Automation in Finance – Preparing for the Future of Back Office Functions

What is the best way to prepare for automation in finance?

• Understand and carefully detail what your current AP processes look like. Be sure to include, and highlight, problem areas.
• Engage with colleagues and understand how your processes and pain points impact the wider business.
• Build a multi-disciplined team to head up your process review, and any subsequent project. Involving more people in this offers a chance for new ideas and insights.
• Do your research, what information can you find that highlights best practices for Finance and Accounting department?
• Detail your “as-is” and your “to-be”. Use a partner for this if you are unsure of the best approach.
• Involve your IT team, find out what tools they already have that could be used.
• Using your team of experts, understand what impacts your project could have on the wider business.
• Ensure communication to a wider community, explaining what is being explored and how this can bring them benefit.
• Design a phased approach to automation, starting with some small areas that could yield quick wins.
• Make sure that the project plan is adhered to, from costs to timescales, and ensure that this information is open and clear for scrutiny.

As with any significant project, there are always some key steps that you should consider taking, automation in finance is no different.  These are just some of the key considerations.

Understand and detail your current processes.

In order to have a chance of a successful outcome, it is vitally important that you know where your starting point is. The more detail and information that is gathered and evaluated at this stage, the better your chances of really pinpointing pain points that could be addressed.

Every person in a department, and in each department that would be impacted, will have a different opinion about what the biggest challenges they have are. What is important at an early stage is documenting these in a clear and concise way.

Automation may not solve every problem you encounter; in fact, it may simply be too large or costly a task to address everything. What is important is that you know this early on, this will start to form the framework of your project(s).

It is often tempting to downplay areas that are an issue, especially in critical areas of a business like the finance team. Let’s be honest, it can take a brave person to, not only admit, but also to carefully document issues related to money entering or leaving the business.

This makes these areas even more important to look at when you start evaluating automation options. Sometimes the savings that can be generated from these embarrassing gaps can far outweigh the short term loss of face.

A prime example of this would be organisational supplier master data. We know it is rare for best practices to be applied when creating new accounts or updating existing records. In fact, a recent survey conducted by PPN showed that 43% of respondents only claimed to be monitoring their supplier master file each 6 months.

For many organisations they feel that any attempt to enforce best practices, or ensure that the file is clean and well maintained is simply too big of a burden for AP to handle. In many instances though there are few other teams in the business with the knowledge and skills to effectively do the job. This could be an area where automation can make a real difference to a business, from reducing data management jobs to reducing fraud risks.

Engage with colleagues outside of the finance team.

This should, honestly, be a no-brainer. Yet we have often found that automation of finance or AP is explored and managed almost exclusively by the team in question, and their direct line management.

However, how can you know what time and cost impacts moving to a No PO No Pay policy will have on procurement if they are not asked? Not only should they be asked, they should be involved from stage 1. Why do you not already have this policy? What has stopped the business moving forward on purchase orders?

What is key to remember is that this works both ways, there should never be a situation where automation of the Finance or AP functions is researched and considered without their direct involvement. It simply does not matter how well qualified your procurement team are, they will not have the knowledge and insight required to make this a success.

The chances are that there will be a large number of processes within finance and AP that have direct impacts elsewhere in the business. After all, these teams are at the very heart of every transaction the organisation completes.

Another key benefit from engaging other departments at an early stage, it gives them a sense of involvement and direction in their own departments growth.

Automation tools, if carefully selected, can often have a significant impact on the profitability of a whole organisation.

Build a multi-disciplined team.

Following hot on the heels of asking your colleagues for their insights, don’t leave it there. If you want to give yourself the best chance of success in your project, and in business uptake, keep these people involved.

Create a dedicated project team involving members from all necessary departments.

Remember, this is about improving your business processes, and ensuring that where these impact on peoples working lives, they feel that they are being included in the decision making process.

Equally, and as already mentioned, the chances are that someone who works exclusively within AP is unable to clearly define the challenges faced by their colleagues in procurement or IT. If you want to get this right, and have a chance of getting your subsequent decisions right, involve these people every step of the way.

When working with a multi-disciplined team, you will almost certainly find that the answers to some of the key questions will be thought of differently. For example, someone with a technical mindset is likely to find a different answer to a business problem than someone with a financial mindset.

This allows for new ways of thinking and working to be explored, and will very likely offer new ways of approaching your problem(s).

Research, research, research.

Over the last 5 to 10 years, organisations have begun to recognise that their own research is vital to the long-term success of an automation project.

In fact, it is widely suggested that more than half of the information that is used during the decision making process has been gathered internally, without a reliance on third parties.

