The ultimate guide to modernizing your finance department

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Today’s highly competitive, data-driven business environment demands that organizations let go of traditional finance activities and embrace the digital revolution. Because modernizing your finance operations means spending money, many companies put off transitioning from traditional finance activities to digital technologies. However, outdated and fragmented financial management systems are slow and prone to human error.

Saving money today may keep your business from streamlining operations, reducing maintenance costs, and achieving the flexibility to scale. In this complete guide to modernizing your finance operations, we will demonstrate how outdated processes and legacy systems are close to obsoletion in the finance world and why they can hinder your company from planning and budgeting effectively. We will also discuss how digital transformation will improve your financial health, how AI and machine learning are used in finance, and how your business operations can gain access to these technologies cost-effectively.

Digital Transformation: What Is It and Why Is It Important?

Digital transformation is the strategic process of leveraging digital technologies to improve productivity by streamlining business processes and organizational activities. It involves reimagining traditional roles, like sales, marketing, and finance, to meet the changing business environment and market expectations.

Digital transformation provides an opportunity for accounting departments to shift from manual processes and automate core finance functions, such as accounts receivable, accounts payable, payroll, and so on. It enables the company to eliminate document-based communication that is inefficient and often the reason for duplication of work, errors, and miscommunications. By modernizing your finance operations and making internal processes more efficient, finance and accounting teams generate more time and gain the flexibility they need to scale effectively as the business grows.

In the finance world, there’s intense pressure for CFOs and finance and accounting staff to be more strategic in managing money, more innovative, and provide information and insight more quickly. To keep up with changing business landscapes and evolving technologies, they need to let go of time-consuming, repetitive transactional activities and focus on high-value work that leads to better business results and continuous improvement.

By automating key areas in the finance department and moving away from manual activities, the CFO and finance and accounting team can focus on strategic roles that support innovation, strengthen business partnerships, and pave the way for growth. Streamlining communications by leveraging digital technologies provides leadership with more time to fortify client relations.

The Future of Finance and Accounting

The roles of CFOs and finance and accounting departments are evolving and being reshaped by digital technologies, data, new risks, and changing regulations. Embracing technological innovations has become crucial to increasing efficiency, driving decision-making, and supporting the company’s growth strategy.

Senior leadership can no longer afford to ignore technology if they want to remain competitive. Underestimating the changes to avoid disruption and holding on to traditional financial activities will only result in the organization’s inability to keep up with globalization. CFOs need to focus more on money management, planning and implementing strategies, and people management, rather than financial statements reporting and other time-consuming transactional activities.

Finance functions will operate differently in the future because its people will need to focus on tactical challenges and leveraging new technologies. The success of the business will depend on their ability to implement smart technologies and combine them with their critical thinking skills.

The Digital Technologies Transforming Finance and Accounting

Technologies like artificial intelligence (AI), robotic process automation (RPA), advanced data analytics, cloud-based Infrastructure, and Software-as-a Service are just some of the technologies changing the face of finance and accounting departments. As these technologies evolve and improve, finance decision-makers will need to combine their skills and experience with these advanced tools and software. Here are the technologies already transforming the finance function.

Advanced Data Analytics

The problem with outdated systems is that data is likely stored separately throughout the company. Using advanced, predictive analytics allows CFOs and leaders to improve core processes with data and insights that improve accuracy to forecast sales and identify trends in the market, allowing them to avoid market risks and potential obstacles.

Using old systems meant weeks of waiting for the data and insights that were required to make informed decisions. This allows finance executives and accounting team managers to reduce operating costs, despite increasing work volumes.

Machine Learning and Artificial Intelligence

Machine learning and AI can help finance and accounting achieve better balance sheet integrity, forecast capital availability more accurately, reduce operational costs, and improve cash collection.

In an interview with the Austin Business Journal, Scott Tynes, CEO of Consero, indicates, “seventy percent of your time can be freed up to focus on strategic initiatives.” As part of its overall technology-enabled solution, Consero has developed SIMPL, a cloud software platform for finance, along with Simon, voice-activated AI technology that functions as a SIRI or Alexa for the accounting/finance department.

By leveraging AI, companies can tap into their data and analytics to reveal their potential at a faster rate. The result is faster decision-making that optimizes management of expenses, cash flow, and working capital.

