Finance processes are what keep any business going, but it’s much more than just accounting and financial scorekeeping. Since finances support every part of a business, Finance, and the processes they manage, are integral and intertwined with everything your business does. That makes Finance a critical part of every business decision. But they can’t be involved at a strategic level if they’re consumed with manual, slow, error-prone, or otherwise friction-filled processes. When Finance can’t be strategic, mistakes happen, things are overlooked, and businesses make poor financial decisions.
Improving finance processes benefits your entire business. Even just focusing on the biggest components—accounts payable, cash flow, accounts receivable, and data entry—can bring efficiency, accuracy, and better decision-making. These tips will help you improve your processes, but only if you begin by understanding how they work today. Because, you can’t change what you don’t understand, right?
What Are Finance Processes?
Finance just might be the most important team in your business. They’re responsible for everything from billing customers to paying workers, and everything in between that’s related to finances. So, when finance processes aren’t working, money isn’t moving and people aren’t getting paid.
If your business is a ship, Finance is the financial captain, compass, and engine that makes it all work to meet corporate goals. They determine the best strategic objectives, set the course for financial health, and keep the business moving through the processes that bring money in and keep vendors, workers, tax collectors, landlords, and others happy. But that’s not all: Finance guides compliance, audits, and risk management, too, among many other areas.
Add it all up and finance processes are critical to keeping a business afloat. But, since they are integrated into every part of your business, it may seem daunting as you look for improvements. So let’s narrow down the tips here to just accounts payable, cash flow, accounts receivable, and data entry.
- Accounts payable are the finance processes of paying your bills and debts. The bulk of that is likely to suppliers, but it also covers rent, leases, office supplies, and other goods and services.
- Accounts receivable are the finance processes of collecting your bills and debts. It’s what’s due from customers for the goods and services you provided but which customers have yet to pay for.
- Cash flow processes manage all the money as it moves into and out of your business. It’s incoming payments from customers, but also from investments and financing. And, it’s outgoing money to suppliers, but also to workers and to fund purchases or projects that enhance your business.
- Data entry is the manual process that makes every other finance process happen. It’s slow, manual, and error-prone, and is the low hanging fruit of process improvement.
Your business obviously uses these processes, and many more. But, it’s important to focus on achievable objectives when you’re looking for finance process improvements. And, remember that you must first understand how your business operates today to know how to improve it for tomorrow. That process intelligence is a prerequisite to any finance process improvements.
Ways To Improve Finance Processes
Understanding how your business works today is where you can find ways to improve finance processes. It’s important to be both comprehensive and deep, since finance processes typically extend beyond just Finance. Think of payroll, budgeting, forecasting, auditing, training, business development, expenses, sales, and, well, everything. If you’re working right now, Finance likely made decisions alongside your manager, department head, human resources manager, and even CEO to ensure you had a salary, a laptop, email, and everything else needed to do your job. That all costs money, and finance processes are behind each of those decisions.
So, understanding end-to-end finance processes requires digging deep into your business to see how those processes operate. Just looking at the software tools used by Finance might only capture a fraction of the full picture. Similarly, since nearly all companies use email and spreadsheets to run most finance processes, relying on manual process mining or limited application log files leaves too much unknown. What’s required is a platform that captures real-time, end-to-end process insights across every worker and every system.
Once you have a complete, detailed view of your finance processes, you can start to identify and tackle these tips.
Reducing Manual Errors In Finance Processes
Inefficient and inconsistent finance processes lead to errors, omissions, and clouded decisions. This can be caused by siloed data separating, say, accounts payable and cash flow forecasting processes, or by manual data entry, data transformation, or data loading that slows valuable insights or delays timely financial reporting.
Using process intelligence to understand where finance processes move out of dedicated tools and into email, spreadsheets, or paper documents can highlight where manual errors are most likely. Those manual and end-user computing (EUC) tools consume too much manual effort to manage and maintain, so manual errors are likely to happen.
Solutions include finance process automation using robotic process automation (RPA) bots and artificial intelligence (AI) tools; reducing inconsistencies in process execution, integrating systems to avoid manual data transfers, and more.
Accelerating Finance Processes
Time is money and cash is king, so accelerating finance processes gives your business access to both time and money through better, faster, more accurate decisions. When the business wants to make any investment, they lean on Finance to help them understand the financial impact of that decision. Using old plans, out of date reports, stale financial data, historical budgets, and other past data could lead them down the wrong path. When finance processes are fast, however, those decisions are made with more relevant insights.
Speeding up finance processes also impacts financial reporting, such as monthly close and consolidations, annual planning cycles, and the monthly and quarterly financial budgets and forecasts. Taking time out of these processes not only gives Finance and the business more timely insights, it gives Finance more time to spend on strategic decisions that really matter. And, it helps Finance get regulatory and compliance reports submitted on time and with less effort.
Reducing the Cost Of Finance Processes
Taking time out of any process also reduces the cost of that process. But, Finance is interested in the bottom line, so reducing costs in any process helps improve profits. Cost reductions in finance process can come from reducing manual effort by workers, which can then turn into reduced or redeployed headcounts, or taking on more value-add activities without adding costs.
Process duplication and redundancy also lead to excessive costs. Peering deeply into finance processes, from auditing to accounting, can highlight tasks that require repeated effort, or where mistakes frequently require rework. Eliminating that overlap requires you to gain visibility into all of your existing processes so you can see where duplication happens, and then fix it. Of course, the traditional process mapping and process mining tools don’t have this level of visibility.
Increasing Visibility Into Finance Processes
Finance processes, and the resulting insights, are heavily scrutinized, audited, and analyzed. It’s for good reason, since financial process errors can cost businesses millions of dollars in profits, lost sales, and regulatory fines. The root cause in many cases is a reliance on manual processes, but to eliminate those processes, you need visibility into finance processes.
Process intelligence can provide detailed, accurate, real-time visibility into how your business runs its finance processes. With that insight, you can begin to identify areas for automation so that more mistakes can be eliminated. Or, you can find ways to pull more financial processes out of spreadsheets and email, and onto dedicated systems where they are put through proper review, approval, and auditing cycles. That helps you catch more errors before they have a chance to impact your business.
Reducing the Cost Of Finance Process Training
Bringing on new workers to the finance team requires training in your processes and systems. However, it causes productivity lag and frustration when the training doesn’t match the actual as-is processes new workers need to learn on the job. Training is a long, expensive endeavor, so it’s a poor financial strategy to waste time if it doesn’t match how processes actually run.
Mapping your current finance processes not only helps you find areas of improvement, it uncovers areas where reality doesn’t match expectations. You can then work to fix broken finance processes, understand why workers are avoiding or working around specific processes, and update training courses to either match reality or reinforce the importance of following accepted finance processes.
Start Transforming Finance Processes With FortressIQ
FortressIQ Process Intelligence uses computer vision and AI to discover, document, and analyze finance process insights at the user level, in real-time and at enterprise scale. Your financial process data is then mined using machine learning and deep learning algorithms to discover and map all relevant finance processes. From there, you can get to work on automating, optimizing, and streamlining finance processes within Finance and across your business.
To learn more, download this report from 451 Research to understand why leading businesses are deploying process discovery technology and intelligent process automation to improve finance and other processes.