Why you need to switch your finance team's focus from production to analysis
By Shak Akhtar, SVP Finance Automation/Customer Experience Officer, Redwood Software
The benefits of automation strike a chord with many business functions. Automation allows you to spend less time on grunt work and spend more on analysis and interpretation. Finance is by no means an exception.
The manually intensive nature of control and production processes is a thorn in finance’s side. When it comes to the mechanics of producing financial reports and other analysis, finance teams will typically spend 70% of their total time extracting raw data from the many and varied systems they use by means of downloads, file extracts and reports. Next, they populate a spreadsheet ready for adjustments and manipulation. By default, that leaves a much smaller amount of time for analysis and interpretation of the numbers.
And yet failure to devote sufficient time to financial analysis is a missed opportunity. Despite prescribed methodologies for presenting financial information, the reality is that business departments may not be well-versed in financial terminology. The value in being able to analyze and interpret data as well as explain findings in business terms that allow non-finance recipient users of that information to make educated business decisions cannot be underestimated.
Analysis is the cornerstone that allows finance to offer insights into how the business is performing, suggesting corrective actions to get back on plan or highlighting business opportunities ripe for exploitation. This is an opportunity for finance teams to shape business strategy and be in the thick of it at a time when everyone is under scrutiny and having to justify their existence.
External factors too—not the least are regulatory requirements, growing demand for information from stakeholders and a culture of transparency—also shift the focus towards an explanation of what the numbers mean. But any analytical capability demands confidence that the data on which it is based is complete, accurate and valid. Essential to that shift is to automate the extraction of data from different sources, its transformation into a workable format and seamless loading into a central repository for validation and analysis.
Without automation, the risk of error is huge. The personal embarrassment of inaccurate figures is one thing, but the professional consequences of a financial restatement is potentially catastrophic. Automated rules-based checks allow you to validate numbers, while drill down capabilities give you transparency of the underlying data and an audit trail that shows how the numbers came about.
In addition to removing huge amounts of manual effort, automation offers the advantage of timeliness, allowing you to produce vital business information when you need it, rather than being a slave to the monthly close. Imagine the prospect of being able to supply your sales teams with sales data along with margin analysis by customer on a daily or weekly basis.
Of course, the shift is not without its challenges. Trusting the technology to provide the correct numbers may feel like a leap of faith. The reality is that automation is far more reliable than manual effort. Similarly, the change management implications cannot be underestimated, particularly when you’ve been relying on manual production for as long as you can remember.
The business case for finance automation hinges on three seriously significant, but intangible benefits: complete, accurate and timely results, the opportunity for finance teams to shed the shackles of financial processes in favor of more activities that add real value, and, finally, the opportunity to make sense of the numbers for the business. How do you quantify the value of that?
Find out how to free your finance team to drive greater value-added analysis with Redwood Finance Automation.
Get in touch with Redwood to find out more.