Digital Finance Transformation Explained + 9 Tips to Get Started
The events of 2020 have catapulted the subject of ‘digital transformation’ into the mainstream amongst businesses worldwide.
It’s a phrase used by business leaders and politicians urging economies to adjust to cope, to global governments set targets and funding to help to achieve a now essential ‘digital transformation’.
But… what does it actually mean?
For somebody who’s running a business or managing a finance team, this guide and tips will help you to evaluate the need and set you on a practical path to digitally transform how you do business.
What is digital transformation?
Digital transformation is a broad term to describe a replacement of traditional working methods with today’s digitally connected equivalents. Or put simply - replacing old with new.
It’s moving away from the old way of business - paper and manual processes - to modern digital standards, with cloud-based tools and automated processes.
Expense management is an example that has traditionally been handled manually with piles of receipts. By switching to a digital approach, weeks worth of manual work is completed in a matter of minutes.
These same kinds of solutions can be found for every aspect of the finance function, including:
- Accounts payable
Digital tools can improve productivity - even across national economies. The Australian government anticipates leading by example, by investing in digital transformation with the anticipated $6.4 billion boost to the country’s GDP by 2024.
Why is COVID-19 driving digital change?
The necessary lockdowns due to COVID-19 have made digital transformation a necessity.
The obvious change has been a global shift to remote and flexible working as offices have closed down or limited access to employees due to the lockdown restrictions.
It’s a change that was introduced as a temporary measure but is becoming permanent for the majority of businesses. Global research by PwC found that 78% of CEOs say the pandemic has resulted in a permanent shift to remote working for their company.
This has exposed the limitations of traditional methods and tools that are used by finance teams, particularly those which are paper-based and involve manual processes.
A recent poll found the top three frustrations being experienced by newly remote-work employees are:
- 62% Access issues (documents, networks, software)
- 19% Supporting colleagues to use technology
- 18% Inadequate equipment and tools
An overwhelming 93% of the respondents hoped that the pandemic would act as a catalyst for greater digital transformation within their business.
Digital transformation: Where to start?
By reviewing your current set-up, you can start to identify the areas where a digital change can deliver the biggest benefits. Here’s a look at some of the common problems areas and solutions:
The move to remote working makes any kind of paper-based process a problem.
Employee expenses and accounts payable are two areas where many companies have a traditional approach that still relies on paperwork. By switching to cloud-based tools a remote team has instant access to all the information they need.
Reliance on spreadsheets
Traditionally, spreadsheets have been used to transfer large amounts of financial information between processes and departments. However, it is an inefficient process where human errors are inevitable. The use of spreadsheets comes with the potential for significant adverse consequences.
Wherever spreadsheets are used, there’s the potential to automate the process to create a seamless capture and movement of data.
Manual compliance checks
Software has a major role in improving compliance and reducing the risks posed by errors and fraud. Digital processes to root out potential problems.
For example, accounts payable (AP) automation software can reduce invoice fraud. How? Whenever an invoice enters the system, automated checks identify duplicates and verify POs and accurate bank account information of suppliers. If problems are identified, an alert triggers for finance to investigate.
Without a central office to act as a hub, new ways to share information and collaborate across locations need to be found.
By switching to digital, previously manual communications are replaced by automated workflows and real-time notifications, alerts, and reminders.
What are the benefits of digital transformation?
The current push towards smarter digital ways to work may be driven by the events of 2020, but the benefits go far beyond. The bottom line is that a digital process delivers better performance.
The benefits of digital finance transformation include:
- Time-savings: Task automation reduces time wasted on manual processes
- Fraud prevention: AI improves protections against errors and fraud
- Ease-of-use: Simpler, smarter tools improves the productivity of remote workers
- Increased visibility: Easy access to accurate data transforms the way financial reporting/analysis
- Consistency: Ensure correct finance protocols are followed across a workforce
Next steps in your digital transformation
You’ve reviewed your operation and identified the areas where you want to introduce digital processes. Next, your need to create a roadmap; the steps to complete a smooth transition to digital. Here are some tips on getting it right:
Find the right providers
Your right solutions should consider features, prices, expertise, and support.
Your right solution should fulfill the needs of you and your team. This includes providing the information and support for your team required during implementation, initial adoption - and beyond.
Bring your team with you
Often change is met with resistance.
An effective approach for team-wide adoption should address concerns and make them an integral part of the process. You may want to consult with your team, and providing a forum to share concerns. Communication is key.
Identify digital ‘champions’
An effective way to champion this change may be to task a team member in helping colleagues to manage their new tool. An accessible, low-key way for training, help, and support.
Plus, more team members become comfortable with a new process, they can also start to act as digital champions.
Focus on integration
The end-goal for digital transformation is to create a way of working in which data is shared seamlessly between workers, departments, tools, and services. To achieve this, you need to look at how well a new digital process will work with your existing systems.
Choose a provider who can integrate with your existing software.
Adapt your culture
Effective digital transformation requires more than just new tools. It needs a fresh way of thinking; one that embraces the agility and visibility that’s provided by the switch to digital processes.
Finance directors can help empower employees and to find mutually beneficial ways of managing a finances and teams.
Want to know more about how to digitally transform your company's financial processes?
We can help. If you’re looking to update your processes, our team has the experience and knowledge to make it a simple and stress-free experience. Get in touch with one of our consultants.