A couple of decades into the 2000s, most businesses don’t think of digital transformation as a new concept. Even after all these years, 15% of companies’ finance departments still rely on manual processes such as using Excel for tracking their payables.
Manual processes are just the tip of the iceberg when it comes to challenges facing today’s finance teams, including accounts receivables, payables and taxes. Let’s take a look at some of these challenges and what can be done to address them.
The Growing Threat Of Fraud And Cyberattacks On Finance Teams
You might not think of cyber security as a “finance” issue, but it is. We found that 25% of respondents reported strengthening cyber security practices is the most important challenge their finance teams face today. Why?
Cyber-criminals have become bolder and more technologically savvy since the beginning of Covid, resulting in a surge in fraudulent payments and other activities.
- In Q1 2022, the average ransomware payment was over $200,000 (with a median approaching $74,000).
- The average estimated cost of a data breach was $4.24 million in 2021.
- Phishing attacks can cost organizations more than $1,500 per employee.
With remote working further necessitating the digital transformation of most business back-office functions, the need for automation is more crucial than ever. Automating the analysis and detection of cyberattacks is essential to protection against cyber-threat and fraud. According to IBM, automation reduces the financial toll of a breach by 80%.
Cyber security automation uses artificial intelligence (AI) technologies like machine and deep learning fueled by extensive Big Data to monitor systems for possible attacks on known vulnerabilities. Such technology can prevent fraud by automatically detecting duplicate transactions, for example, as well as monitoring any threshold parameters an organization sets. Human analysts must investigate newly discovered attack vectors and instances of possible fraud to improve threat detection and fraud prevention.
Ongoing Labor Shortages Show No Signs Of Slowing
Our data also showed that 65% of companies’ finance leaders are concerned about hiring and retaining new talent in 2022—and the escalating costs of these activities (and salaries) have finance teams worried, too.
The labor shortage is felt acutely across departments, industries and countries. Attracting and keeping talent with the necessary skills and attitude requires projecting a modern, forward-thinking business image. A business whose operations remain grounded in manual and repetitive processes cannot do that. Therefore, hiring managers must show candidates upfront how automated systems allow them to concentrate on more fulfilling, higher-value work.
Furthermore, automation helps solidify a company’s reputation as a great place to apply. Many job applicants complain that they get no feedback after putting tremendous work into applying for a job. This “ghosting” leaves a sour taste in their mouth, which can lead to disparaging comments that tarnish a company’s reputation.
But automation doesn’t only benefit the candidate. Automated hiring tools allow companies to build a pipeline of talented candidates and reach out to those prospects more efficiently. These AI-powered hiring systems help companies identify candidates with the ideal fit for an opening and the organization’s culture.
With automated systems, hiring decisions can better reflect the actual requirements of the position, too. It eliminates the biases that prevent the hiring manager from noticing the signs that any given applicant is an excellent (or poor) choice for the opening. Finally, automating HR systems can reduce processing time for applications and provide faster communication, instead of hiring managers having to reply individually to candidates not selected.
So, not only does it benefit the candidates, it elevates the company as a desirable place to work. It helps hiring managers to find and match the best candidates to each position, drastically reducing the time and resources required and avoiding costly mis-hires and compliance issues. All these savings end up helping the finance teams plan and stay within budget guidelines, despite the labor shortage.
Inflation And Recession: A Finance Team’s Old Foes Return
The inflation rate in both the European Union and the United States quadrupled between May 2020 and May 2022, the fastest rise in 40 years. Much of the knowledge required to deal with inflation may not be present in companies today, as leaders from that era have left or retired. Simultaneously, the threat of recession is genuine. Once again, automation can help. Let’s look at AP processes, for example.
Automated processes reduce data processing mistakes and the time required for approvals. AP fraud detection tools reduce fraud and lower the costs of doing business. Finally, automation helps reduce employee turnover, stress and burnout. These reductions amount to significant cost savings for a company.
A Harvard Business Review analysis showed that successfully thriving during a recession required a combination of cost-cutting in operations and judicious investments in marketing, R&D and assets. Operational efficiency was the best indicator of future success. By removing as much manual labor as possible, companies increase operational efficiency by reducing overhead and the costs of doing their daily activities.
Finance Teams: Embrace And Insist On Digital Transformation Across The Organization
We started this article by highlighting how the lack of automation in AP is still a problem despite the gigantic leap in digital transformation over the past two years. If companies want to thrive despite the current economic threats, that transformation must touch all aspects of their business, not just finance.
However, everything is connected within the enterprise. The struggles every department faces with respect to digital transformation (or the lack thereof) eventually turn into challenges for finance. By automating manual processes in the organization, forward-thinking companies will succeed despite constant cyberattacks, fewer talented job market prospects and skyrocketing costs that are amplified by the threat of reduced spending worldwide.
Technology and automation won’t solve all these challenges, but they are a necessary and critical starting point.
This article was originally published to Forbes.com as a part of their Forbes Business Council on August 23, 2022 and authored by Yooz CEO Laurent Charpentier
