Digital transformation is taking over the business world, with new technologies integrated into virtually every aspect of operations. Finance departments are no exception, with a range of tools available to improve how organizations handle their money.
In the past, finance departments required large teams to perform time-consuming manual workflows. Technology has taken over much of the burden so today’s finance teams are more streamlined, containing tech-savvy individuals capable of managing robust accounting applications to fit the company’s needs.
But, what does digital transformation in the finance department actually look like? First off, it’s more than adding new software to pre-existing accounting tools. Digital transformation is not simply extending the finance tech stack. It’s a cultural and operational shift towards technology and the business benefits it can produce.
Modern finance departments rely on data, analytics, and automation to simplify operations while identifying growth opportunities. They produce actionable insights and enhanced decision-making while reducing operational costs and scaling with the company.
Finance departments are no longer the bean counters who check budgets, pay expenses, and file taxes. Post-digital transformation, they can become a meaningful competitive advantage helping businesses pull ahead in a crowded marketplace.
Listed below are four examples of how new technologies can transform finance departments.
1. Automating the Right Financial Processes
Identifying processes ripe for automation is a key part of digitally transforming finance departments. Two areas to focus on are accounts payable and the monthly close process.
Accounts payable software is now available to simplify much of the bill payment process. This includes automatically transferring bill information from a document or photograph to accounting software. AI-powered solutions can now analyze the file to determine the most pertinent information (amount, payment date, etc.).
Another area of accounts payable to automate is approval workflows. Define every team member’s responsibilities, so they can review and approve relevant payments without having to wait for higher-up approval. Automating approval workflows prevents bottlenecks while maintaining oversight.
At the end of every month, finance departments typically undergo a monthly close process, collecting and reviewing accounting information. Depending on the size of the business, the monthly close process can lead to significant work on top of the day-to-day activities. With software tracking critical financial information throughout the month, companies can remove the burden of the monthly close process and automatically generate the necessary information.
2. Centralized Data and a Single Source of Truth
Finance departments often struggle with information overload, and it is common for internal barriers or data silos to slow or limit the output of a financial team. A key part of digital transformation is ensuring any new systems output into a single centralized data store, feeding one source of truth across the entire organization.
This is harder than it sounds when workloads and sensitive company information are likely split across multiple cloud environments and providers. Organizations need to design their IT infrastructure around a high-performance, secure data store that is always accessible to the people who need it. A number of solutions are available, including data lakes, data warehouses, and digital integration hubs.
3. Identifying Talent with Digital and Financial Skills in Mind
Digital transformation is nothing without employees capable of maximizing the resulting financial systems. Therefore, talent models for financial teams are evolving, with companies now looking for digital literacy, coding, and data science on top of the traditional accounting skillset and vital soft skills such as interpersonal or communication.
Having finance-minded personnel with the software development capabilities to generate scripts and bots specific to a company is helpful. While much of the software finance teams use are out-of-the-box solutions, there can be tasks particular to an organization that requires bespoke coding.
Additionally, having data science skills in-house helps businesses analyze financial information. Delivering the insights needed to improve operations.
Thankfully there is also a crossover between typical financial skills and the more tech-savvy abilities companies now want. This means with the proper training in place, it is possible to upskill existing team members to deliver the workforce needed to oversee smart new technology.
4. Generative AI for Finance Teams
With the release of ChatGPT, the world is abuzz with new use cases for generative AI models, and it won’t be long until we start seeing systems specifically designed for finance departments. Generative AI already has the potential to transform financial workloads, including:
- Conversational chatbots for finance databases: Rather than traditional financial database querying, a generative AI model could analyze the information and return answers in a conversational manner. This would allow anyone to find the information they need in a simple way.
- Document analysis and summarization: Generative AI models are great at taking in vast amounts of information, returning critical analysis, or condensing thousands of words and numbers down into succinct synopsis.
- Report generation: This level of computer-aided analysis within a finance department would allow it to automatically generate well-structured and coherent financial reports.
While there are many exciting financial use cases for generative AI models, some form of human supervision will have to remain for now. While large language models like GPT-4 produce amazing results, they are still capable of “hallucinations” and returning unexpected or incorrect results. A mistake in something as important as a business’s financial reporting could have dire consequences.
Keeping Up with New Finance Technology
The pace of technological advances only seems to be accelerating and with the recent introduction of generative AI products, who knows what the future will hold? With organizations looking for any advantage when it comes to productivity and financial analysis, it is vital to keep up with those on the cutting edge, so that you don’t get left behind.