Like every other industry today, finance is evolving. Rising expectations of the function mean that finance leaders must find ways to deliver more with less, all while maintaining stricter controls and keeping up with a changing and turbulent environment.
To do this, the finance function must invest in finance transformation.
This means what, exactly?
According to Deloitte, finance transformation refers to “a set of offerings that assist finance executives with assessing their finance strategy and vision… and helps design and implement change to their finance organization, process and systems to improve the overall value of finance.”
CFOs need to take active steps towards improving the effectiveness of the finance function. Unfortunately, the building blocks of many organizations still involve inefficient, manually-heavy processes and a lack of synchronization.
To combat this, changes must be made. What finance transformation ultimately achieves is the creation of an agile and cost-efficient organization. This often involves the adoption of enabling technologies such as corporate performance management (CPM) systems. It can also involve a variety of other changes from shortening a budget cycle, to implementing new accounting software, to reducing overhead costs.
The end result- better alignment of finance with the overall business strategy. More than that, finance will begin contributing to strategy. Ideally, the ultimate goal is for finance to assist the executive team in making better, more informed decisions.
Ideals are one thing, reality another
To date, there are still many organizations that fail to see the necessity of finance transformation. Reasons for slow adoption can range from costly price-tags to simply not sensing the urgency. No matter the cause, it will ultimately be to their detriment.
Finance transformation makes the function more effective and drives greater business value. With finance contributing more to strategy and development, the end result can only be profitable growth.
Blackline outlined 3 pillars of finance transformation:
- Close process transformation
- Process automation transformation
- Risk transformation
Close Process Transformation
According to Blackline, “too often, the close process is run by gut, instinct, and collective knowledge, versus a defined, centralized, and orchestrated workflow and process. With so many people involved and mounds of spreadsheets constantly accumulating, roughly defined processes are often different, from geography to subsidiary. Collaboration remains stubbornly stuck in email and conference calls, with limited visibility into the process.”
To transform the close process organizations must establish clear steps, responsibilities, and tasks. They must cultivate a greater sense of clarity and organization by breaking processes down into milestone tasks.
According to Digitalist Magazine there are many dimensions to financial close, three of which are people, process, and technology. When looking to transform the close process, each of these needs to be assessed.
Digitalist Magazine broke it down into the following questions:
- Do my people have the right skills for the tasks they are doing?
- Could they be better utilized doing other tasks?
- Are my processes documented?
- Are they effective and efficient?
- Am I leveraging technology to automate tasks and achieve better period-end reporting where possible?
Process Automation Transformation
Manual work is the enemy of efficiency. Sadly, you can often find the most talented of workers wasting valuable time on manual processes simply because they’re necessary.
Among the operational areas of finance that often see extensive manual work is FP&A work that involves plentiful consolidation. Others include billing and collections, accounts receivable, and more specific tasks such as journal entries, account and transactional reconciliations, and intercompany transactions.
This is where process automation comes in, and it’s a huge game-changer.
For example, DataRails automates
Excel-based consolidation processes and aims to help
you embrace optimization by significantly enhancing the way you work without
asking you to change.
This is a win-win solution since you continue to work as you always have while DataRails adjusts to you. While you work as usual, DataRails automates your consolidation processes. The platform eliminates the pesky task of having to merge all the different Excels you receive and work with, meaning employees can spend more time on tasks that matter.
- No more manually merging spreadsheets. Tedious copy/paste, be gone.
- Automatic data aggregation reduces manual spreadsheet work by over ¾.
- Automated consolidation results in saved time, time that can be dedicated to value-added work.
Implementing process automation is excellent for optimization of processes as it allows for the reallocation of costs towards strategy and analysis.
With automation organizations can improve data integrity, which in turn minimizes risk.
By improving data integrity, an organization reduces the risk of exposure from an inaccurate filing or restatement. Making processes as rule-based and as consistent as possible makes it possible to back them up with automated corrections, adjustments, or review processes.
Finance transformation as a competitive edge
A truly successful finance transformation involves building up all three of the aforementioned pillars. By embracing them, employees can subsequently channel their efforts towards more value-added tasks like strategy and analysis.
Finance transformation is not only important, but necessary. Aligning finance with business strategy is the best way to ensure that the executive team gets all the information they need in order to make the best business decisions for the organization.
DataRails is an enterprise-class software that empowers each finance professional to independently work with data and deliver actionable, data-driven insights. Finally, count on numbers you can trust and reduce inefficiencies without having to change how you work on Excel. With DataRails, strengthen the connection between finance and operations to drive better organizational decisions.