AI-based technology learns and gets smarter the more it’s used. For example, in invoice management, the technology uses algorithms, natural language processing, and data to analyze journal entries to simplify the sorting of invoices. Machine learning and reasoning takes invoice payment history and patterns to help invoice collection and reconciliation go faster, allowing finance and accounting professionals to be more proactive and focus on strategy and growth. The result is faster invoice payment, fewer errors, improved accuracy, and less risk of becoming a victim of fraud.

Robotic Process Automation (RPA)

Robotic Process Automation (RPA) eliminates mundane, manual tasks, streamlines enterprise operations, and increases financial processing efficiency. RPA software can be configured to communicate with other digital systems to process transactions, reducing the amount of human labor it would typically require moving routine data between external applications and multiple accounting systems.

Before RPA, transactional processes involved multiple steps that were prone to error. Working in accounts receivable and accounts payable meant separating Excel files from xml files, then zipping the xml files to upload them on the appropriate website for customers to access.

With RPA, the software automatically saves invoices to the specified network folder, navigating the system to locate the right folder while reducing desktop clutter. RPA does this by capturing work steps, creating process blueprints, and setting up automated scripts to process data across systems. The whole process dramatically cuts down the number of clicks and time it takes to upload an invoice.

RPA can be applied to multiple processes at once, including accounts receivable, accounts payable, expense management, and financial planning, reporting, and analysis. It can also be used to reduce vendor invoice processing cycle times, automate invoice data feed validation comparisons, eliminate manual merging, and reconcile and compare invoice discrepancies automatically.

Cloud-based Infrastructure and Software-as-a Service (SaaS)

The SaaS model means you don’t have to worry about maintaining, managing, or securing your data because it’s kept on secure, remote servers, or the “cloud.” Cloud-based infrastructure and SaaS streamline operations and relieve companies of the maintenance costs of system upgrades. Cloud computing is no longer considered new but relatively mainstream, and many people are already using the cloud without realizing it. With SaaS, there is no longer a need for organizations to maintain either the cloud-based software or physical servers.

Transforming Your Finance Department by Outsourcing

Advanced technologies will help your company stay ahead of the curve. Unfortunately, the latest accounting tools and software are not only expensive to purchase but also costly to maintain. Beyond the time and money your human resources and recruitment team will spend hiring the right finance and accounting team who can use the tools, you will need an information technology (I.T.) specialist who will maintain the systems.

Maintaining an in-house finance and accounting team can also be costly. Beyond paying wages, you also have to consider payroll taxes, retirement accounts, benefits, insurance, and so on. There are also the costs of retention, recruitment, and training.

The alternative to purchasing expensive accounting technology, spending thousands on application development, and employing a full-time finance team is outsourcing your finance and accounting. When done right, Finance as a Service can prove to be a strategic partnership that provides a high return on investment. Here are the three main benefits of outsourcing your finance and accounting:

Experienced People – The goal of a great Finance as a Service firm is to free your mind from the worry of managing your business finances. Their people become an extension of your existing team and will work with you to accomplish your business goals.

When you outsource your finance and accounting, you save time and money, minimizing your overhead, while still gaining access to expert accounting resources. Their experienced finance team helps you avoid increasing staff costs by providing you with the services you need, without spending money on a full-time salaried finance and accounting staff.

Advanced Systems and Processes – The elimination of human error leads to more accurate reporting. If you’re still tracking your finances through manual processes, the risk of your data being leaked is higher. Because their systems utilize the latest technology, such as AI, machine learning, data analytics, and RPA, your company benefits from these tools’ accuracy and efficiency.

Outsourcing with a Finance as a Service provider means you not only gain the expertise of accounting professionals, but you also benefit from their robust systems, advanced tools and software, and streamlined, efficient services. Mature processes and controls lead to efficient transactional processing, formal policies, and accurate documentation.

Data Visibility – Data is power. And when you outsource to a finance and accounting company, you gain access to your financial data anytime and anywhere, thanks to cloud-accounting applications. The cloud allows programs to share data effectively, keeping you connected to your data whenever and wherever you need it. And when your finances are handled by outsourced accounting services, you also have the peace of mind that your data and sensitive financial information is secure in the cloud.

The Services Provided by a Finance as a Service Firm

Whether you are the CEO, CFO, or an investor, the right outsourced Finance as a Service firm can help by giving you complete financial visibility and implementing proven processes, systems, and resources needed for a company to scale effectively. Access to detailed reporting whenever you need it offers valuable data and insight that leads to informed decisions. .

