COVID-19 has shifted the role of the internal finance function.
From “work from home” mandates and furloughs to downsizing and outright business closures, every department found themselves forced into change. Finance departments have been particularly impacted due to the crucial role they play when it comes to businesses navigating through crises.
A business’ first challenge is to maintain continuity while working remotely; as time does not stop, financial obligations must be respected. More than ever during difficult times, businesses need to find a way to keep going.
COVID-19 has arguably been one of the biggest drivers of digital transformation, forcing a lot of people’s hand to look at solutions to overcome problems such as working from home, ensuring remote IT security or paying suppliers to keep production and sales going. The crisis acted as a wake-up call for all finance departments that had not yet started their digital transformation.
The finance departments’ second challenge has been managing cash pressures to ride out the crisis, which means streamlining processes to cut costs, save time, and gain visibility on inflows and outflows. To do so, implementing the right digital tools and technologies is no longer an option.
The crisis has highlighted the strategic role of the CFO in guiding every crucial business decision. During this sensitive time, CEOs and management teams count more than ever on the analysis and advice of their finance departments. Digital transformation and automation are helping finance teams free up time from manual tedious tasks to focus on more value-added work such as data analysis that clarifies and facilitates decision making.
How has the responsibility of the finance department evolved?
As the pandemic hit, finance departments’ main priorities shifted to ensuring business continuity, carefully managing their increasingly tighter cash flow, while guiding their management team’s decision making.
Finance teams found themselves having to be come more agile to make better, faster decisions while maintaining control over financial processes and minimise risk to the business.
In the context of an economic slowdown, finance departments also need to be especially efficient, optimising their tedious processes through automation, to save time and money. Digital transformation is helping finance departments achieve these goals.
For example, finance departments that implement cloud P2P Automation software have reduced their costs by up to 80% and cut processing cycle time to hours. AP Automation also helps businesses prevent risks such as late payments of invoices, erroneous or double payments, fraud attempts, or not being compliant.
The continuity of the finance function is crucial to avoid cashflow problems and help support suppliers, clients and, ultimately, the economy.
It’s important to keep paying providers, big or small, as the knock-on effects for their own business and customers could be significant. Paying suppliers is a simple yet effective way to keep continuity of service as well as a way to keep people employed, motivated and prepared for after the crisis.
Simply put, there are two main ways to help with business continuity: by allowing suppliers to be paid, fast, as when everyone pays suppliers on time it will be easier to face the crisis for many others down the chain.
Secondly, because businesses have streamlined the financial processes, it makes everyone more productive while providing full visibility on key decision-making information.
What role do finance, and accounting technologies play in crises management, continuity planning and performance observation?
The COVID-19 crisis is the first in modern economic history which has prevented employees to work even while business was alive and when new project investments were not frozen. Why? Because it stopped processes remaining mainly on physical exchanges – paper-based to be clear.
Conversely, the processes which are digitised continued to run because they allow their stakeholders to continue working remotely: issue an electronic order, receive an invoice by email, validate it via the web on their computers, their tablet or mobile, approve payment and settle it.
Indeed, technology-based processes allow businesses to switch to remote working mode overnight. We can argue that COVID-19 is the proof-of-concept for cloud technology, notably accounts payable automation and a wake-up call for any finance departments which did not have a business continuity plan including digital technologies.
Furthermore, we expect that companies that have been partially or strongly been impacted by the cash crisis will want to control and cut their internal costs even more. In the coming month, cutting costs and fighting invoice fraud will become critical, therefore using technology will be essential to achieve these goals.
A wise man once said, “Life isn't about waiting for the storm to pass; it's about learning how to dance under the rain”.This describes perfectly the current mind set of financial decision makers who have quickly realised, if they didn’t know it already, that digital transformation is not just essential, but inevitable.
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