The Importance of Efficiency in Finance
The uncertainty of the economic climate at the outset of 2023 means CFOs need to focus on boosting efficiencies across the finance functions within their organizations.
This is based on the dual need to maintain or reduce costs within their department and to drive close to real-time accounting and finance data.
Completing core workflows manually is no longer good enough. Finance leaders need to leverage the automation capabilities of their ERP software and integrate add-ons designed to streamline processes and increase the speed and accuracy of data processing. This will result in finance tasks being completed faster and allow for more agile decision-making.
The Processes That Can Be Automated
CFOs should apply the mantra of automating as many manual processes as possible.
Leading accounting and ERP software, especially cloud-based versions, have many inbuilt automation capabilities as standard. Some everyday processes that can be automated include pulling in bank feeds and coding bookkeeping transactions.
Recurring journals, fixed asset register postings, and group consolidations can streamline month-end workflows.
Most tax filings can be completed through core software, eliminating the need to duplicate data and remap accounts.
Add-on software partners can also execute automation capabilities not offered within the products of ERP vendors, as well as a deeper level of functionality for businesses that are growing at scale.
Using directly integrated end-to-end payables automation tools help fulfill the entire payables lifecycle, from completing compliance checks for new suppliers to transacting and reconciling payments.
The complexity and depth of these features go beyond what is typically offered by ERP vendors, which will often capture data from purchase invoices but offer limited features related to accounts payable.
Payroll automation can be enhanced by directly integrating with third-party vendors to automatically calculate taxes, employees’ net salaries, and mapping journal data. You should seek out vendors that can also connect with HR software to make relevant calculations for new hires and any paid holiday for those leaving the company.
It is easy to make a case for using a CRM vendor for invoicing due to their ability to provide a single source of truth for customer details, automatically generate invoices with pay links, and direct integrations with ERPs.
The Benefits of Automated Processes
Speed of Data
Automating accounting processes increases the speed of data made readily available. You’re no longer restricted by the number of entries staff members can manually post within a set time.
Data should be processed immediately if you have technology tools set up correctly. This means ledgers will always be up to date, and the workload at month end will significantly be reduced due to most accounting entries already being present.
Posting entries manually comes with the inherent risk of human error. Transposition errors, with team members posting the last two digits of transactions back to front, are unfortunately very common and can take additional time to fix.
Automated processes have higher levels of accuracy due to removing the risk of human errors. These errors are lessened even further if you have a tech stack that allows data to flow seamlessly throughout the entire payables lifecycle—from initial data entry to payments and reconciliations.
This means data only needs to be entered once and not duplicated and re-entered across various systems.
Automation provides CFOs with unparalleled visibility on company-wide data.
Accounting and ERP software are updated in close to real-time, so agile and timely decisions can be made with accurate and relevant data, rather than having to implement decisions without fully updated ledgers.
For an even more granular level of visibility, create cost centers so expenses can be analyzed and apportioned across departments. These can be used to set budgets as well as analyze ongoing performance.
ERP vendors and accounts payable automation tools also allow you to set up rules to assign suppliers to specific tracking categories.
Reduced Cost and Headcount
Efficiency through automation will lead to decreased costs and headcount.
Providing technology is implemented to its full capabilities, data processed by software should be more cost-effective than if it were completed manually by team members.
This may require upfront investment and overhead associated with setup costs. Still, over the long run, technology tools should reduce the cost of traditionally manual tasks, with less input required by staff.
Free Up Your Finance Staff
Automation frees up the time finance staff spends on non-value-adding and repetitive manual tasks.
Instead, their time should be used analyzing real-time company data to better aid decision-making and ultimately become more involved in driving the business’s overall strategy.
These higher-profile tasks will engage finance team members, help them develop their careers, and minimize the chance of them leaving to join competitors.
Efficiencies from automation create a compelling opportunity for finance to work across the business rather than being a siloed function.
CFOs should encourage their team to work closely with colleagues in all departments, educate them on how finance impacts their roles, and put together more accurate budgets and forecasts by collaborating.
Automation efficiencies within your AP processes can also help sustain and elevate your business’s relationships with suppliers and partners.
While automating payables processes benefits the finance team and the business as a whole, it also streamlines your suppliers’ payment experience. Fast, reliable, and error-free payments, along with self-serve capabilities (depending on the solution), help with strengthening trust, making it more likely they will want to continue working with you, and reduce the number of inbound inquiries regarding payment updates and statuses.
Your business will become more sustainable due to tighter controls over cash balances and a potential pathway to profitability if you are still loss-making.
This will reduce your burn rate and give you a longer runway for negotiating and accessing new rounds of funding.
Additionally, automation ensures your business’s financial data is always up to date so finance leaders can make forward-looking decisions based on what is happening now instead of what happened in the past. For example, this can include better visibility on future cash balances and insights into changing market conditions, whether that be opportunities or threats.
Lead by Example
The unpredictable economic outlook creates an opportunity for CFOs to lead by example and show the wider business how to drive efficiencies, cut costs, and demonstrate agility.
Once finance leaders have streamlined their processes, they can get other departments to follow suit to finetune their own expenses and speed up data availability.
Efficiency is the Holy Grail
of Accounts Payable
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