Real-time reporting for CFOs – why automation is crucial

Reporting is still crucial in the finance department. CFOs have always focused a lot of their attention on financial analysis – a critical part of any modern business and an important measure to understand the business performance of a company.

Whether CFOs are compiling these statements themselves or assigning others to create accurate statements, their role doesn’t stop with the handing over the numbers. CFOs are charged with producing reporting that is useful to leadership and key stakeholders. They will understand the performance metrics, indicators, and targets that need to be hit for the organisation to move forward.

Traditionally, CFOs have been limited to looking backwards through a rearview mirror. They would be reviewing financial reports and balance sheets that will create the state of the business at the end of a period.

The world has changed. Financial reporting is still highly important, but technology and the availability of data has made it possible for businesses to get real-time information about company performance, and even how it can perform in the future. There is a huge amount of untapped power and potential in what is a legal requirement in most countries.

Because of this, the role of a CFO has changed. Instead of simply being the financial leader, they now need to actively drive business change through finance. Now they have a variety of tools focused on predictive analytics and intelligence, with machine learning and artificial intelligence potentially changing the game even further.

The impact of automation on financial reporting

Financial reporting is crucial to a business – as well as performance, it is needed for areas such as regulatory compliance and investor relations. As a result, there are pressures that CFOs and their departments could be feeling from the business when it comes to getting better financial data, such as:

1. A corporate mandate to improve the quality of financial and accounting data

2. A management focus on improving the productivity of financial/accounting staff

3. Stakeholder demand for financial data access, and the need for more regular disclosure (monthly instead of quarterly or annually for instance)

4. A need to augment financial reporting with non-financial performance data

Businesses should look at automation as a reliable way to improve the quality of financial data and increase the productivity of financial/accounting staff.

Instead of being tied up in time-consuming transactional tasks and gathering data, automation offers an alternative – potentially reducing by 46% the time and cost for key processes such as billing, management reporting, general accounting and budgeting, according to PWC’s Finance Effectiveness Benchmark Report 2017.

Automation allows businesses to:

• Minimise the manual intervention needed in financial and accounting related tasks, such as ledger entries and reconciliations
• Reduce the potential for human error
• Improve the use of staff time through a reduction in manual processes
• Increase and expedite turn-around

Through automation and the use of integrated business systems that serve as an auditable system of record, CFOs and their departments can make use of technical capabilities to make them more effective and useful for the business.

Automated financial reporting, including narrative analysis. Financial data with context and a clear story can be very useful.

Real-time updates to financial metrics. Real-time metrics improve the quality of related data and the efficiency of prepared reports. Having inputs uploaded in real time rather than batch processes reduces reporting turnaround time and avoid financial data gaps.

Multi-dimensional reporting. This allows multiple codes to be used to generate models and charts from compounded sets of data. It allows data and analytics from various transactions to be aggregated.

What technologies should finance focus on?

CFOs should understand Robotic Process Automation (RPA), a technology that is becoming a competitive advantage for organisations looking to reduce costs, deal with changing business conditions, and spend more time on strategy.

RPA uses software robots to mimic certain physical actions which humans would use to perform tedious and redundant low-level tasks. Following set defined rules, this creates a ‘digital workforce’ that can perform back-office functions humans would normally do, such as transactions, data entry and invoices. Essentially, software robots can carry out repetitive high-volume tasks, leaving staff free to focus on more strategic front-office work.

RPA has the potential to:

• Accelerate turnaround time
• Lower employee overhead
• Deploy a 24/7 work shift without interruption
• Streamline processes without complex code
• Maintain greater compliance because the software is designed to provide an audit trail
• Enhance customer service since employees are free to perform higher-value tasks
• Increase employee satisfaction because they are freed-up from repetitive, mundane tasks

Automation is a subcategory of artificial intelligence (AI) that follows pre-programmed rules to run processes. However, we’re moving towards a future we’ll see the finance department make use of AI software that displays self-learning capabilities. This can be seen with three levels of RPA that CFOs should understand:

1. Simple process replacement

This is considered the entry level of robotics, which tends to be process automation or the replacement of manual repetitive task by a software generated program. This can already be used by finance departments as part of accounting software.

2. Learning

With advanced RPA, not only will software replace data from documents or add to a workflow, it can learn and complete transactions. It could for example read fields in document and know what fields to populate, or use an algorithm based on previous known transactions to make software-based decisions that would take a human a long time to do.

3. Cognitive

This is where software automation gets to a level associated with more advanced forms of AI, as it can take in different and complex data sets, using algorithms to not only learn but make decisions much faster than humans.

One real benefit of AI for the finance department will be the freeing of time spent on boring, manual and repetitive tasks, leaving more time for strategic creative tasks that will make the finance department central in responding to digital disruption. The CFO has a central role in maximising the value of data that businesses hold, deriving value that can provide an important competitive advantage.