Financial Transformation: Moving from “Reactionary Scorekeepers” to “Proactive Strategic Advisors”

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Financial Transformation: Moving from “Reactionary Scorekeepers” to “Proactive Strategic Advisors”

In a rapidly evolving marketplace, the finance function is playing a critical role in offering insights, efficiency, and value to businesses. Now, the pressure on finance directors and chief financial officers (CFO) to do more with less, and do it faster and cheaper, has never been greater. 

While traditional, inflexible systems and multiple siloed information sources are hindering finance teams, heavy manual tasks are burdening their shoulders. However, thanks to financial transformation, organizations have the opportunity to restructure their finance functions and align with their overall enterprise goals. 

Financial transformation is the blend of systems, processes, and technologies that help finance leaders analyze companies’ finance and accounting strategy and vision. These shifts revolutionize the way companies manage their finance department and the associated internal controls, processes, and financial reporting. 

With financial transformation, the goals and value of finance executives now include pushing forward efficiency, assisting with decision-making, and serving as strategic advisors. In simple words, financial transformation is the shift of businesses’ finance professionals from conventional bookkeepers or number crunchers to business partners. 

Research suggests that 8 out of 10 organizations are embracing or planning to invest in financial transformation. 

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5 Benefits of Financial Transformation 

Here are the benefits CFOs should expect from a financial transformation program:

Enhanced Agility with Well-informed Decisions

Today, business decisions are more conscious than ever seen as finance teams can quantify and analyze customer data for patterns. AI-enabled predictive analytics and rolling projections empower professionals to examine the companies’ financial health, optimize cash flow, and boost financial controls, allowing quick pivots to adapt to a rapidly changing landscape.

Data-driven enterprises can outsmart their competitors by 5% in productivity and 6% in profitability. Easy access to accurate insights keeps companies agile and prepared to thrive amidst market disruptions.

Real-time Reporting for Quick Response Times

All companies need to focus on growth, but successful ones put equal focus on ensuring their methods are sustainable. Real-time reporting helps organizations alleviate threats to safeguard their viability and health while empowering their finance teams to refine services for optimum client loyalty and satisfaction.

Good customer service is the most crucial factor for over 80% of customers during their purchasing journey. Fine-tuning revenue recognition and calculating churn rates are two critical parameters that help spot potential issues before they go out of hand.

Boost Financial Capabilities with Process Automation

By 2025, the global data chunk will surpass 180 zettabytes – nearly 3X the amount generated in 2020. 

Today’s finance leaders tackle this data onslaught with process automation. AI-driven operations improve financial capabilities and enable proactive bank management, credit management, and revenue recognition.

Besides, automating tasks curtails human errors from manual data entry and headcount, thus decreasing overhead significantly. As such, organizations can save money, time, and stress by being less chained to legacy accounting cycles while still outsmarting their peers.

Streamlines Regulatory Adherence

Keeping pace with regulatory compliance can be challenging, given that norms continuously evolve and vary widely across regions and industries. Trends in new corporate practices demand updates to compliance norms. 

The rising prevalence of repetitive operating leases and billing models has, for instance, paved the way for ASC 842 to fix off-balance-sheet expenditures and ASC 606 to account for recurring delayed revenue, respectively.

Luckily, modern financial management features, including centralized payments, globalization and tax configuration, and e-invoicing, make it way simpler to remain compliant. Tools that help maintain compliance are pivotal, given the average cost of non-compliance is around $15 Mn – 2.7X more than compliance costs.

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Bolsters Data Security

Finance teams negotiate a lot of classified data. From information about suppliers to customer transaction records, securing data is extremely crucial. Financial transformation offers businesses the opportunity to upgrade their systems and invest in the gold standard for information security (InfoSec). 

Decision-makers can consider a few essential features, such as two-factor authentication (2FA), SSL encryption, and advanced firewalls when upgrading their IT security fabric. Additionally, these features will scale as their businesses grow.

Getting More from Finance Teams

Big data and automation tools have heralded a new era for finance departments. The role that involved chasing after numbers, compliance and reporting has been remolded in the name of financial transformation. Finance executives must think about the impact of these technologies on the way their work is shaped and completed. 

With financial transformation, CFOs have a larger role to play in delivering value to enterprises, being the first to express the need for changes, and steering businesses toward maximum success using analytics, data, and insights. 

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