Four out of five finance professionals have said that their department is not keeping pace with the rest of the organisation’s digital transformation plans, leaving them struggling with productivity, cost and efficiency issues, according to new UK research among senior finance and IT executives.
IT which most commonly leads digital transformation said finance was the department with the greatest need to transform in the survey, although 45 per cent said finance team resistance was hindering this, while 39 per cent says an over reliance on manual processes was holding them back from ‘going digital’.
The study was conducted by Sapio Research and eProcurement provider Wax Digital, surveying over 200 senior finance managers and over 100 IT professionals.
Eighty per cent of finance professionals admitted they’ve struggled to keep up with the business’ digital goals, with 66 per cent saying they are more paper reliant than other business functions, and 58 per cent unlikely to make decisions or manage approvals electronically.
On average, while two thirds of every financial process is automated or managed electronically, one third of the task still requires manual intervention. The manual work required for some processes can be up to 50 per cent.
Expenses, budgeting and debtor management are among the financial processes with the lowest levels of automation, manually carried out 36.5 per cent, 35 per cent and 34 per cent of the time respectively.
But it is invoice management that is most in need of modernisation, with 66 per cent of supplier invoice data needing to be manually rekeyed and processed. A surprising nine per cent of invoices are still delivered by fax, while 19 per cent come though the post, 15 per cent are hand delivered, and 23 per cent arrive via email. In contrast, only 11 per cent of invoices arrive through e-invoicing portals, while 20 per cent come via direct integration between suppliers’ billing systems and customers’ financial systems. Three per cent of invoices are delivered through ‘other’ means.
According to Gartner the typical cost of manually processing an invoice is typically between £4 and £25 per invoice, and in some cases is as high as £50. Organisations without automated invoicing processes in place are therefore losing money compared to their more digitally enabled competitors who can make these processes more efficient.
Accounts payable and accounts receivable – both one third manual – are the two financial processes considered by the business to be in greatest need of digital transformation. Invoice processing is also in the top two financial activities that businesses say need to be addressed in order to increase efficiency, and the top outcomes that businesses wish to see from this include:
Improving productivity, for 65 per cent
Removing paper from the department, for 65 per cent
Identifying cost savings, for 50 per cent.
Daniel Ball, director at Wax Digital, says, ‘By their own admission and the opinions of those leading the digital cause, it’s clear that finance is lagging behind other departments when it comes to digital transformation but is in great need of change in areas such as how it manages its invoices.
‘The whole business, including senior management, needs to be on-board with leading a digital transformation for finance so that it matches the innovation shown by departments such as sales and marketing. For example, there’s exciting potential for finance teams to utilise Artificial Intelligence with applications such as robotic process automation, to reduce time spent on manual processes involved in areas such as reporting and transactions, and minimise tasks such as scanning invoices that are prone to human error. The finance team and the business in general needs to adopt a progressive way of thinking in order for the department to reach that stage.’
Further reading on digital transformation
Does your business turn over between £50,000 and £500,000? If so, you are eligible for the new Small Business Grants initiative from SmallBusiness.co.uk. We’re giving away £5,000 every month in a free-to-enter competition. Apply now by clicking here. Good luck!
Small Business Poll