Of course, ease of access to information and speed of connectivity have both helped drive this trend forward.

What does this mean for your automation project? It means that you need to educate yourself and your colleagues, and not rely on information from just one company or source.

There are countless suppliers of automation solutions, and a raft of organisations that are set up to be independent experts. But, as with everything, in order to obtain a rounded picture of what could be achieved, you will need to ensure that your information is gathered from as many sources as possible.

Technology is advancing faster now than at any other time in living memory, resulting in new and exciting ways to do things. As a result, the education gained during the research phase of the project will no longer be enough for some organisations.

Larger enterprises and significant automation projects will require research and understanding of potential solutions to be continually updated throughout the project lifecycle.

Remember, reliance on a 3^rd party to conduct your research for you means that they are getting all of the advantages of the research and education, all you and your team will see is the end results.

We are not, of course, suggesting you should avoid engaging 3^rd parties. Experts and suppliers alike can be a great source of information and knowledge. We would suggest though that you make use of this yourselves.

Finally, on this point, we would suggest that it is worth your time to look at what your peers and competitors are doing. There are numerous documents, surveys and reports that will start to give you these insights.

Detail your “As-Is” and your “To-Be”.

This element of the process could easily have been addressed at an earlier stage. In fact you may question how you can conduct your research without already having completed this step.

However, even if you have created these process diagrams already, now that you have conducted research into technology that is available, you will almost certainly want to re-visit these.

Whilst you will already know your pain points, without understanding what technology is there to assist in addressing these it is very hard to be able to define what your processes should look like at the completion of a project.

Equally, without the input and insight from a multi-disciplined team you are likely to find that there are gaps in your knowledge and understanding of the processes and steps required.

This goes a step further, and should probably include direct input from senior management. For example, if you require sign off of non-PO invoices from C suite management now is the time to establish the why. Is this a necessary step, is this causing unnecessary delays in the processing of invoices? What could be done differently.

In every workflow there is the risk of bottlenecks, these are often unnoticed until they cause an issue. Holidays or unexpected leaves of absence are prime examples. If you are building a “To-Be” process, areas such as these should be addressed and mapped. Often alternatives can be put in place to ensure the smooth running of the process.

Involve your IT team.

Yes, even if your corporate direction is to move to cloud based technologies, your internal IT team will still be vital in this project.

It is almost certain that, during your research, you will come across technology that simply doesn’t make sense to you. Now, if you have involved IT in the project this issue can be avoided by having someone with a good technical understanding on hand to support the process.

As already mentioned, multi-disciplined teams are hugely beneficial to these projects. However, there is a very high probability that similar projects will have been run previously and without input from the Finance / AP functions.

What this could mean is that the tools and solutions you are committing time to exploring could already have been procured, and could simply be extended to your departments.

Equally, your organisation may already have an agreement with a technology provider (your ERP vendor) that includes additional functionality that was simply never implemented.

This information will be available to a colleague in IT, they may be able to very quickly offer some solutions to some of your problem areas.

As with all things, this comes with a warning. Do not be put off exploring and educating yourself, and do not be afraid to challenge the information supplied internally.

Historically, exploring technology solutions has been the domain of IT, and for a lot of organisations they simply do not want to lose this control and input. If they tell you that they already have solutions, ask to see them, what do they offer? Treat IT (in this instance) as a vendor. Benchmark them against other platforms.

This is especially true if IT tell you that they can build you a solution in house. Most technology vendors in the automation space have been around for a long time, this is what they do, this is their area of expertise. You certainly wouldn’t buy a car from someone that has never built one before. Why risk your business processes in this way?

As technology progresses it is also highly unlikely that any system built internally, without 3^rd party expertise, will be making the best use of the latest advances. Automation should be seen as a way to future proof yourselves as well, ignoring technology such as AI, RPA or Machine Learning in order to keep IT happy is simply foolish.

What are the possible impacts elsewhere in the business?

Again, in order to do this efficiently, it will be vital to involve key people from other departments. One of your highlighted problem areas could be non PO invoices, and the time it takes to process these to payment.

As such, you have now decided that every invoice must be received with an associated PO. Brilliant.

Now is time for you to understand what this will mean to the wider business. Are all of your PO’s raised by a dedicated procurement team? If so, what additional time will it take to create these in a new system. Better yet, what time will be saved?

Do all PO’s need to be signed off (we have discussed this already!) If so, why, who else could do this?

Within the company do you need everyone to have access and training on the new PO system or would super users in each department do a better job? Again, what are the impacts on peoples time in order to ensure uptake of your new policy?

