How Financial Automation Can Help Finance Departments Do More with Less

by Thomas Schroeder III and Gregory Handley

Automation programs result in improved data quality, process efficiency, and resiliency, while freeing up resources to focus on other critical areas of the business.

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Before the COVID-19 health crisis impacted the global economy, the Hackett Group released survey results that indicated technology spending as a share of a finance function’s budget was expected to increase in 2020. Now that the world is facing a different economic reality, CFOs are pressing their finance departments to focus on driving down costs while improving efficiency and resiliency.

Despite tighter purse strings, investments in automation will likely continue due to a positive correlation with cost and time savings. Downturns like the one created by COVID-19, are an opportunity to streamline and strengthen business functions using automation technologies that offer quantifiable cost savings and increases in productivity. As finance leaders proceed with automation initiatives they should consider the following:

Start small and focus on high return on investment (ROI) areas. Labor-intensive, data-driven processes such as invoice processing and cash application are ripe for automation.  For the following reasons:

  • Relatively large number of employees work on these high-volume processes;
  • Repeatable, predictable tasks prone to manual input error;
  • Financial and business risk when employees are unable to carry out tasks due to illness, stay-at-home orders, or other reasons;
  • Opportunity to reduce headcount expense or to transition employees to higher value-added tasks.

For these and similar processes, automation solutions are well established and employed by an increasing number of companies. Importantly, the cost of this technology has come down significantly, both in terms of subscription fees and implementation investment. Automating these areas can be achieved in just a few weeks with predictable automation outcomes and positive ROI. An automation solution should include an ROI model that is continuously updated as well as a self-service dashboard that measures automation percentages versus exception percentages. Exceptions (i.e., any breakdown that prevents process completion) should be displayed by type and trend.  Exception analysis is the foundation for continuous improvement and will help drive discipline around achieving increased ROI over time.

Require a proof of concept (POC) as part of your evaluation. As a finance department embarks on its automation journey, a partner that specializes in financial automation solutions provides value in its ability to define the correct strategy on how to initiate, evolve and scale an automation program specific to a company’s needs.  Insist on a POC that demonstrates results using your file sharing and data privacy protocols. There should be minimal disruption to the finance team’s day-to-day activities as involvement should be limited to providing access to documents, data, systems and answers to certain policy questions. In other words, the POC should be quick and easy and demonstrate that the projected ROI outweighs cost by a significant margin. As information security is paramount, the partner should also be able to provide independent certification of compliance with data security laws (e.g., Soc 1 & 2). 

Another deliverable of the POC is to show the initial automation percentage for a given process. The partner should be present a detailed analysis and explain the exceptions that hinder further automation. This “process mining analysis” becomes the basis for a continuous improvement program. Automation programs also enable a closer examination of underlying policies and processes that may need revisiting. Process analytics are a crucial part of any automation offering.

Build on automation and efficiency successes. After the initial automation initiative is deployed and delivering on its promise, it is then time to implement a broader automation strategy. Once again, this is where an outside partner adds value and helps drive ROI.

Accounts payable and accounts receivable are strong targets for automation as they commonly include functions such as document and data management, adherence to polices via business rules, and workflows that move from process step to process step and from person to person.  Additional processes such as supplier data management, customer invoice creation, customer data management and recurring journal entries fall under this category.

Company-specific rules and workflows are typically managed through financial system configuration. The remaining document and data management activities and tasks are generally universal. Most companies must deal with PDF’s and entering similar data fields to pay invoices and to apply cash remittances. For these reasons, automation tools work very well for most companies and can scale and yield excellent dividends very quickly, with little custom configuration. 

No better time than the present. Low-risk, low-investment cost reduction and process automation in finance is more achievable than ever with the right technologies. Automation programs result in improved data quality, process efficiency, and resiliency, while freeing up resources to focus on other critical areas of the business. These are objectives that align with many CFOs’ priorities in today’s business climate. 

Thomas Schroeder III is the Global Practice Leader – Financials within Alight’s Cloud Deployment Solutions and HR & Financial Solutions Consulting Practice. Gregory Handley is Alight’s Global Finance Transformation Leader