Here’s Why Modernising the Finance Department is Key to Business Growth

The pandemic spurred on digital transformation projects for many businesses across all industries. Almost overnight, businesses of all shapes and sizes were looking for ways to keep the lights on, staff engaged, customers happy and ultimately, the money rolling in. Examples of this include the surge of hardware adoption and communication platforms - helping teams working remotely to stay connected, and the uptake of customer relationship management (CRM) tools to find new ways of boosting online customer experience.

While investing in such technology has been vital to helping many businesses survive and thrive in the pandemic, one department that is often overlooked is finance. Rob Israch, General Manager Europe and CMO at Tipalti, explains why this needs to change.

Despite advances in technology and the adoption of cloud accounting software over the last decade, it is still common for businesses to complete many finance processes manually. In fact, we know from our recent research that nearly a third (29%) of CFOs in the UK are dealing with more manual financial operations than ever before. Not only is this wasteful in time and money, but it is also holding finance leaders back from working on important strategic initiatives. We know that driving international expansion, incorporating environment, social and governance (ESG) and sustainability, and dealing with changes brought about by the global pandemic and Brexit – are all causes of complexity for already-busy CFOs.

In order for finance teams to evolve and become the strategic heart of a business, instead of being siloed and viewed as only fulfilling statutory requirements, adoption of automation technology is vital. Any resistance around adopting such technology, which is often that the perception that manual operations is good enough, can be squashed when we look at the benefit it brings businesses. Applying new tools to automate everyday tasks such as payroll, accounts payable, purchase order management, invoice management, group consolidation, and expense management will increase the efficiency of finance teams, allowing them to produce fast and high-quality information. In turn, stakeholders can benefit from increased agility to act on timely management information. Below are the specific benefits businesses that modernise their finance department will see.

Payroll

Payroll is a critical finance task. Employees are one of the most important assets within any business, so it’s important to keep them happy by paying them accurately and on time. However, it is easy to get wrong by failing to submit up-to-date information about leavers and joiners, and not providing accurate employee tax codes. Its completion also has added pressure due to being time-sensitive and needing to be performed within a precise and tight deadline each month.

Payroll systems usually are not connected, meaning finance teams have to manually key in or export data to core accounting software and banking providers. However, many payroll processes can now be automated using solutions connecting accounting software and banking providers to provide an all-in-one workflow – saving time and reducing the chance of human error by overcoming the need to move data into different systems, either manually or by exporting and importing CSV files. A particular benefit is not having to recreate payroll journals, which is a notoriously fiddly task.

Accounts payable

Similar to payroll, accounts payable is an essential and regular task for finance teams. Ordinarily completed once a week or fortnight, it takes significant time to collate all invoices, enter payment details onto banking platforms and attain the necessary approvals for payment.

Incorporating vendors that leverage automation to facilitate multiple approvals and pull payment data from accounting software to a banking and payments interface, removes the friction associated with payment runs so they can be completed seamlessly, while also reducing the risk of manual payment errors and fraud.

Many accounts payable solutions reconcile payments automatically, saving further time, which can be used to complete higher-value tasks. A further benefit is better supplier relationships, providing visibility of payment status and enabling proactive communication to suppliers, while also helping reduce the likelihood of invoices being paid late, removing the risk of late payment penalty fees.

As CFOs’ roles and responsibilities grow, an increasing amount of pressure is put on the finance team to focus on tasks that help grow businesses – it’s essential more importance is placed on adopting finance automation as part of businesses’ wider digital transformation plans.

Purchase Orders (POs)

POs play a key role in financial control, with many companies insisting on their use for spend above a particular threshold. The creation and approval of POs are commonly a pain point for companies. There can be a disconnect between budget owners and suppliers, resulting in invoices being raised with incorrect or fully utilised PO numbers.

Using an automated PO tool that integrates to the core accounting platform streamlines processes so they can be created on the fly or from within forecasts. Additionally, they can auto-match invoices to PO numbers when received, eliminating the risk of being assigned incorrectly and delaying payment to critical suppliers.

Group consolidation

A number of core accounting software providers don’t include functionality to consolidate at a group level. Finance professionals can get around this by exporting figures for individual companies into spreadsheets and manually making adjustments to consolidate group companies. Alongside the risk of entering data incorrectly and a potential delay to month-end close, this approach requires judgment due to often needing to consider which exchange rates to use and making adjustments based on the accounting standards under which the parent company is prepared. For example, this may include whether to recognise unreleased foreign currency gains/losses in the balance sheet or profit and loss, or revenue recognition treatment.

Using core accounting software that has consolidation features, or a third-party consolidation package, will ensure consistent treatment across all group companies and save finance employees from the hassle of exporting and manipulating accounts data.

Expense management

Managing employee expenses has historically been a chore for finance teams due to having to chase colleagues for their reports at month-end, alongside also needing sign-off from managers for approval. Additionally, the quality of submitted reports is often patchy, with receipts missing and spend being taken to the wrong accounting category. Embracing an automated expense management solution results in more accurate expense reports, allowing for easy upload of supporting receipts, OCR data extraction, and easy imports into accounting software.

As CFOs’ roles and responsibilities grow, an increasing amount of pressure is put on the finance team to focus on tasks that help grow businesses – it’s essential more importance is placed on adopting finance automation as part of businesses’ wider digital transformation plans. Embracing automation for all of the above tasks will benefit finance teams and the wider business. Finance team members will be able to use their time to produce up-to-date reports, providing financial and operational insights into company performance to grow sales, optimise KPIs and finetune acquisition channels.

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