This is just one example of a process change made by Finance or AP that would impact on the wider business, there are a multitude of others, and these will all vary depending on your “As-Is” and “To-Be” models.

Remember, document all of this as you progress, ensure that the information is available to everyone involved, and welcome their additional feedback. Too often something that seems insignificant to one person could be incredibly vital to another.

In accepting colleagues reviews of your notes, and their feedback you are not only ensuring that you have the clearest possible understanding of these changes, but you are significantly increasing the likelihood that they will support the project when it comes to implementation and business use.

Ensure communication to the wider business.

So at this stage you will have your team of experts in place, IT will have been involved. You should have completed your research and have an idea of what you can and cannot achieve using technology.

Supporting this you will likely have started building your business case, project plans, time frames etc. Now, if you haven’t already, is a prime time for you to present this information to the wider business still.

Similarly to each previous step, this will allow for insights, feedback and thoughts that you and your team of experts may have missed. It will also allow you to ensure that the information you have collected from heads of departments also rings true with users on the ground.

Without doubt, the biggest benefit of doing this is to allow your colleagues to ask questions, either in an open forum or directly. People will almost certainly have concerns about the impacts of technology on jobs, these are fears that you can address quickly, and remember not everyone will have the courage to speak up about these so broadcasting your answers can be vital.

Do not think that this should be a one off exercise. Now is the time for you to build a serious communication plan for the project. This could mean that you will create regular updates for the organisation, sometimes specific ones for departments or the level of seniority receiving the information.

Your communication plan should work alongside your project road map, ideally it will ensure that at each critical step employees are kept informed of changes, and feel that they are able to ask questions.

Be prepared, some of the questions that you could be asked could be very hard to answer, but we would still recommend that you do so. Questions relating to employment, productivity, cost etc. may well need to be answered by direct line managers, but regardless you need to ensure that there is as much clarity and visibility of these as possible.

Handling too many decisions behind closed doors will inevitably create distrust and concern among colleagues; avoid this wherever possible. Not only could it hamper the project but it could significantly impact on go live and the overall success of your project.

This is especially important when considering employees within departments that are likely to be directly impacted by the technology, or by employees that will be expected to make use of the platforms.

Design a phased approach to automation.

Automation may well be the answer to any number of issues an organisation faces, however it is important not to take on more than you and your teams can handle in any one go.

The larger the project is, the more risk that is associated. Not only in costs and budget implications, but also to how these changes are taken by the wider business to how long it takes to actually implement the solutions.

Remember, most business cases will be built on the success of a project over a certain period of time post the go live of the technology. If this period of time is centred on a smaller process change it drastically increases your chances of achieving your desired goals.

Equally, as you will be investing in new technology, if something doesn’t go as you had planned the repercussions will not be so significant. The phrase, fail fast, is applicable in these scenarios.

If you find that you are not able to make the cost savings, or time savings, that are needed, if the project impacts only on a smaller part of the business process it is far easier to re-evaluate and make the necessary changes.

As one project comes to completion, a period of stability is recommended. Ensure that you have succeeded in your goals before you kick start the next step. For some processes this could well mean going back to the first steps and repeating this process. Whilst this may seem like a significant cost in time, this is generally preferred to a loss in budget, operational efficiency or business profit.

A failed project that tried to change too many areas of a business could very easily have repercussions that are completely unseen, this is the absolute worst case scenario.

Adhere to your project plans.

When project start to drift there can be a tendency to adjust your plans accordingly, normally this is done in an effort to ensure that delivery of the project looks like it has been achieved.

By reducing the overall size of a project, timescales should be less likely to slip, and subsequently there should be less chance of additional financial impacts. However, it is still the project manager that is responsible for ensuring that key stages of the project are met within the allotted time.

Of course, there are always risks that cannot be mitigated against, and obstructions that cannot be foreseen. One way to handle these is to set soft goals for specific points in the project. Rather than allowing a week for a step, allow two.

As we have already discussed, clarity, access to information and regular updates are vital. Not only will this ensure that people know what is happening (and hopefully stop unnecessary questions) but it will also focus you and your team on your deadlines, and where there could be issues.

Continued reference back to your project plan will also provide this focus for you. With regular checks you will quickly be able to spot if there are gaps or delays starting to happen. You can then focus on these in order to address the issues before they become a problem.

Finally, regarding budget, again we would suggest that this is carefully monitored throughout the project phases. Similarly to when time targets start to slip, if budgetary restraints are not taken into consideration additional costs could easily result in a failed, incomplete project. The net result of this is that you don’t improve the processes and have wasted all of the time dedicated to moving your organisation forward to face the new challenges of Industry 4.0.