8 Challenges that CFOs Face and Can be Solved through Robotic Process Automation (RPA)
Gone are the days when the CFOs’ role was tied exclusively to back office tasks. Now they are widely viewed as “powerful digital guardians”, and their disruptive influence is expected to be a primary source of innovation for thriving businesses.
Indeed, according to a 2019 Grand Thornton report based on the answers of 378 senior finance executives from companies with revenue between $100 million and over $20 billion, CFOs will lead the way to the digital world.
If you stop for a second and consider things like the need to locate the right data, or to thoroughly evaluate and manage business risks and costs, it becomes clear to see that the challenges that CFOs face are far from trivial. In particular, for the CFOs’ who aim to establish a differentiating competitive advantage for their company. This is why they seem ready to invest in emerging technologies like robotic process automation, which promise a quick and robust ROI.
Challenges that CFOs could solve through robotic process automation (RPA)
We now list 8 challenges that CFOs face, and hint to how RPA may be of help in approaching them successfully.
1. Streamlining business processes
This is a crucial step towards the goal of rendering the finance activities that keep your company running, such as revenue management, cash disbursement, financial planning, payroll, accounts payable and receivable, record-to-report, etc., more efficient.
According to a report published by the McKinsey Global Institute, 40% of finance activities are amenable to full automation, and 17% can be automated to a large extent. Consequently, approaching this challenge by resort to RPA, and achieving the expected efficiency bonus via process simplification and establishment of standardized reporting mechanisms, seems to be the right thing to do.
2. Getting budget approval
Business proposals are often marred by vagueness when it comes to specifying the potential benefits, or a temporally anchored ROI. Robotic process automation facilitates putting together a strong business case, which shows its value for the whole company.
Don’t forget that, given their scalability, bots ensure enterprise-wide business process improvement. The RPA-assisted feasibility analysis increases the likelihood of getting the approval from those who join the budget meeting.
3. Managing productivity levels and operational costs
Talent management is also among the demanding duties of financial officers. By swapping bots for human employees for the menial, monotonous tasks, CFOs can get one step closer to optimum efficiency.
Use of performance support in the form of, e.g., in-application guidance, task automation, can assist employees in adapting to software novelties. This would decrease the risk of error and greatly improve productivity.
CFOs are also among those who can educate the human workforce about what software robots can and cannot do, allowing the employees to move beyond the unfounded myth of robots stealing people’s jobs.
4. Reducing operational risk
Late financial closing, missing deadlines for payment release, or ‘jumping to behavioural conclusions’ (i.e., acting on incomplete information) are some of the mistakes that people make. These show that the reduction of operational risk is one of the most significant challenges that CFOs face.
Being error-proof is one of the core benefits of RPA deployment. And its further consequences, like cutting down financial losses, is key for CFOs ability to manage this challenge.
5. Managing ever-growing transaction volumes
Financial officers’ efforts to grow revenues are hindered by errors and leakages. Due to increased risks of inconsistencies and errors, this is even more challenging in multicultural environments, and in companies that make use of outsourcing.
Software robots’ capacity for uninterrupted, fatigue- and error-free work boosts processing effectiveness and significantly cuts down operational costs.
6. Optimizing financial key performance indicators (KPIs)
The rationale for embarking on this challenging set of activities is that it paves the way towards more appropriate, solution oriented management decisions. Such good decisions are made possible by consolidated, accurate, and easily accessible data.
RPA is highly effective for improving access to KPI data like annual bad debt, days sales outstanding, days payable outstanding, etc. As a result, the decision making process is streamlined, resulting in quicker, more sound, and more precise management decisions.
7. Generating monthly spending reports
This is a problem for CFOs because manual performance requires scrupulous attention to details, it is tiring, time-consuming, and nerve-wracking, while the cost of error is very high. But a combined use of robotic process automation and natural language processing software has been proven to be very advantageous when applied by a European bank, according to McKinsey.
Upon data collection and analysis, the back-office system easily listed KPIs, and red-flagged problematic cases. CFOs invested their cognitive effort in finding optimal solutions to address these unsettled cases, instead of spending their precious time on data scans and analyses.
8. Fulfilling compliance requirements
Keeping up with frequent changes in government regulations is certainly not a piece of cake for those responsible with the financial and accounting processes. This becomes even more of a challenge that CFOs must face in the context of economic globalisation, which raises the probability of businesses being subject to multiple and conflicting regulations.
Robotic process automation provides CFOs with a sound strategy to keep track of the numerous updates and mitigate non-compliance risks, ensuring that financial activities such as claims processing adhere to regulations at all times. It is also a way to speed up process execution, and to stay away from the damage caused by human error.
Financial officers have gradually been coopted in the executive crew of companies. This made it necessary to embrace new roles, like planning so as to ensure the company’s viability, focusing on long-term growth strategies, or managerial decision-making.
In this context, pursuing sustainability, creating value, and overcoming challenges by leveraging the potential of digital technology looks like a first choice. Disruptive technology is currently reshaping the finance function, opening up new horizons of productivity and performance. CFOs, inasmuch as other senior leaders, are the ones to act out and substantiate the potential of robotic process automation.