With this blog post, I’ll continue to look into the trend related to digitization and automation of the processes in the finance function. It’s an area where we’re seeing rapid development in the technology that makes this possible. Many finance processes are well suited for digitization and automation. That’s because they’re often characterized by structure, rules and repetition. In other words, a large share of the data that’s processed is relatively easy to structure, and many of the processes that’re in place to manage them are basically rule based.
However, it’s worth noting that things can get complex and that has to do with the practice that a given organization are working according to in their finance processes. I.e. the specific bookkeeping and accounting practice. It means that you should be observant when you start to digitize and automate the finance processes. If I, as an example, look at the process related to expense receipts and cost invoices, then it’s far from all digital tools for expense management, receipt handling or invoice management that can support exactly your business’ way of doing things.
Focus on your domain knowledge
Applications that’ll help you drive digital and automated finance processes can mean the world to your business. They can, for example, help to bring down time spent on manual and repetitive tasks, while they can also increase quality and precision of the output. You’ll just want to make sure, that you don’t get dazzled by all the sales talk and golden promises about the capabilities of various new and smart systems, that promise to do it all with no effort. Because fact is, that in too many cases there’re limitations towards the systems’ actual abilities to support the specific way of working in your organization. That’s why you always need to remember, that the unique domain knowledge that has been accumulated within your organizations isn’t forgotten. Within the field that we’re discussing here, it’s about the pure finance specific domain knowledge as well as the company specific domain knowledge when it comes to your bookkeeping principles and accounting practices within the accounts payable field. In this area, it isn’t recommended to compromise, if you ask me. That said, it never hurts to let oneself challenge how things are done by, say, a system or software provider – but it shouldn’t be at any cost.
Supporting or undermining your business?
When you choose to invest in software that helps digitize and automate, it’s crucial that you’re thorough in the work with uncovering if the software can support your business to full extent. If we stick to the example with tools for managing expenses and receipts and your business operate with multiple financial dimensions, then the tool you choose should obviously support this. It can also be that your expense and invoice workflow is required to be dynamic based on entries or selected dimension values. The example could then be, that an expense transaction are linked to a specific project by an employee and this then initiates an approval process where a specific project manager needs to approve the expense, and not the line manager, who normally approves the expenses. In this case you should ask yourself (and the software vendor) whether your specific dimension structure can be supported. If that’s not the case or if the vendor looks like a big question mark when you ask the question, then you’ll really need to consider whether you’d want to compromise or if you’re better off finding another vendor.
If you choose to compromise, you’ll risk that the desired effects and benefits of the implementation of a solution will fail to happen. This means that you’ll be forced to spend substantial resources for subsequent processing of data and thereby miss out on efficiency gains. In a worst case scenario, a compromise would even mean that you’ll start undermining your own business because you’re putting your domain knowledge, and the derived requirements, in second line and start implementing a piece of software despite its limitations (whatever you’re aware or not). In this example, where we’re talking expense- and receipt handling, the fact that you’re sacrificing the ability to, for example, link transactions to your financial dimensions will mean, that you’ll have a hard time doing detailed reporting and insight into the financial performance of your operation. That can quickly become costly.
Best-of-breed equals best conditions
Let me get the point straight; if your bookkeeping practice has just a little bit of complexity, you should look for best-of-breed solutions to support digitization of your finance function. When we’re talking expense management it’s clear that some solutions are very hard to compare, even though they’re basically tapping into the same process. Let’s take the built-in functionality for expense reporting in salary and payroll systems or apps from certain company payment card providers, that’ll allow transaction documentation. With stuff like that, you’ll just don’t get the necessary options for configuring financial dimensions or workflows, so they’re fit for your operation. If such solutions are compared to real best-of-breed solutions for expense management, I guess you can say that it’s like comparing a finance system to an Excel-sheet.