Are you managing Finance by exception?

Nov 29, 2016

If Finance wants to become the trusted business partner that it believes it should be, finance operations need to be organised in such a way that creating business value is the number one priority. Finance should become all about delivering on-the-spot information to enable better decision making. However, business partnering and end-to-end value creation remain a challenge for the Finance office.

Shifting to real time

One of the main inhibitors I see is that Finance still relies heavily on batch-oriented processes. These analogue, sequential processes no longer make sense in a digital world. How do you explain to the business that the requested information won’t be available until after the month-end closing? It is time to uplift finance operations to a new level of efficiency. Finance processes need to be automated as much as possible, reducing operational cost per transaction and increasing efficiency, to enable a bigger focus on its role as a business partner.

Although automation and making better use of existing technologies will play a major role in the transformation of finance operations, adopting the right mindset and opening up towards the entire value chain will be the first and most important steps to take. For example, by letting go of the end-of-month focus and providing information whenever needed, based on a soft close, relying more on accruals and estimates. Companies may run into some system-related hurdles when embarking on this journey, but in essence it is mainly a matter of introducing new processes and procedures.

Towards robo-accounting

Building on this new mindset, companies can then turn their efforts to increasing the efficiency and effectiveness of their operations to the next level, by fully embracing end-to-end process thinking through robo-accounting. Robo-accounting equals the introduction of business rules for software robotics, automating the delivery of (back-office) business and financial processes with significant benefits in terms of speed, quality and cost. Technologies such as SAP Ariba, e-invoicing, (mobile) expense management or VIM (Vendor Invoice Management) already make it possible to optimise processes end-to-end and break down silos for better collaboration between suppliers, producers and customers. Hence enabling Finance to focus on being a business partner.

The tools are available and, what’s more, if you deploy them in the cloud, high performance and low maintenance are guaranteed. The result should be the introduction of straight-through processing (STP) in Finance to complete most, if not all, financial transactions without intervention, eliminating any delay between one party receiving information and being able to proceed.

Roadmap to success

Will this new approach to finance operations shake up your Finance department overnight? Certainly not. In fact, that shouldn’t even be the goal. What matters is that you define a clear roadmap, increasing the efficiency and effectiveness of operations to be able to improve the entire value chain and meet business requirements. It’s time to shape the future of Finance, one step at a time.

This article is the fifth of a series of 6. After setting the scene of why CFOs need to transform the finance role, I dive deeper into the 5 challenges CFOs are facing today. I also shared some of my findings in the report `Fast Forward Transformation or Back to Basics?

Author: Thierry Bruyneel. You can connect with Thierry on LinkedIn.