By Mark A. Brousseau
Brousseau & Associates
Every business wants to transform its back office to wring out costly inefficiencies, improve staff productivity and morale, and free up cash and resources to grow and thrive. Digital technologies for finance—one of the most labor-intensive and time-consuming back-office tasks—is a good place to start. But common myths about digital technologies can undermine even the most solid business case for automation. This blog entry will dispel those myths to keep your business moving forward.
Top Finance Challenges
There are four issues keeping CFOs and other finance leaders up at night these days.
The economy: The combination of rising interest rates and sky-high inflation have increased the likelihood of an economic slowdown. Many businesses are reducing headcount, scaling back their operations, and putting the brakes on expansion in anticipation of a recession. If the economy falters, businesses will lean hard on their finance departments to find ways to improve operational performance, generate working capital, and manage business spending.
The supply chain: Clogged global supply chains have resulted in unpredictable costs for goods and raw materials and longer time to revenue when critical components are delayed. With no telling when seaports and other supply chains will return to normal, it will be a challenge for businesses to stay within budget and for CFOs to accurately forecast expenses.
The labor markets: “The Great Resignation.” “The People Shift.” “The Once-in-a-Lifetime-Take-This-Job-and Shove It” moment. Whatever you call it, workers are quitting their jobs in droves, making it harder for finance departments and other parts of the business to attract and retain staff. Increased turnover has forced finance departments to raise wages, offer signing bonuses, provide flexible work arrangements, and beef up tuition reimbursement programs.
The bottom line: Every business wants to do more with less in times like these. The question for many businesses is how to scale their operations without hiring more staff.
Businesses are counting on their finance department to help guide them through these challenges.
What is Digital Transformation?
Digital transformation empowers businesses to meet today’s finance challenges.
Digital transformation combines best practices and advanced technologies such as invoice data capture, digital workflows, and electronic payments to automate manual, repetitive finance tasks.
Digitizing and simplifying finance processes such as payments to suppliers delivers big benefits.
Improved efficiency: Digital transformation solutions eliminate manual tasks such keying data, shuffling paper and emails, chasing down approvals, and fixing errors and mistakes.
Cost savings: With digital transformation solutions, there’s no need to print and mail paper checks, file invoices, manually reconcile payments, or hire more staff as volume increases.
Enhanced visibility: Digital transformation solutions put smart insights at the fingertips of the people who need them, as well as when and where they need them. Decision-makers always know where things stand with the company’s cash flow, spending, and operational performance.
Reduced risk: Digital transformation solutions consistently enforce separation of duties and other business rules with complete tracking of all actions taken on an invoice or payment.
It’s for these reasons that more businesses are digitally transforming their finance function.
The Biggest Digital Transformation Myths
Not every business is digitally transforming its finance function.
One of the most common reasons that businesses drag their feet on automation is that they’ve bought into common myths about automation. Myths can be fun, like the idea that giant alligators roam the sewers of New York City. But myths are no laughing matter when they hold a business back.
Here are the most common myths about digital transformation that businesses should be aware of.
MYTH #1: “Digital transformation requires big spending.”
REALITY CHECK: It’s cost-effective for businesses of any size to implement digital tools and technologies. Cloud-based systems and subscription pricing eliminate pricey license fees. Pre-built integrations to ERP applications avoid the need for system integrators. Configurable workflows enable solutions to be easily adapted to a company’s needs, without costly professional services.
MYTH #2: “Digital transformation requires lots of IT manpower.”
REALITY CHECK: Digital transformation projects shouldn’t be a burden on a company’s IT or department resources. Cloud solutions can be deployed fast without disrupting existing workflows. Many digital solutions require little or no customization. Pre-built connections to ERP applications means IT won’t get bogged down with a complicated integration project. And web-based training makes it possible for staff to learn digital transformation solutions while they work from home.
MYTH #3: “Our business is too small for digital transformation.”
REALITY CHECK: Businesses of all sizes can benefit from digital transformation initiatives. Cloud solutions can be deployed fast with minimal IT resources and a nominal upfront investment. Eliminating manual tasks enables a business to quickly scale its operations without the need to hire additional finance staff. Businesses can adapt fast to changing business requirements. And digital transformation solutions free up finance staff to focus more time on growth-generating activities.
MYTH #4: “Digital transformation is all about technology.”
REALITY CHECK: Successful digital transformation projects start with an assessment of existing processes. Before automating, finance departments should inventory current workflows, identify process gaps, survey stakeholders and frontline staff on pain points, compare their Key Performance Indicators (KPIs) to industry benchmarks, and develop a plan to proactively manage change.
MYTH #5: “Digital transformation is disruptive.”
REALITY CHECK: Short-term transformation can often be accomplished through conventional tools and technology. Invoice data capture, workflow automation, mobile invoice approvals, ERP integration, and Automated Clearing House (ACH) transactions can deliver compelling, rapid results.
MYTH #6: “An economic downturn is no time to automate.”
REALITY CHECK: Digital transformation solutions can help a business navigate tough economic times. Eliminating manual tasks reduces operations overhead. Decision-makers have enhanced visibility into cash flow and corporate spending. Paying suppliers electronically provides better control over the timing of payments. And automation frees staff to focus on high-value activities.
MYTH #7: “Our employees will never adopt the technology.”
REALITY CHECK: Today’s workers expect intuitive, digital tools that empower them to be productive from anywhere. Automating manual tasks transforms the role of finance professionals from a data-entry clerk to a data analyst. Frontline staff can instantly access the information they need to make decisions. Cloud accessibility and mobile applications empower staff on the go. And personalized, intuitive user interfaces make it easy for staff to become proficient on the system.
Don’t let any of these myths stand in the way of your finance department’s progress.
How to Elevate your Finance Department
The shift to remote working and the increased pressure to do more with less has made automation a top priority for finance departments. Don’t let common myths hold your finance department back. The right approach to digital transformation can deliver big benefits to your finance function.
Ready to drive digital transformation in your firm? Follow our Driving Digital Transformation series to hear from today’s industry thought leaders who have been there, done that, and are sharing what they've learned along the way.