• Paul Brunda, Vice President at Trianz


• 22.01.2021 07:45 pm
Digitalization , Finance , accounting

Accounting and finance are integral parts of a smooth business operation. This helps enterprises to manage incoming and outgoing capital, accurately file tax returns, and to pay their staff in a consistent and timely manner. Careful management of these areas will ensure suppliers can be paid, operating expenses are covered, tax compliance is upheld, and staff are compensated for their work.

At present, basic Excel spreadsheets are bordering on obsolescence in finance and accounting workflows. Modern accounting and finance demand more functionality than ever before to tackle growing administrative workloads. Manual data input and export processes are no longer feasible, and Excel's analytics functionality is primitive when compared to more modern alternatives in the industry.

Let’s explore how accounting and finance are evolving due to a widespread digitalization push.

Why Digitalization?

The digitalization of finance and accounting incorporates a full digital transformation of businesses' underlying systems and processes.

A recent Institute of Management Accountants (IMA) report—with 800 respondents surveyed—found that a third of accounting teams spend between 51% and 75% of their time on low-level administrative tasks. Furthermore, 56% of respondents highlighted how automation is necessary to keep up with increasing workloads. Digital transformation through digitalization is one way to reduce the administrative burden and enable more extensive automation.

How to Approach Digitalization in Finance and Accounting

Before you approach digitalization, it is vital to understand the current maturity level of your finance and accounting operation. Analyzing this will show you where improvements are necessary and help you avoid investing in areas that will offer little or untimely return on investment (ROI).

Trianz, a leading IT management consulting firm, created the Digital Enterprise Evolution Model (DEEM) to facilitate this process. DEEM helps enterprises benchmark the digital maturity of their finance and accounting operations across five different levels of maturity. Trianz bases this model on data collected from more than 5,000 companies across 20 industries, assessing each company’s finance and accounting maturity in relation to competitors. You can find out more about the DEEM model here.

Pathways to Digitalization in Finance and Accounting

Let us explore some pathways to digitalization in finance and accounting, including executive strategy, technologies, and changes to workflows:

• CFO Strategy – An organization's Chief Financial Officer (CFO) has an essential role in the digitalization of finance and accounting. Rather than focusing on performance and results, the CFO should adopt a solutions focus.

This will require proactive planning and foresight into your business's potential future state. Questions to ask may include: How would this change benefit the business? Would this new system still meet our expectations in 5 years? Will these changes pose a challenge to governance risk and compliance (GRC) now or in the future? Therefore, a solutions-focus entails the management of opportunity and risk, maximizing the benefits of new investments, as well as analyzing the long-term feasibility of decisions.

• ERP Software – Enterprise Resource Planning (ERP) software is typically used to manage accounting, procurement, change management, governance risk and compliance (GRC), and supply chain management (SCM).

A digital transformation in this area would include adopting cloud-native intelligent ERP (i-ERP) tools, with major players including Microsoft Dynamics 365 and Oracle ERP Cloud. Such platforms enable new innovative functionalities like advanced artificial intelligence (AI) and analytics, automated financial data ingestion and orchestration, and integration with third-party tools to further extend capabilities and enable later automations. Cloud i-ERP software is also highly scalable, scaling processing capacity to sustain performance and minimize bottlenecks.

• Digitalization of Finance and Accounting Workflows – As we enter the second decade of a new century, paper trails create an unnecessary burden. Physical documentation can easily disappear, with data input suffering at the hands of human error. This also impacts efficiency as employees filter through physical documents, increasing the low-value administrative burden. There are two pathways to digitalizing finance and accounting documentation management.

The first involves converting paper documents to digital formats, where optical character recognition (OCR) tools like Adobe Acrobat Pro DC can automatically convert paper documents to PDF format. An ongoing part of this pathway will be automated conversion pipelines that deliver scanned documents to a defined storage location—typically through a document management software (DMS) tool like Templafy or Docuware.

The second pathway is digitalizing the originating document. This will require existing processes that use paper to be changed, migrating customers, suppliers, and internal departments to modern technologies. Forms could be distributed using platforms like Typeform. Invoicing could be handled through Intuit QuickBooks. Expenses management could involve read-only access to employee bank accounts for digital transactions or OCR conversion of receipts using tools like Xero.

To summarize, paper documents are readily convertible using OCR tools, with digital document management making it possible to eliminate paper entirely. i-ERP software can centralize accounting and finance processes, with additional support from AI automation, Robotic Process Automation (RPA) and insight generation through analytics reporting dashboards.

CFOs should consider the benefits of adopting these modern solutions, creating a plan of action to migrate away from manual processes and achieve end-to-end digitalization of finance and accounting workflows. Read more about digital benchmarking for finance and accounting on Trianz.com.