January 25, 2021

The time is now to update your finance operations

Revamping the finance department is a perennial topic in the fintech press. The argument goes that traditional methods lack security and are too time intensive and risky for long-term strategic gain. Most commentators agree that the old way of working is no longer tenable, with few voices contradicting this position.

But agreeing on something and acting on it are two completely different things. While some firms took the plunge and embarked upon transformation projects pre-COVID, there are many who continue to make do with what they have for as long as possible. A report by Workday in April-May 2020 estimated that just over half of businesses surveyed have implemented some form of finance digital transformation initiative. That still leaves a significant number of firms who chose to persevere with a wait-and-see approach.

Modernising the finance department should be a priority.

If these firms continue to wait, they risk even higher security concerns, a lack of vital business intelligence, and could fall behind the curve as their counterparts race ahead. However, it is also not too late to get started and catching up may be easier than you think.

The cash management jigsaw

Getting hold of reliable and complete cash positions has always been important when managing the financial health of companies of all sizes, but as we navigate uncertain economic times, this information is no longer just nice to have, but essential. This is a problem area for many. According to the Office for National Statistics’ Business Impacts of Coronavirus Survey undertaken earlier this year, more than 20% of respondents were “not sure” of their cash reserves.

What stops firms obtaining this data quickly and clearly? Typically, it depends on the number of different pieces required to complete the puzzle. The largest multinationals have format and channel inconsistencies, and struggle with many incompatible back office systems including treasury management, core banking, and enterprise resource planning.

For smaller firms, the problem lies with the many different spreadsheets or bank portal downloads that must be consolidated manually to build up a complete picture of the company’s cash. Firms of all sizes should not underestimate the potential margin of error, and significant time and resource needed to pull this data together, especially during challenging times.

BYOD (bring your own device) … with caution

It is not just a lack of data visibility and overall resourcing that is a problem for today’s finance department. Even getting hold of the right tools, in a safe environment, to keep the payments and collections processes moving securely is often an uphill battle.  With homeworking soaring since the start of lockdown, so too have cyber-attacks. Action Fraud recently reported that it received 3,916 reports of cybercrime during the first month of lockdown alone.

When many employees are remote working, it is essential that they can transfer files around their network just as securely as they were able to in the office. But the rise of bad actors and the risks posed by team members using their own devices to access sensitive payments and collections data, means that firms must take extra precautions.

Virtual private networks (VPNs) are a step in the right direction, as long as they are thoroughly tested, and different IP addresses access do not restrict access. Multi-factor authentication and encryption of data are additional steps that firms can put in place to ensure secure payments and collections processes. However, if your finance team is still working with many sources of information from multiple back office systems connected to multiple banking portals, the security challenge increases substantially.

Fast transformation is within reach

The past few years have seen the word transformation start to appear in job titles. These roles are tasked with digitisation, automation, and transforming business processes across the business. It’s a mammoth task and there is a danger that such programmes will spiral out of control making ROI harder to obtain than ever. In today’s precarious economic landscape firms may hold back from investing in any modernisation project. But this is a false economy especially when modernisation need not involve wide-scale digital transformation that can take months or years.

With the right approach you can modernise your finance team in just a few weeks. This includes improving cash management visibility and workflow, and smoother payments and collections processes across the business. This requires an integration layer between multiple banks and back-office systems which enables firms to create and automate seamless cash management workflows through a single user interface (UI), irrespective of how many treasury management systems, enterprise resource planning models, and banks are in their ecosystem. This approach can also enable automated retrieval of bank statement data to back-office systems, providing real-time, consolidated insights on cash positions, allowing forecasting and preparation for the future – however uncertain that may be.

Now is the time to act

While this year has thrown more surprises our way than anyone could have foreseen, it needn’t prevent firms from thinking and acting strategically going forward, especially when it comes to something as beneficial and quick to implement as finance modernisation.

There is now talk of an emerging second wave of COVID, as well as a much-welcomed vaccine on the horizon. These milestones, along with all other peaks and troughs along the way, will doubtless cause further disruption to the economy and society at large.

Businesses should put the pieces in place now so they are well-prepared to ride the wave and bounce back as quickly as possible with a modernised finance team firmly in place supporting the rest of the organisation for whatever lies ahead.