Finance chiefs are caught in a vicious circle, CFOs said in a CFO.com webinar last week. They're too preoccupied by the pandemic to make the shift to automation even though they know doing so would improve their ability to respond to it. 

"Our monthly close is extended now by over a week," said Rob Goldenberg, CFO of customer engagement software company 6sense. "We want to close the books faster. Every month of data we can get in this new normal will help us forecast."

Although It has been more than 20 years since the digital automation of finance and accounting functions became practical from a cost and resource standpoint for most organizations, only 5% of companies have fully invested in it, a survey of several hundred finance executives by finance automation company Auditoria found. 

Most companies have less than half of their back-office functions automated and most of the rest have a quarter or less automated. Until the pandemic hit, addressing that relatively slow adoption rate wasn't considered a priority, but that view is changing.

"In early March we spoke with CFOs and they talked about the amount of work it required to come up with estimates, game plans, and pull cross-functional teams together, especially with a distributed workforce," Rohit Gupta, CEO of Auditoria, said. "And they had to do this while more was being asked of them in other areas." 

Manual functions

The accounts payable (AP) and accounts receivable (AR) functions remain the most labor-intensive part of finance and accounting teams' workload, even though those functions are typically among the first to become automated. About 50% of finance chiefs in the survey said the two functions continue to be the most manual of their staff's tasks. 

"That was a bit of a surprise to us, given how much investment in AP and AR automation there has been," Gupta said. 

In a typical organization, finance staff continue to spend hours manually checking invoice accuracy, getting internal approvals, checking payment status, tracking invoice accruals, and otherwise moving invoices through internal processes.

For accounts receivable, staff still spend manual hours trying to get payments from unresponsive customers and following up with calls and emails.

A company with a 20-person finance team typically loses the equivalent of 1,920 hours annually or an estimated $124,800 in costs to these manual tasks, Auditoria estimates. A big company with a 100-person finance team might lose 9,600 hours, at an estimated $624,000 a year.

Audit readiness, procurement, vendor management, tax, treasury and FP&A are other finance processes companies have been slow to automate. 

Finance staff tend to get bogged down preparing for audits because of the evidentiary data they have to pull. Treasury is time-consuming because of the amount of reconciliation that has to be done, especially in companies doing business in multiple geographies with different currencies. Vendor management involves frequent quality checks. 

Move to cloud

The move to cloud-based ERP systems, starting some 20 years ago, has helped increase efficiencies, but these systems are designed to help organizations keep a record of financial data and transactions; they were never intended for the kind of automated processing and predictive analytics expected of finance teams today, Gupta said. 

"ERP systems have done a good job moving to the cloud and improving user experience and visibility, but there's a disconnect with the desire for ERP systems to natively automate the repetitive tasks and the back and forth that takes place," he said. 

Going forward, Goldenberg's priority is finding technology that can help take manual tasks off his team members' plates, because remote work has exposed the routine inefficiencies consuming their energy.

"Their time to do things has gone down, especially those who are parents," he said. 

He's asked his team to find and test tools that can save time and improve communications. 

"Every place where we have a process flow involving downloading something and putting it into a spreadsheet as a CSV file, and uploading it to another system, is ripe for change," he said. "Ideally, in the next six months, we'll replace that with some form of automation. This wasn't necessarily a priority before, but it's become a real pain point now."

He also wants to find a tool to enable his team to do the kind of deep customer base analysis they spent weeks doing after the pandemic hit as part of an effort to revise their forecast.

"It took four weeks and involved our entire customer success team, half our sales team, a large part of the management team, and even some of our board members," he said. "We want to be able to do that better. We won’t go through that process monthly or once a quarter, but, more holistically, we want to look at the health of our customer base beyond whether we expect to get paid on time."

Tien-Anh Nguyen, CFO of UserTesting, a platform helping companies get customer insight into upcoming product changes, said his goal is finding tools to integrate internal and external communications and improve other back-office functions. 

"Growing companies are used to throwing bodies at the problem," he said. "Throwing bodies doesn't work anymore. You need a strategic shift. You can solve the need for this week, but not for the long term; it adds to overhead costs. So, automation is a strategic pillar. It reduces error, increases consistency, and satisfies increasingly complex regulatory and security requirements."

Leveraging AI-Driven Automation to Improve Business Resiliency in the Finance Back Office was sponsored by Argyle and Auditoria.