In part one of our three part series on the impact of paper and manual processes on finance departments, we established the fact that paper-based processes produce inefficiencies. In part two, we examine examples of how paper and manual processes inhibit financials leaders from achieving their goals.
As a finance professional, you’re always seeking out ways to drive performance and create value for your organization. But doing so is easier said than done. Below we look at some of the most common goals permeating finance organizations worldwide, as well as the potential roadblocks to achievement.
Your Goal: Drive efficiency, effectiveness and productivity in financial operations.
Manual data entry errors
When these are identified they result in time consuming rework for correction – a big hit to efficiency and productivity.
When the risk of misplaced or lost documents is real, as it is with paper-based records and information, how confident can you be in the efficiency and effectiveness of your financial operations?
Limited ability to access and share paper based information
Collaboration among co-workers is challenging when information can’t be easily shared.
Manual processes, such as AP and AR
These allow inconsistent or ad hoc process execution. Lack of consistency is the enemy of efficiency, allowing for delays in process completion, delays in customer responses and diminished productivity. And when most or all transactions require to be touch by an employee, the result is time-consuming processes (according to some estimates, regardless of the size of the organization, finance teams spend 49% of their time on transaction processing) that drive up the cost per transaction.
Ad hoc scanning of paper documents such as invoices
This is time consuming. It is a distraction for office workers and prevents them from spending their time on higher value activities
Poor visibility into financial processes, such as AP and AR
It’s challenging to hold employees accountable for their work when you lack visibility, as you can’t measure what you can’t see, and you can’t improve what you can’t measure. It’s gotten to be so bad that 66.4% of controllers report that developing effective measures to gain visibility into overall performance of finance and administration functions is among their top priorities.
Your Goal: Drive speed, accuracy and value of financial reporting and analysis
Manual data entry errors
Worse than causing time consuming rework for correction and introducing inefficiencies that slow preparation of financial reports, when not identified, they result in inaccurate data, reporting and potentially flawed analyses
When data from paper based documents are missing, how can related reports and analysis be thorough and complete?
Limited accessibility of paper records and information
When you have the paper based documents that you need, but they can’t easily be accessed and shared, how confident are you that the data that they contain is fully accounted for in financial reports and analyses?
The above (manual data entry errors, misplaced or misplaced documents and limited accessibility of paper records and information) contribute to a hurried financial close negatively impact the opportunity to make necessary adjustments and the best decisions.
Goal: Execute a timely, efficient and quality financial close.
Creates tremendous inefficiency as staff spend time hurriedly tracking it down, pleading with co-workers for timely responses, and/or relying on spreadsheets to manage closing checklists
In combination with information that is missing or difficult to access, manual processes create a labor intensive, tightly time constrained situation that often results in overtime and/or the need for temporary help. It’s costly! Manual financial close processes don’t provide the diligence or agility to ensure that a business is not susceptible to material weakness in financial reporting.
Both of the above (missing information and manual processes) contribute to a hurried financial close, which inhibits adherence to internal financial controls and procedures, jeopardizing quality preparation. It also negatively impacts the opportunity to make necessary adjustments and decisions.
It doesn’t have to be this way!
In part three, we’ll look at this ways digital workflows can help finance departments, as well as quick tips to get started with your digital transformation.
http://ww2.cfo.com/budgeting/2015/12/metric-month-finance-people-spend-time/ Accessed 041617
IOFM 3 Ways Automation Improves Financial Operations Visibility
IOFM 3 Ways Automation Improves Financial Operations Visibility http://www.ironmountain.com/Knowledge-Center/Reference-Library/View-by-Document-Type/White-Papers-Briefs/1/3-Ways-Automation-Improves-Financial-Operations-Visibility.aspx