While the goal of any company is to ultimately expand, running a growing business comes with many challenges. The strain put on your accounting and finance team can hinder it from performing effectively and prevent your company from scaling. To drive your business in the right direction, you need to eliminate time-consuming activities that bog down business operations and keep leadership from their strategic roles. You can do this by partnering with the right accounting services firm. Here are the primary services that outsourced finance and accounting firms provide.

Bookkeeping and Back-Office Support – When you spend all your time keeping your financial records straight, you find you have little time to focus on strategy and other activities that improve your financial health. By outsourcing your bookkeeping and back-office support work, you can improve financial data visibility, reduce staff costs, and gain more time in the day to focus on high-value work. Here are areas in bookkeeping and back office support that you can outsource:

  • Account Reconciliations
  • Customer Billing and Payments
  • Deferred Revenue
  • Employee Expense Processing
  • General Ledger
  • Financial Reporting, Tax Reporting, and Reporting Automation
  • Foreign Currency
  • Month Close
  • Multi-Entity & Multi-Currency Consolidation
  • Order to Cash
  • Payroll Administration / Services
  • Procure to Pay / E-Payments
  • Subscription / Maintenance Renewals Management
  • Time and Expense Management / Expense Services
  • Vendor Invoice Processing and Payments

Controller ServicesFinancial controllers ensure the company is using the proper

internal controls that keep the business profitable. CFOs rely on their interpretation of the company’s business figures and financial information to make business decisions on sales and expenses. Because controllers are valuable, they also expect a decent salary.

When you outsource controller services to a Finance as a Service provider, they will provide dedicated support and guidance, while leaving control of the decision-making to you. Even if you already have a full-time controller on your finance team, they will benefit from the additional support outsourcing provides. They will free your controller to add more value to the company by focusing on strategic activities that will carve a path for personal and professional growth. The following are controller services that a professional accounting services provider can provide.

  • Audit Report
  • Compliance Management
  • Employee and Vendor Communication
  • Management Reporting
  • Policy Adherence
  • Policy & Procedures Guidance and Adherence
  • Transactional Processing Oversight

Financial Planning and Analysis (FP&A) – Informed financial decision-making leads to financial stability and business growth. Therefore, performing in-depth reporting and analysis and evaluations of your historical data and present business operations performance is crucial to financial planning, budgeting, forecasting, reporting, and development of an effective growth plan.

By outsourcing your finance and accounting, financial experts and analysts will help you operate cost-effectively, understand and leverage market trends, and identify profit and growth opportunities. The following are key finance services that outsourced accounting firms can provide:

  • Acquisition Integration Support
  • Audit Support
  • Board & Bank Reporting
  • Business Decision Making
  • Company Financial Data Analysis
  • Financial Leadership
  • Investor Communication and Reporting
  • Management Reporting and Narrative
  • Planning, Budgeting, and Forecasting

CFO Consulting Services – From strategic planning to implementing organizational processes and controls, C-level financial leadership can help your company achieve its specific business goals. Here are some of the key areas that outsourced CFO consulting services cover:

  • Capital Raise
  • Creation of investor pitch deck
  • Deal negotiation support
  • Financial representation at investor meetings
  • Funding options and business objectives alignment
  • Investor targeted financial summary
  • Prospective investor introductions
  • Capital Deployment
  • Board meeting representation
  • Detailed operational budget & forecast
  • Establish deeper KPIs for measuring operational performance
  • Investor communication
  • Reporting and analysis of business performance vs. plan
  • Strategic planning support
  • M&A Transactions
  • Buy-side support
  • Post-transaction integration support
  • Sell-side support

Conclusion

There are many hurdles to overcome when trying to transform your finance department and build out your own modern financial operations. Beyond the high costs of purchasing the advanced tools and software, you may encounter a lack of experience and knowledge to leverage them effectively. 

However, modernizing your finance operations doesn’t have to be expensive. With outsourced Finance as a Service providers, there is no need to purchase costly tools and software, hire an in-house accounting and finance team, or maintain your own data center and servers.

The best way to approach digital transformation cost-effectively is by strategically partnering with an experienced finance-as-a-service solution that has the right people, processes and controls, and technology. Not only is outsourcing less expensive compared to maintaining the necessary people and technologies, but it’s the way to gain the talents of top finance and accounting professionals.

By outsourcing your finance and accounting activities to a reliable service provider who is experienced in business intelligence and modernizing finance operations, you can focus on more critical objectives and strategies, while making more informed decisions. The right outsourced Finance as a Service provider will implement a scalable financial platform that provides financial planning and data analysis support. This will serve as the backbone that will maximize the valuation of your business and help you scale successfully.


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