Reimagining the future of Financial Accounting

Any major changes or revolutions in the Financial Accounting area have been done with deliberate consideration, and no major changes have been made in isolated pockets. With the onset of Digital Transformation, it has become increasingly important for this field to adapt to the changing times as well.

With the effect of the pandemic hitting business circles around the world, the discussion of Digital Transformation in the Finance sector has been renewed. But the real question is if this urgency will promote total and real digital transformation or sub-optimal siloed solutions that may be detrimental for the field in the long run.  So what could be the best approach here? The Financial Accounting realm has to strike a balance – it has to focus on a sustainable solution that accelerates digital transformation, without dwelling too long on the minor digital changes, effecting better business outcomes.

So it seems that finding the right initiatives to drive digital transformation is of paramount importance.

Several organizations have been looking at automation as a major part of Digital Transformation, and have been looking to transform manual process into automatic deliverables. Several other organizations are looking at going from the on-premise to a cloud transformation as a major driver for Digital Transformation. But in reality, these changes are localized and, incremental and not truly transformative.

For Financial Accounting, change will come in levels and in a variety of things. Although most of these activities will be in response to the current situation, and to patch up the shortcomings this situation is exposing, there will be other drivers that work to give that competitive edge for organizations.

A lot of organization across the world are painfully behind in this and still use archaic systems and skills to run the accounting process. Such organizations operate with pen and paper and outdated, siloed applications that were crying out for a change years ago. These organizations, although looking towards overall organizational growth, never assumed priority for revamping these outdated dinosaur of applications.

Although menial tasks such as data entry have been largely automated by most organizations, these automations work only with human supervision. Data has to be interpreted at the human level before they can be fed to the systems. These systems and software are completely outdated and must either evolve or be replaced in order to match the requirements of the current standards. These systems must evolve with the evolving times and should be able to be operated from anywhere with nothing but an internet connection.

Several organizations are looking for cloud based, multi-tenant solutions that offer more than just basic automation of processes but advanced workflow models and exception handling as well. Such solutions help organizations to run several processes effortlessly, and reduce unnecessary document management, vendor status calls, and bill presentment followups.

The secret to the next step lies in AI & Machine Learning. Smart applications with machine learning algorithms can work to resolve basic decision making and mundane tasks that fester Financial Accounting. This allows the Finance team to focus on special exceptions and process improvements, and transform the role to be more of a strategic value-add to the organization.

Financial Leaders are making the best of the situation and reimagining how the Financial Accounting practice can be more than just number pushing, and work more towards the operational

aspects of the organization, affecting bottom-line RoI. Financial Leaders are gaining this power to visualize through the availability of big data sets, new accounting practices, supply chains and customers, and of course the software solutions themselves. This sort of power allows Finance’s capabilities to expand beyond the restricted boundaries that the function has so far prescribed.

But it is not just a matter of changing out the software, like changing out the locks on the door. Finance professionals will have to rethink how the process works and what it comprises of for now and the future. Rushing to change out the software might be detrimental to the well-being of the organization.

Instead, The Finance function should look to the future and envision what could be possible through technology. From looking at cloud-based solutions suitable for a mobile-friendly process to chatbots and advanced analytics, you should be looking at what could make the future of the function. This cannot be stressed enough as it is easy for the function to fall back to just sifting through papers again.

You have to look at solutions that have modern architectures and workflows, robust platforms, for solutions to be built at scale with the growing needs of the organization. Choosing the right vendor to supply such a solution might prove to be a challenge, but is essential, otherwise risking unnecessary expenses in the long run.

Another important aspect that organizations have to consider in this aspect is how fast Finance as a function can transform to match the Digital transformation that we are driving for. While it is easier said than done, training your resources to match the speed of change is essential. Everyone must be on board in understanding the changing job roles and functions. Training has to be integral to the Digital Transformation that your organization is driving for, and without it might end up to be an expensive, senseless exercise.

Food for thought

  • Most automation efforts may look like Digital Transformation, but are not quite there yet. They may be just catch-up activities that are necessary in these testing times.
  • True Digital Transformation is twofold. One in the search for an advanced flexible technological solution and the other in prepping the business and process models to scale along with the technology. Financial Leaders should be looking to the future and have to look at how to break out of the shackles of the past.
  • Financial Accounting will have to look at the future not only from an inside out view, but also look at how vendors contribute to the digital transformation that we are driving for. A vendor with a solution base that is 10-20 years old may not be the best fit for your efforts.
  • Business as usual is no more the norm. It must be business-as-unusual. It has to be challenged and changed. And it cannot be done unless you have the courage to do it.

The future is yours if you accept it!