Factors that can slow down the transformation of the Finance Department – Dedicated hub

Globalization, pandemics, rising customer expectations… It’s a complex market for finance leaders, who are under increasing pressure to make better use of data to generate more revenue, maintain healthy balance sheets and manage working capital more effectively.

However, achieving these goals is strongly linked to effective cash management. Ensuring that the company has sufficient cash requires the transformation of the Finance function by implementing and using technological tools, including the automation and digitization of their Payables and Receivables, which allows for the optimization and optimization of processes.

Cash flow problems can affect the success of any business, large or small (although larger companies are better able to find sources of finance than smaller companies). In fact, business leaders and other executives responsible for financial matters must have reliable cash forecasts, and this requires full visibility of all debts.

However, a recent study by Forrester Consulting for Corcentric, The Future of Finance: A 360-Degree View and Control of Cash Flow, shows that volunteerism alone does not enable a company to achieve its financial goals. Forrester Consulting surveyed 633 financial managers in the US, UK and France to find out the aspirations and concerns that exist in this area.

They were asked about their respective companies’ plans to automate supplier invoicing and customer invoicing, and the results look promising at first glance. Only 15% of accounts payable departments and 12% of accounts receivable departments say they have no intention of implementing these technologies. The rest, 85%, either plan to deploy them or have already done so. These executives know that without it, their companies will have limited visibility into their cash flow, making it especially difficult to have reliable forecasts and limiting their ability to identify possible sources of funding for key projects.

Finance transformation: finance managers know what to do, but where’s the problem?

While there is some consensus on what needs to be done, accomplishing this mission is a bigger challenge. According to this study, 74% of executives surveyed admit that “Challenges experienced over the past year have alerted CEOs and other financial managers to the need to view cash flows globally and in real time.” This goal is difficult to achieve when the majority of executives surveyed (57%) report that their companies are struggling to modernize their payment processes.

Finally, even when deploying accounts payable and receivable automation solutions in hopes of having the information they need to make strategic decisions, 70% admit that the solutions they use only provide them with fragmented cash flow information. Recognizing that real-time visibility into cash inflows and outflows can reduce the risk of fraud and help improve business agility, finance leaders are looking for ways to remove roadblocks.

Challenges slowing financial transformation

Challenges may vary from one company to another, but no matter what company or what sector, some of the reasons why they exist are the same. Over time (some would say a long time ago), finance leaders realized that manual, paper-based processes were hindering progress. They are really slow and error-prone and open the door to situations like double payments, fraud, late payments and not being able to take advantage of early payment discounts within companies. The resentment this creates between customers and suppliers has even more damaging consequences.

As part of this research, financial managers were asked what was holding back this progress in their structures. Here are their answers:

  • Lack of digitization of payments in 51%
  • 49% lack of automation of payables and receivables
  • 46% in manual checkout process

Even if these processes are automated, functions are too siled in many companies, even within the finance function. Communication and collaboration between and even within business units is key to getting a clear picture of cash inflows and outflows. However, research by Forrester Consulting shows that 44% of executives surveyed agree that their accounts payable and accounts receivable processing processes are separate. Maintaining this silo means that 38% of executives surveyed find that there are inconsistencies in their processes for managing incoming and outgoing payments. But it is not only these processes that harm progress, but also people create brakes in this area. The economy is facing an unusual problem right now… there are too many job vacancies and not enough people willing to fill them or with the skills to do the jobs it does. Controlling accounting books and records and being able to reconcile them at the end of the month or create spreadsheets are skills that are no longer enough. Accounts payable and accounts receivable teams should be viewed as strategic partners, not accountants, with the ability to work in a digital environment and analyze data to make recommendations that help the company achieve its goals.

However, 54% of executives surveyed in this study report a lack of internal skills and/or desire to view their company’s cash position in real time. If a company is reluctant to hire, but knows that financial transformation is a commitment, not a luxury, the solution may be to hire a third-party service provider to work with them well beyond the implementation of the chosen solution (preferred). partner) to ensure the long-term success of cash management. In this study, 85% of companies said they “use or plan to use a service partner to fill existing talent gaps and leverage best practices.”

When it comes to the question of an external partner and its selection, the main concern of companies (55%) is to ensure that it is an expert in its sector of activity and can offer flexible solutions that can meet the specific needs of the company. (48%). We also note that more than 50% of surveyed executives want to work with service providers that offer global solutions (software, deployment and managed services). But knowing this, a lack of agreement among stakeholders on the value created by modernizing existing payment processes and systems is an insurmountable obstacle for 32% of respondents. Financial managers must then convince these firebrands that the cost is important and that it will produce a positive return on investment.

It is up to the CFO and other leaders to drive the changes necessary for cash flow optimization initiatives and cash forecasting to be successful. The task may seem daunting, but as research from Forrester Consulting shows, finance leaders know that the future of finance lies in being able to fully optimize their company’s cash flow by digitally transforming their systems, processes and operations.

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