With rapid swings in the business environment coupled with complex and constantly changing regulatory and compliance norms, the role of the financial executive has evolved a lot. This also brings opportunities for them to occupy necessary seats for critical business decisions within the organisation.

Finance leaders must face the challenges to meet the expectations that businesses have from them. It is important to redesign and redefine their roles to the demanding and fast-paced business age or transform itself to remain viable, competitive and relevant.

The need for value addition from the finance department arises due to various factors that are shaping the business environment these days. In order to remain competitive, companies are fast adopting innovative and new age business models that not only bring effect to ways of functioning, decision making processes, and execution of ideas, but also enforce the finance functions to be an integral part of the operations so as to guide the business effectively.

Global economic conditions that are mostly unpredictable including sovereign debt default, volatile commodity process, undervaluation of currencies, among others, necessitates the finance function to be alert all the time, sense the upcoming challenges and strategise accordingly for survival. The finance function is expected to optimise its processes to maximise the value to be generated for shareholders.

Changing regulations such as reporting and accounting standards, country specific rules if the business expands beyond the country and various social and environmental issues affect the businesses considerably. The finance function is required to be more adaptable, market focussed and with risk mitigation capabilities in cases of competition arising due to pressure on margins.

In order to achieve the organisation’s business objectives, the finance function must focus on increased usage of technological tools to improve various processes and mitigate risks and achieve increased effectiveness and business model relevance. Technology could also be used to improve business intelligence and information strategy.

Technology would also help in establishing deeper business partner relationships and translating actions into significant return on investments (ROI). In addition, it helps in enforcing better controls and risk management policies in case of businesses moving to new geographies with changed regulations.

Given the current business environment of stiff competition, many finance experts believe that functions such as transaction processing, planning and performance management/ business analysis, compliance management, cash disbursements, and purchase and revenue cycle are the critical ones to bring in the necessary finance transformation. A successful finance transformation plan should carefully consider the current state of people, processes, and technology. The key enablers to the finance transformation include:

Shared Services Centre (SSC): According to an independent study, more than 75 per cent of Fortune 500 companies have adopted some or the other form of SSC and (in-house or outsourced). It helps in standardisation and process optimisation.

Business Process Management (BPM): It helps in running the various processes in a standardised manner to improve productivity and efficiency, internal and external communication. An effective BPM system could lead to fewer enquiries and faster turnaround of invoices and payments. A transactional process with streamlined and automated sub-processes could result in approximately 30 per cent lesser manpower.

Mobile Technology: It enables businesses to make faster and better decisions at any given point of time from anywhere and manage operations to accelerate key process such as planning, budgeting, dashboards, alerts, and approvals, thereby, reducing cycle time and eliminating bottlenecks. It is also useful in extending reach across large enterprises to provide targeted information and analysis across the organisation. Since it allows for two-way conversation, on the one hand it allows one to get real-time information from widely disbursed business units, and on the other hand, it can be used to disseminate analysis and results back across the enterprise.

Analytics: Analytics is helpful in transforming the finance function by providing immediate insight into the business and finance performance of the organisation. It combines structured and unstructured information for a holistic view in order to facilitate rapid decision making by determining the impact of decisions via quick and complete what-if analysis.

Internet of Things (IoT): This has the ability to transform the finance function via creating new models of data identification, gathering, and capturing. It can induce a predictive sense into the process via augmented intelligence and augmented behaviour. It can provide an enhanced level of automation and controls and can be used in various processes such as vendor management, facility management, insurance, and health management, fleet management, and inventory management.

Robotics Process Automation (RPA): This is an application-specific software algorithm (also known as virtual FTEs or robots) that mimic human actions to interact with multiple applications and rule-based transactional processing.

The RPA can be effectively used in many processes such as procure to pay where it can automate work involving obtaining and routing items and ensure seamless data flow. It has its use in quote to cash as well, where it can expedite sales process, pricing, quoting, order management, and invoicing. It has the capability to automate administrative and customer service activities related to receiving, reviewing, analysing and remitting in a process, such as claims processing.

(The writer is Director - Finance & Accounts Outsourcing, Mynd Solutions)

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