For many businesses, the shift to digital sales, payments, and other processes wasn’t an option in 2020: It was a survival strategy. Even so, just how much a particular business has done to digitize their financial processes varies wildly by industry, says Jason Cagle, head of Industry Specialization and Advisory at Truist Commercial.
“When COVID-19 first hit, businesses suddenly started realizing, ‘We can’t get payments out. We can’t get payroll done.’ So, everyone started thinking about [digitization],” he says. “But in some accounting offices, it’s still just stacks and stacks of paper. So, we’re at the tip of the iceberg on a massive shift to digitization of payments.”
This is especially common among privately held businesses, whose owners saw digitization as a stopgap measure and want to turn their attention and dollars toward other innovations now that the accounting office is full of people once more.
Here are just a few reasons to keep pushing the envelope.
Digitizing financial processes benefits your people
More and more institutions have found that ditching manual processes in favor of a digital workflow has improved operations across the board. Consider these findings reported by Business WireDisclosure 1 on the challenges that executives associate with business processes:
- 69% say employees lose paper documents.
- 68% are concerned about compliance breaches with manual processes.
- 65% suggest that pen-and-paper processes reduce employee productivity.
Digitization can also save your company money at many points in financial processing. For example, automation of accounts payable processes alone can cut costs by 80% for a single invoice while increasing efficiency by 74%.Disclosure 2
But the benefits can’t be reduced to just percent and cents. People count, too.
Supporting remote workers. By some counts, nearly 60% of the workforce is at least partially remote.Disclosure 3 Digitizing financial processes supports remote workers and ensures business continuity and stability during times of uncertainty (including a natural disaster, for example).
Solving for workforce gaps. Digitization of financial processes may also help employers solve for the labor shortage.
“The exciting thing is that we can come in and advise folks on how to improve their working capital cycle through digital means, which ultimately will make them less reliant on manual processes driven by human beings,” says Cagle.
This may mean employers can focus their talent search and talent dollars on parts of the business that are drivers of innovation, strategy, and growth.
Allowing young professionals to shine. As you make new hires, consider making tech savviness part of the discussion. For example, when interviewing finance department recruits coming out of college, keep in mind they may be new to the workforce but well-versed in digitization, says Taylor Howerton, Logistics and Supply Chain industry consultant at Truist Commercial.
Improving the customer experience. Finally, digital technology can improve the consumer experience. Automated electronic invoicing and automatic clearing house (ACH) payment options provide a more streamlined payment process. But there are other aspects where digitization of financial processes wins customer approval ratings, such as in customer service regarding payment or billing questions.
Ultimately, the cost and time reduction from using a best-in-class digital tool provides organizations with the ability to focus on high-value tasks that stimulate growth.
4 good places to start (or expand)
The challenges for a finance team looking to sell others on the digitization of financial processes usually boil down to “technology overwhelm” and employee/executive buy-in. Digitization is a solution, but it’s up to the company culture to drive the initiative forward. Without proper support or planning, it’s challenging to implement a successful digital solution.
Secure management team buy-in
Financial and information technology leaders within a company can benefit from buy-in among the top-level management team to encourage staff at every level to invest time and energy into the digitization project. Outside of securing the funds required to kick off digitizing financial processes, employees will need to upskill and learn the new technology and buy-in from management can increase the likelihood of success at all levels of the organization.
“When communicating to the team about the importance of technology, the higher up in the organization the communication comes from, the more everybody is going to pay attention,” says Scott Hesketh, Treasury Solutions commercial real estate sales leader at Truist.
Make use of strategic APIs
The process of bringing in new technology can strain both the budget and the staff. A transformation is more likely to be successful if completed in increments—and with consideration for what employees already understand how to do.
The vast availability of application programming interfaces (APIs) makes this process considerably easier, especially for the finance department. The finance team is likely accustomed to an enterprise resource planning (ERP) system with useful digital capabilities but also limitations, such as a lack of automation or enhanced data.
Strategic APIs can quicken the automation journey without investing in on-site systems or equipment or asking staff to learn new software. Remember that any forward progress is a step in the right direction.
“[Digitization] doesn’t have to happen all at once. Many businesses are trying to throw new, innovative applications on top of old legacy systems,” says Chris Scott, Treasury Solutions technical product consulting leader at Truist. “That can be clunky, but it’s a necessary fix for a lot of merchants right now.”
Focus on fraud protection
In a 2020 survey, 47% of companies said they faced fraud over the previous two years, and the risk has only been increasing.4 While digitization can open a firm up to a different set of risks—which are important to discuss with your risk management team—a digital workflow in the finance department can significantly reduce fraud.
The use of artificial intelligence to match invoices, reconcile credit card and bank statements, and verify receipts helps to lessen risk from third-party vendors or employees. Meanwhile, manual processes generally make it easy to duplicate payment or receipt, since verifying the information takes a significant amount of time. According to Katie Saez, Treasury Solutions sales leader at Truist, paper checks are still the No. 1 concern in terms of financial fraud.
Invest in enhanced data
While there are additional compliance costs and regulations to handling data, enhanced analytics—which include detailed and valuable reports—provide extensive insights. Once a workflow is entirely digitized, it’s possible to incrementally improve it. But optimization is only an option if an organization has access to clean, accurate data sets. This may involve hiring data cleaning services or freelance experts who can look at what you’re working with and make recommendations on how and what to scrub.
“The feedback loop is so much faster now. If used properly, data can allow companies to pivot and become more competitive,” says Michael Carter, head of investment and corporate banking at Truist Securities. “What I see going forward is that companies will not only learn how to leverage their internal data, they will effectively become data companies themselves.”
Building the business of tomorrow
The digital transformation doesn’t have an end date, so neither should your upgrade and optimization efforts. As with any truly transformative experience, digitization isn’t a plug-and-play solution. It often takes three to 18 months to fully implement a new piece of the puzzle. The sooner you start, the sooner you can reap the benefits of taming your company’s paper tiger.