and keeping abreast of developments in this area will be a key factor in determining the success or failure of a business’ finance transformation project – after all, the chances are that even this article may be out of date by the time you read it, such is the pace of change!  Sage, for its part, regularly reviews its list of Independent Software Vendors (ISVs) with regards to key add-ons for systems such as Sage X3. Mysoft can also advise on potential integrations with best of breed solutions outside of the ISV list, just get in touch!

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What Customers Say About X3CloudDocs:

Efficient AP processes directly impact relationships with both suppliers and internal stakeholders. Automated systems facilitate timely and accurate payments, enhancing the trust and collaboration between businesses and their suppliers. Moreover, AP automation will automate “embarrassing” tasks such as chasing whether internally for approvals or payments externally, cutting out the “guilt or embarrassment” and speeding up the process.

Alex Stephens – TIMCO

X3CloudDocs has really automated our company’s AP processes. We now spend less time doing manual work and has truly made our AP processes very easy and efficient. The solution is very user friendly and the interface is easy for even a novice to navigate. As many other companies experience we have several control points and validation checks along with approval hierarchy we need to employ day to day and X3CD almost seamlessly integrated with our existing processes and controls. 

Heather Sauceda – Transpak

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