Innovation is the Key to a Future-Proofed Finance Team

By Debbie Green, Vice President of Apps, Oracle UK 

Every finance department is facing the same challenge, no matter their size, expertise or industry. New technologies are entering the workplace, changing the way we work and completely upending business models. Nowadays, consumers are ‘always on,’ demanding rapid service and communications. People want to subscribe to products, rather than buy them. Even investors are asking a lot, for example insisting companies precisely predict demand to keep the bottom line lean.

In response to these new business models, CFOs and their staff are having to integrate new technologies day in, day out, all while making sure companies are compliant with increasing regulations. So, as many companies turn to artificial intelligence, machine learning and blockchain to gain a competitive advantage, how can the finance function make sure they’re not outpaced by change? 

Constrained by legacy

At a time of constant innovation and evolving customer expectations, business agility has never been more important. The enterprises most adaptable to change stand the best chance of thriving. That’s why the finance function must transform, to make sure they aren’t plagued by complexity or a lack of inter-business communication.

Many businesses are constrained by legacy systems. For example, most on-premises accounting systems aren’t equipped to handle the new world of “product-as-a-service” subscription models that require new revenue recognition capabilities tailored to this environment. Without the right technology, they can’t adapt to the new business models they need to survive.

To quickly adapt, companies can update their systems over the cloud, which can also help them become hyper-connected. Evolving in line with market pressures is only achievable through a state of hyper-connectivity, where company, customer and supplier data are all easily accessible across the organisation. If the CFO needs insight into employee productivity, they should be able to access the data from HR in seconds. Similarly, a Chief Human Resources Officer looking for information on a new hire’s financial impact should easily be able to draw the data from finance. 

Cloud technology and hyper-connectivity also helps enterprises successfully execute mergers and acquisitions. Cloud solutions have changed the M&A game, allowing new business units to be onboarded quickly and their books consolidated and closed just as fast.

Predicting the future

With increased pressure on the finance function, companies will also increasingly turn to the likes of AI and ML to help them identify future issues or opportunities.

Over the next couple of years, AI and machine learning will really come into its own, creating real-time analysis that finance teams can use to alter or improve business functions.  For example, finance teams will be able to gather smart data based on publicly available information – which tracks the business performance of a company, its turnover, its investments, and new contracts it has won.

Then it can integrate this with the information held on the ERP system, such as what their credit limit is, how reliable they are with payments, or their normal order size. By using AI, the finance team can discover new insights and then make recommendations to the finance team, such as altering a payment plan or highlighting to the team that a financial dependency poses a significant risk. If a business has just received significant investment or has won a large contract, the system may suggest that its credit limit is increased in order to facilitate the anticipated extra orders. On the flip side, if a company is performing particularly badly, AI could recommend a more aggressive cash collection strategy.

This type of technology will also be a vital tool for finance teams when dealing with suppliers and making business critical decisions, such as deciding to add a new supplier to the supply base or using analysis to decide whether they should renegotiate a supplier contract under more favourable terms. By analysing this data, AI can even monitor supplier risk, suggest alternative suppliers, and score suppliers influencing sourcing decisions.

Making the back-office touchless

AI technology will also be key to future-proofing finance teams by making the back-office ‘touchless’ – ensuring that staff do not spend their time on menial tasks such as data entry. By making back-office functions touchless and automating processes, a company can increase their focus on strategic opportunities and essential risk management. This is particularly important for finance departments where the need for risk management has become increasingly significant in recent years, due to additional compliance regulations and increases in fraudulent activities.

AI technology can detect outliers and anomalies and highlight these to finance teams prior to payments being made, significantly mitigating the risk of financial leakage and effort associated with recovery of these funds.

By focusing on value-add tasks, employees can spend more time utilising their skills and undertaking in-depth financial analysis which will also result in greater job satisfaction. This means they can work smarter by spending more time analysing the data and evaluating anomalies, which could also indicate the process failures that lead to settlement delays. Addressing these anomalies in a timely manner can significantly enhance relationships with suppliers or buyers, result in cost savings and improve a company’s reputation.

Future-proofing through innovation

Despite the many challenges they’re facing, finance departments can thrive if they give the necessary attention to innovation.

The impact of connecting data and automating processes across lines of business is transformative and can help the finance function ensure its success. It can enable finance teams to unlock strategic insights into operations, increase collaboration and anticipate and react to change as quickly as necessary. This comes as research found that almost three-quarters of HR and Finance executives struggle to focus on future strategic direction due to a lack of collaboration and too much short-term thinking. With a shared, single source of accurate data, however, business leaders will no longer have to make decisions in the dark – but this requires investment in the right technology for the job.

To create a future in which the finance team leads rather than follows, finance and operations will need to work in unison to help companies thrive with leaner inventories, more precise product costing, and more profitable product-as-a-service business models. The fundamentals of business haven’t changed, but businesses can no longer expect their finance function to continue as if its business as usual. To future proof their business and ensure they don’t get left behind their rivals, technology isn’t just a nice-to-have – it’s vital to the future of finance.