If a recent survey by payables fintech provider Tipalti is any indication, finance automation is top of mind for most of your CFO peers.
According to Tipalti‘s CFO, Sarah Spoja, when respondents were asked what they cared about most in the face of future-proofing for dramatically unpredictable world events and a challenging economic environment, three priorities were “uniformly at the top”:
- Automation and digitization of the office of the CFO
- Managing cash flow, and
- Cost reduction.
“At the end of the day, the office of the CFO is a really dynamic space. (But) it is behind its peer departments, as far as technology and digitization goes, as far as implementing new technologies,” she commented during the ResourcefulFinancePro on-demand webinar “How CFOs are Achieving Cash Flow Resiliency and Solving the Financial Talent Crisis.”
Spoja broke down how finance automation addresses all three goals.
Why finance automation?
A frequently cited reason for wanting to automate/digitize the office of the CFO was increased visibility into finance processes for better decision-making and planning thanks to access to data on the latest trends and patterns, as well as cash flow insights.
“By the time (businesses) receive an invoice, they need to pay it. They have contracted for a good or service and they can’t not pay their invoices. But they want to be able to have controls on the front end before they commit to that spend,” she said.
Webinar moderator Dovi Frances, the founding partner of venture capital company Group 11, added that CFOs may also be feeling the need to digitally evolve because they’re noticing a growing population of Millennial and Gen Z finance pros around them. He estimated that 75% of the workforce will be comprised of these digital-native workers by 2025.
By 2030, Spoja predicted finance automation penetration among mid-market businesses would be 30% to 50%, especially as modules for virtual card payments and employee expense reimbursement continue to roll out. That’s a lot more CFOs who will have finance automation platform home screens constantly open, along with their other home screen essentials: internet browser, enterprise resource planning, project management, customer relationship management, etc.
Emerging cash flow tools
Spoja said that a specific trending demand among your peers is increased visibility into purchase orders (PO) and procurement, so there can be more up-front control keeping purchases in line with the budget.
“After payroll, for most companies, invoice backspend is going to be the No. 2 item within the P&L (profit and loss statement),” she said.
As a result, the newest cutting-edge finance automation platforms have built-in purchase order and procurement management modules. Cash forecasting becomes easier and more accurate, and big-ticket invoices won’t be catching A/P off-guard as often.
These capabilities become a game changer because Finance is “able to accrue for invoices, even when they haven’t arrived, because you know that they’re coming, because you have a PO process in place,” said Spoja.
Finance automation and cost control
A big cost cutter for Finance can be utilizing finance automation to reduce the time and resources being spent on manual tasks. Spoja mentioned a common complaint among CFOs that she talks to: “‘On the accounts payable side, I’m making invoice-backed payments through my A/P team. It’s maybe a few hundred invoices a month, and I’ll have multiple people working on this. It’s really time-consuming, it’s filled with mistakes, and approvals and a whole bunch of other steps (are necessary). … It’s very manual.'”
She reported that companies can usually reduce their manual workloads in Finance by 80%, freeing team members up to tackle more strategic projects like financial planning and analysis, supplier relationships and researching untapped opportunities in the market.
And of course Tipalti uses its own product to streamline financial operations. Spoja said that her company’s monthly close gets done within two days because the software’s automatic reconciliation treats every day like it’s month-end close time.
Some of your peers are trying to save money right now with hiring freezes or layoffs, while also trying to improve back office functions. “CFOs can’t say: ‘OK, all of you guys, go reduce your teams, but … I’m going to keep growing my team,'” Spoja said, noting that because finance automation streamlines the inefficient manual work, it can save on labor costs and enable Finance to do more with fewer people.
At the same time, finance automation keeps team members “happy and engaged and working on the right stuff,” according to Spoja.
Global growth
More and more, companies need to be prepared to do business on an international scale, which may involve many different types of currencies and subject-to-change tax compliance requirements of other countries.
Because few finance pros have that kind of expertise, or the time to become that much of an expert, leading finance automation solutions on the market have that knowledge built in, and is updated accordingly.
