Is Finance On The Technology Beat?
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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For once I am going to spare you the trouble of reading the article to get the answer. The answer is a simple NO! In fact, out of the ten most important issues, as identified by The Hackett Group for CFOs in 2021, this is where we are failing the most. We are simply not taking advantage of new finance technologies.
Perhaps we are too risk-averse to explore our options. Perhaps we are simply not aware of what is possible. Perhaps we cannot get the funding to invest in new tools. We can only guess as to the reasons; however, I am going to call them all out. They are not true. The only thing that could make them true is that we tell them to ourselves as excuses for not getting started.
I will tell you this. Do not ask what is possible. Ask how to make it work for you. When it comes to technology usage in Finance pretty much everything is possible. It is time we move into action. Some things are happening though as Accenture has documented that the rate of automation of transactional activities has increased from sub 40% in 2018 to 60%+ in 2021. However, beyond transactional activities, it is looking quite poorly. Now let us get practical about this and discuss what you should be doing in the tech space to get Finance on the beat.
It is time for a tech review
One could probably write a longer whitepaper about all the tools and technologies available to Finance and how to use them. Here we will just review a few of them and provide with you a push to get started.
- Automated accounting: A lot of solutions already exist in this space. As far as recording transactions goes you could properly reach an automation level of 70-80% today. This can be done through combinations of OCR (Optical Character Recognition) and ML (Machine Learning).
- Month-end reporting: I remember doing month-end reporting ten years ago and it involved many manual processes like applying cash, posting accruals, and reconciling intercompany transactions. Today this can all be automated, and continuous reporting is possible. Close your books and report them as and when you want them.
- Auditing: AI (Artificial Intelligence) is ready at your command to data-mine all transactions in your ERP system and highlight any suspicious entries that need a closer look. This is a powerful tool for CFOs and auditors alike and can help them elevate their dialogue about the numbers to a strategic level.
- Planning: Most companies still rely on some sort of Excel interface when doing planning although in many cases it hampers the whole process. Today planning must be connected across the company, integrated throughout the value chain, not just in Finance, and collaborative enabling the organization to get more done with less. All the tools are available, and you just need to pick one!
- Forecasting: All that is needed to say here is Microsoft. From 800 people involved in quarterly forecasting to two. From a three-week completion time down to two days. No argument beats that. You do not even have to go as sophisticated as Microsoft did since tools are available for download that will get you close enough.
- Modeling: Want to do on the spot simulation of your financials if the commodity price changes with two percent? Not a problem at all. Build your value driver tree from the net present value of cash flow returned to shareholders down to operational and commercial drivers. Then you have the ultimate flexibility in hand.
There are more processes to cover, and you could do a full vendor review on each process. However, I will leave that to the consultants but just open the floor to anyone who wants to add to the list. What is missing from the board of what is possible? Post it in the comments and we can add it to the list!
Where is your biggest potential?
The key challenge is picking where to start. It depends on where your biggest potential for either automation and freeing up resources or sophistication i.e., enriching your insights with next-level information about trends, patterns, and unusual transactions.
Another way to pick where to start is by IDing some people who are keen to experiment with what is possible. Free up time in their schedule and let them experiment with a process on the side of your standard process. See what they come up with and compare the two. If it works you can easily scale it to the rest of the organization/process. The experimentation will also come at a cheap price and help prove the business case should need significant funding for getting up on the beat.
There are no excuses for not starting to close the gap on taking advantage of new finance technologies. We are so far behind yet have all the opportunity to make up the difference fast if we start now! Where is your finance function in terms of getting up on the beat? Are you still lurking around evaluating your options or did you start experimenting long ago and are now ready to scale your solutions? The latter will be the winners in the future. The former will be forever playing catch-up. Start today. Stop procrastinating. That is it!
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You can read previous articles in my CFO series below.
The Top 10 Priorities For CFOs In 2021
How FP&A Becomes A Strategic Partner To The Business
Eight Ways For Finance To Go Further On Cost Efficiencies
Finance Professionals Are The Masters Of Analytics, Or Are We?
Re-Imagining Finance In The Face Of The Pandemic
Is Finance Winning Or Losing On The Talent Agenda
Is Your Finance Platform Up To Date?
It Is Time To Go Beyond Financial Planning
Agility And Sustainability And The 8 Types Of CFOs
CEO AND CFO - The Most Dynamic Duo In Business
The CFO Is The Voice Of Reason In Business
If you want to become a better business partner you should consider taking our online course "Business Partnering Explained - Value Creation Unlocked" to get a better handle on the role. It's accredited for 5.5 CPD hours.
You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on Twitter.
All Successful Business Partners Are "Leaders" (the last article in the series about our new capability model)
Should We Keep Talking About Business Partnering? (part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)
Your Journey To Successful Business Partnering Explained
How To Create Value Through Business Partnering
Everyone Can Adopt A Business Partnering Mindset (part of a six-article series about FP&A Business Partnering)
From Business Partner To Working Within The Business (part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)
Is Your Product Optimized For Value Creation? (part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)
How Business Partners Turn Analysis To Insight (part of case study series where I interview business partners about how they drive value creation using real cases)
The Future Of FP&A: Two Ways To Take The Reins
What Is The Accounting Profession Paradox?
What Defines A Finance Master?
The New Career Path For Finance Professionals
How Finance People Can Be More Successful
The CFOs Roadmap To Transforming Finance
How To Become A Finance Business Partner
Financial Analyst vs. Finance Business Partner
Finance Business Partner Is A Bullshit Job
How Business Partners Keep A Plan On Track
Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 9,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 57.500+ followers.
Professionalizing finances in growing businesses ?? Fractional CFO | FP&A | Podcast host | Financial Puzzle Solver | Have a financially healthy & sustainable business
3 年I spent many hours frustrated and thinking “why in the world are we still doing this like we’re in the stone ages!?” The only possible answer I could find is that it’s not the technology issue (because technology is obviously there). It’s not even the “how do we afford this” problem either. It’s the issue of change, risk, and culture. Introducing new tools and technologies means change and there is always a risk of “it might not go as well.” Which means that if there is no strong champion at the top who is truly pushing this forward, sees the value, and is willing to stick with it despite the bumps (and there are always bumps when you implement something new like this), people will eventually take the path of least resistance. Or “we’ve managed so far, so...it’s not too broken for another bandaid.” And then in very large companies there is the “prestige” of having a giant team under you as well. If you don’t need an army of finance people to do this work and managers to manage them, how will that impact your own destiny at this company? Is there truly an incentive to push for change then?
Director - LMS Advisory, Advising SME's on Growth, Strategic Planning, Maximising Profit & Cashflow. Financial enabler. AI/Tech enthusiast | LMS | KeepMyBooks | WihseFP |Cerebiz |
3 年From firsthand experience I know that the right tech stack can save many hours for the finance function, as well as helping provide real time insights and error tracking. This is especially true when the tools draw data from the same single source of truth. Would you say less is more when it comes to the tech supporting these functions Anders Liu-Lindberg ?
I teach Finance Teams how to use AI - Keynote speaker on AI for Finance (DM me if you need help)
3 年Great to bring the subject on the table again! Do you have more details on how Microsoft succeeded to improve their forecasting process?
Ex- ANZ, HSBC, IBM and GECIS
3 年Once again a Master class from you. Frankly speaking, I liked the idea to experiment with what is possible in parallel to the 'AS IS' process.