5 Big Advantages of Automating Finance

Along with the CEO, the CFO is the only corporate executive liable to end up wearing an orange jump suit if things don’t go right – one important reason among many to make sure that things go really right.

Timely and accurate closing of the books is clearly at the top of every CFO’s list, and in most cases, it takes the finance department weeks to accomplish that arduous task. Internal controls and procedures are an ongoing bear that auditors look at closely. CFOs must also keep pace with changing regulatory regimes and accounting practices around the world.

That doesn’t leave a lot of bandwidth for what CFOs could be doing: analysis, collaborating with the lines of business, and providing critical, cross-functional insights to the C-suite and the LOBs. Automating as many of the traditional finance processes and tasks as possible —like the monthly close — can free up time for finance to turn its organization-wide view of the business into a catalyst for competitive advantage.

Automation can not only make closing the books easier; it can enable finance to do a close far more frequently, which in turn provides a real-time view of where the company stands. According to Rebecca Wettemann, vice president at Nucleus Research, “the ability to close the books close to every day allows you to make course corrections more quickly, and identify areas that are problematic before they boil over into a crisis.”

With tasks like this no longer taking an inordinate amount of time, finance leaders can focus resources on strategic aspects of the business.

But the advantages don’t stop there. Automating traditional finance tasks can provide a range of benefits:

1. Cross-functional insights. By automating finance process and systems and integrating with systems and processes in other areas of the organization – supply chain, marketing, sales, human resources – executives across the organization are able to share consistent, more accurate data sets.
2. Risk assessment. With access to accurate and timely information from throughout the organization, finance executives are able to run scenarios with different sets of variables – such as interest rate, inflation, or currency fluctuations – to assess both potential risks in existing markets and opportunities in new ones. “Your CEO doesn’t want to be blindsided by a change in the strength of the dollar, for example,” notes Matthew Hurst, assistant professor of finance at Stetson University.
3. Develop new KPIs. Organizations that have successfully automated standard finance functions can get beyond traditional metrics to look at more focused and forward-looking KPIs, such as customer satisfaction, or even tackling the complex issue of treating data as capital. Indeed, “the value of data itself is beginning to show up as a form of capital in quarterly meetings with analysts,” says Oracle Big Data strategist Paul Sonderegger.
4. Enable global expansion. Automated finance functions allow corporate finance to comply with regulations in different countries, provide multi-language and multi-currency support, and automatically support accounts from local subsidiaries.
5. Negotiate better discounts. Incorporating automation technologies like machine learning can improve net liquidity by generating better discount terms on settlement dates. “Now through technology you can increase those discount rates to create more immediate liquidity,” Hurst says.

Boards of director and CEOs are increasingly looking to CFOs to provide accurate, timely information that enables strategic thinking, and automating the table stakes allows CFOs to shift their organization’s focus to do just that.