Technology is Evolving Finance Functions, but Not as Fast as It Should
It’s no secret that technology has been changing the finance function at a rapid pace. In fact, it is hard to find an industry that has not been impacted by technological advancements in one way or another.
However, there seems to be a significant disconnect between the rate of change in technology and its impact on finance functions. While some aspects of finance are being revolutionized by new technologies, others are still being done the old-fashioned way and may continue in this way during the short-term.
Finance teams can already access a wide range of game changing technology solutions such as automated accounting, AI-driven cash flow monitoring, and cloud-based data storage. In fact, most people consider technologies such as optical character recognition (OCR), dashboard reporting and predictive analytics a ‘must have’ for modern-day finance functions.
Joe Paget, Founder of 4thRevolution.co.uk, states: “The advent of citizen enabled analytics tools will fuel a revolution akin to how the introduction of Excel eliminated the use of the ledger book.”
Other technologies such as machine learning, artificial intelligence (AI), and robotic process automation (RPA) are beginning to enter the market, but their adoption is still relatively low in finance teams. New technology solutions are constantly entering the market and provide finance functions with huge potential benefits; however, most teams are struggling to keep up with the pace of innovation.
Too many finance functions are still performing manual repetitive tasks that more sophisticated teams have now fully automated. For example, reconciling transactions that have already been processed, manually checking the completeness and accuracy of data, and typing emails to chase due debts. Additionally, GrowCFO research shows that 92% of companies are still using Microsoft Excel for cash flow forecasting activities and most businesses continue to build their financial models within spreadsheets.
Joe Paget, Founder of 4thRevolution.co.uk, says: “With the increasing availability of no-code analytic process automation platforms, the opportunity now exists to equip your teams with the tools needed to increase their productivity and improve the quality of information used in decision making.”
Barriers to success
Despite its potential to revolutionize the way finance functions work, it seems that technology is not advancing finance functions as quickly as it should be and the reasons for this are manifold. One of the biggest factors is a lack of tech skills in most finance teams. Many companies do not have enough employees with technical expertise. Teams are often too busy running day-to-day operations to invest time in upskilling and training their people.
A recent study shows that only 7% of CFOs look for strong Excel skills within their new hires, whereas 36% prioritize people’s adaptability to new technologies. However, many CFOs lack the necessary budgets to recruit tech-savvy finance professionals or invest in costly solutions.
Furthermore, many teams are still heavily reliant on Excel and other outdated tools which can be time-consuming and prone to manual errors. This can make it difficult for them to monitor cash flow as quickly and accurately as possible during a crisis – an essential task when cash is so vital. People are generally resistant to change as this can feel uncomfortable and daunting. Many people do not want to embrace a new tool or unknown system. As such, teams can miss out on the advantages offered by modern technology solutions and remain stuck in their old ways of working.
It is also the case that teams are often too busy to invest in new technology solutions. During times of economic uncertainty, a huge emphasis is placed on meeting growth targets and ESG commitments, leaving little time for tech implementation or training. Software vendors need to determine how best to overcome these barriers to help finance teams implement new technologies in a seamless manner.
Chris Tredwell from Accounting / Postmodern ERP Solution Aqilla states: “Automation, artificial intelligence, and machine learning within finance functions can help accounting teams considerably. They can do the heavy lifting, the time-consuming data entry tasks and the repetitive work that can fill up so much of the working day. They also remove much of the grind and monotony — freeing up the time of skilled professionals to add value to the business. Although the finance sector is currently behind the curve in adopting these technologies, hopefully 2023 will be the year that businesses push and transform the industry once and for all.”
In conclusion, while technology is continuing to evolve finance functions, it is not happening as fast as it should be due to many factors such as a lack of tech skills, over-reliance on Excel, limited team budgets, and people’s resistance to change. If finance teams can overcome these issues and embrace the power of technology, they will be able to reap the rewards of improved efficiency, accuracy and agility for their finance functions.
Whilst we expect finance functions to continue implementing new technologies, most people are missing out on relatively easy wins to revolutionize and streamline their operational activities. This restricts their ability to transform the perception of finance and make a bigger impact throughout the business by focusing more time on higher value initiatives.
What could our next steps be?
The superpower for good technology in finance teams is not to deeply understand every technology; it’s to know how to research, choose and refresh technologies when the opportunity is there. This applies at both a leadership level and an implementer level. You may wish to become familiar with resources that provide early adopter reviews, join communities that help each other with adoption, and experiment with free trials to test the impact of potential options.