Finance automation: What CFOs need to know

What does the future of finance look like?

Amid an unpredictable yet accelerating M&A environment, the top finance leaders are turning to automation to gain a competitive edge. 

Technology is already embedded into the fabric of everyday workflows and processes for finance teams. But the most nimble leaders know that finance automation offers the potential to gain further efficiencies, recapture their team’s precious bandwidth, and provide a much-needed morale boost. 

Let’s unpack how automation is transforming the finance vertical for leading startups and SMBs.

What is finance automation? 

Finance automation uses technology to carry out tasks that are manual or semi-manual, formulaic and repetitive, occupy hours or days of a worker’s time, and typically don’t require strategic thinking to complete them.

While some of the cutting-edge AI in development today can solve problems that defy human comprehension, the commercially-available finance automation tools are a bit more straightforward. They solve simpler, more concise problem sets based on largely uniform datasets. 

Don’t underestimate the potential impact of automation on your finance department. Your finance managers, accountants, and analysts all do important work — but when empowered with the most innovative tools, the possibilities become more expansive. 

Why is finance automation important? 

Worker shortages across several industries in the US are one reason to fortify your finance team’s output with automation.  

But the CFOs making strategic investments in finance automation not only do so to enhance productivity. Smartly, they’re also working to retain their best and brightest minds. 

A recent workforce survey underscored the importance of enabling employees to work with the best tools available.

Nearly a third of surveyed workers expressed concerns about slow, cumbersome processes interfering with the quality of their work. Only 7% expressed concern about learning new tools or systems. And over 20% will choose to work for an employer offering the best tech for the job.

If you read between the lines, over 30% of these employees don’t believe they’re living up to their full potential at work. If they had access to better tools, they could create more value — and feel more accomplished.

The path forward is clear. A necessary employee willingness is present to try something new in service of higher-quality, more fulfilling work. CFOs ought to survey for worker input to assess needs and offer better productivity tools.

Which processes can — and should — be automated?

When investing in automation tools, the goal isn’t to put people out of work. Instead, consider how automation can help your superstar team increase their contributions to the business, accelerate the completion of target outcomes, and advance their careers. 

To find out which processes you can automate, do a roundup of your team’s most repetitive, predictable tasks. The most common ones include: 

• Expense management: Approving spending, flagging violations, collecting receipts, and managing card access.
• Accounting: Sending and receiving invoices, recording payments, and tracking budgets.
• FP&A: Data collection and dashboard updates. 

CFOs should strive to automate all work with consistent inputs and simple outputs. Based on the previous example, that could translate to:

• Receipt uploads and storage for expense reports
• Overdue invoice reminder emails
• Data entry into financial performance reporting tools

What are the benefits of finance automation?

The benefits of finance automation include:

• Eliminating tedious, repetitive tasks that were previously inevitable
• Increasing accuracy 
• Creating space and opportunity to engage in complex, strategic projects
• Generating greater job satisfaction and supporting high-performing employee retention

What are the main challenges associated with finance automation?

Change management

There is a certain degree of comfort found in predictability. 

When introducing new tools into a team environment, CFOs may face varying levels of both excitement and trepidation. While some may be looking forward to the opportunity to reduce or eliminate their most dreaded tasks, others may worry about big-picture issues, such as job stability or new expectations from their supervisors.

The transition to implementing new finance automation tools will require the support of a skilled change management practitioner to ensure success. 

Onboarding 

The average time to onboard new software is anywhere from 30 to 90 days. The most advanced finance automation tools built for large organizations will likely fall on the higher end of that estimate. 

In most cases, preparing to migrate to finance automation will require an upfront time commitment to ensure a perfect setup and help the team get comfortable with the new processes. As we’ve all experienced before, putting in the hours early on directly impacts the long-term outcomes with SaaS products. 

At the start, it’ll feel like a lot of work. But the idea is to get automated processes up and running and custom-fitted to your organization’s needs. Before you know it, you’ll be able to tackle those large-scale, impactful projects with your team’s full attention as your automation tools carry essential work forward with ease and precision. 

Cost

Software sticker shock may present a barrier to considering the option. Finance automation software certainly isn’t cheap. It’s the CFO’s inherent instinct to prevent unnecessary spending of company funds. 

But before writing off the idea, run the numbers. Ask your team how many hours they currently spend on the tasks you aim to automate. 

Say your 10 employees spend 4 hours per month on that task, costing the business $4,000 on average per month in productivity. A $400 monthly subscription that brings each employee down to 1 hour per month on the same task is probably worth your while.

How does finance automation work?

Finance automation typically comprises workflows that may fully self-initiate and self-complete. These workflows may be out of the box from a SaaS provider. They may also design custom ones based on how your finance department functions, interacts with subsidiaries, or engages with customer payments.

Some automation tools may perform most of the upfront work needed for a task, then require a manager to validate and approve the output. 

You know finance automation is working in your favor when: 

• Expense reports are filed and reconciled 100% on time every month
• Spending abnormalities are flagged and addressed automatically
• 100% of employee reimbursements go out on time every month
• Invoice payments are received sooner with fewer phone calls and late notices issued
• Company financial data is readily available and up-to-date 
• Finance employees are happier in their jobs and have greater opportunities for contributions and advancement 

How financial professionals can leverage advanced technology to elevate their roles

Leaning into the opportunities presented by advanced technology shows leadership, a capacity for change, and a willingness to embrace the dynamics of the broader industry environment.

CFOs can accelerate their careers thanks to automation. Their teams can accomplish more with less effort, allowing them to focus on bigger prizes.

Entry-level, mid-level, and junior executives can also use advanced technology to advance beyond the present goals set for them and advocate for career growth.

Often, the requests for new finance tools come from the grassroots level. The front-line employees know what they need to increase productivity. Leading CFOs will heed these calls. 

Check out our article on the best accounting automation tools to learn more.

The future of finance automation

We can only dream of just how far automation will take us. If we never had to look at another expense report again, we’d all be happier for it. 

Current trends in AI point towards better predictive analytics, which would have a major impact on FP&A teams striving to source and analyze relevant company and market data. As M&A activity accelerates, remaining equipped with the most advanced industry insights will be a competitive advantage afforded to few. At first. 

Other predictions indicate that AI will become increasingly useful in developing and maintaining complex forecasting models.

Only time will tell, but the future of finance automation is bright. If you’re not already on the train, it’s time to hop on — your CEO and your team will thank you for it.