5 ways to improve your financial processes

Ever since the role of the CFO arose in the 1960s and 70s as a response to increasing (and increasingly complex) regulations, the job’s remit has continued to grow. Companies are more global than ever and need to be highly responsive to market and societal changes if they have any chance of remaining competitive. 

That means CFOs jobs are in constant flux. They need to adapt to new regulations in every market that the company is in, yes, but also be ever more strategic in every other aspect of their job. They must do this in order to support the business in remaining or becoming more agile in how it manages processes and operations.

CFO duties: not getting any easier

For starters, here are some of the more typical responsibilities of CFOs and their teams, and how some have changed in recent years. 

• Cash flow management. Budgeting, tracking, and forecasting are still the pillars of the role, but in most cases they need to be obtained as close to real time as possible as old news is not useful for decision-making
• Set financial strategy. This includes both making sure a company is ready to meet  current financial obligations, meet future capital needs, and set strategies to increase profit, either by earning more money or saving on costs. The global character of most businesses these days makes a strategy even more important. CFOs cannot do this by themselves either; this takes constant interaction with the key stakeholders in the company.
• Interpreting data to obtain business trends and other findings. Data isn’t useful unless CFOs are able to use it to help set the direction of the company as a whole. There’s more data available than ever before, but finding the best data that is fit for purpose, managing it and interpreting it is a challenge in itself.
• Setting policies and processes to improve the efficiency and the work culture of the company. Because so much of their job is wrapped up in finance workflows, CFOs are uniquely qualified to identify strategies that their companies can improve the way they handle money and debt. 
• Ensuring compliance with statutory law and financial regulations. For every company, compliance is a substantial cost, and for heavily regulated industries like finance and insurance, it can amount to a tax of 8%. As companies become more global, they can only count on those costs growing.
• Financial reporting and analysis. Creating reports and analyzing their results are essential parts of a CFO’s responsibilities. Making sure that reports are truly useful is an art, and setting a good example here can help many other parts of the company, while also helping it stay ahead of competition. 

That’s a lot to handle. So what can CFOs do to keep their duties from becoming overwhelming, and make sure they remain on top of financial processes while being effective change agents?

How automation can strengthen financial processes

One of the most important steps is to investigate all the places where automation can help you streamline your financial processes, giving you the potential for savings across your entire organization. Here are a few of the ways in which automation can come to the rescue:

Reduce errors. Automated forms, tailormade finance workflows, and optimized data permissions can all help cut down on human errors and efficiency-killing mistakes. 

Increasing process speed. What tasks are unnecessary, or being done twice? What can you automate? What can be changed so that some steps can be done at the same time? 

Reduce human roadblocks. Many financial processes still require repetitive human intervention that might not actually be necessary. Take business or small consumer loans, which are still often set up for manual collection and payment. Instead, payments can be debited automatically and then be paid back to the lender using fast payment rails (i.e. the SWIFT network). In this way, the necessary float is reduced: because money doesn’t have to be paid until right before it’s actually due, the borrower can hold onto it longer. Automatic reconciliation and similar finance workflows can also help on the back end, reducing the amount of manual investigation.

Reduce costs. Automation can save on business processes, helping to redirect current employees to other important duties. Reducing the amount of employee scutwork required may also improve satisfaction and lower burnout rates. 

Improving reporting standards/capabilities. Simply throwing new or better technology at a problem is rarely sufficient, and that’s certainly true of financial reports.  According to PwC, when it comes to simplifying financial processes, the “solution to better reporting is not simply new or better technology. Improved reporting comes from enhanced integration across the reporting supply chain (data collection, sub-systems, ledger close, consolidation, analysis), fully leveraging the capabilities of leading tools, automating key processes, embedding controls, and applying standards.” After all,  finance controllers need to have a good overview of a company’s financial health as well as its business processes. That means having easy access to all the data of the payments going in and out of the business, so that reporting is both easier and more accurate.

Automation can help the business free up cash by ensuring that customers are invoiced and outstanding debts are followed up more efficiently.