Taking the lead: Why digital transformation should be finance first

Is your business preparing to embark on a large-scale digital transformation program over the upcoming 12 months? For many mid-sized enterprises, the answer is yes. 

Less than auspicious economic conditions – rising costs, geo-political uncertainty and lacklustre demand – have increased the impetus to improve efficiency and productivity across the enterprise.

Digitisation and automation can achieve these ends but the question of where to focus first is often a poser for decision makers in search of a genuine, measurable return on investment, within a reasonable time frame. Or, to put it more simply, a quick win.

Front office functions may appear the obvious answer, at least at first blush, because customer facing improvements to systems and processes tend to be immediately evident to all. But taking this tack won’t necessarily deliver the best bang for your initial buck.

Focusing on finance first

For many businesses, optimising the finance function first can be a smarter, more strategic way to proceed. 

That’s because highly efficient, real time accounting processes and up-to-the-minute visibility of the organisation’s position can free finance leaders and their teams up to focus on higher level activities – think data analysis, forecasting and strategic planning. 

It means they have the capacity to engage in greater and more frequent C-suite collaboration, and to contribute to the success of subsequent digitisation initiatives.

Under pressure on the operations front

As things stand, many finance departments are hamstrung in their capacity to make these contributions. They can’t be the expert partner and special counsel the rest of the enterprise wants and needs them to be because they’re fully occupied with the day-to-day; mired in mundane, manual tasks. 

It’s not uncommon for financial information to be scattered across disparate systems and sources, including spreadsheets and legacy financial platforms that aren’t compatible with one another. That makes it challenging to aggregate, validate and analyse data quickly. 

Relying on manual platforms and processes doesn’t only make things slower and more expensive. It also increases the incidence of clerical error and the risk of fraud.

Organisations with highly manual finance functions are also more susceptible to the evolution of non-standardised processes which lay them open to compliance risks.

Little wonder then that 94% of accounting and ICT teams say time spent on accounting, compliance, and the close process gets in the way of other strategic work, according to IDG’s latest Market Pulse Research.

Bottom line: there’s an awful lot of financial expertise and insight being utilised in a less-than-optimal fashion, in Australian enterprises of all stripes and sizes. 

Unpacking the finance automation advantage

The good news is, it doesn’t have to be that way.

Continuous accounting technology can automate many of the repetitive tasks associated with the finance function, including reconciliation and the development of end-of-period statements and reports.

Instead of relying on spreadsheets and paper-based processes, a rules engine can be deployed to complete activities such as intercompany reconciliations, and matching Purchase Orders to credit cards and invoices.

Automation does more than just cut the number of hours required to complete these tasks, month in, month out. It reduces the error rate down to virtually zero. This leads to a further saving of human hours because finance professionals no longer need to devote time to tracking down and rectifying mistakes.

Meanwhile, automating the accounts receivable function reduces bad debts and improves cash flow, without the need for an ongoing investment in additional personnel. 

It can also enable up-to-the-minute visibility into the debtors ledger; making it impossible for bad payers to escape notice, or for a business to be blindsided by bad debts.

Starting your digitisation journey strong

There are real, measurable gains to be had in embracing automation across the finance function. Achieving them early on in your organisation’s journey will address immediate pain points and demonstrate the tangible value digital transformation can create right across the enterprise.

If quick wins and laying the groundwork for future innovation are priorities for your organisation in FY2025, the finance function is the optimal area to focus on first.