According to a recent survey by the Association of International Certified Professional Accountants, more than one-third of companies spend more time collecting data than analyzing it. Only 11% of executives say they are using artificial intelligence (AI).
Overall, the report concludes that finance departments need to make better use of existing automation and data analytics tools in order to position their companies for future success.
Missing tools, missed opportunities
In January 2019, the association released the report Agile Finance Unleashed: The Key Traits of Digital Finance Leaders in partnership with technology firm Oracle. Its findings are based on responses from roughly 700 CFOs, finance directors, chief accounting officers and other finance professionals.
In a statement accompanying the report, Andrew Harding, the association’s chief executive of management accounting, said that businesses “are missing out on huge growth potential by failing to give finance teams the tools and training they need to make better corporate decisions.”
The report found that CFOs need to speed up digital transformation across three broad categories:
- Operational excellence
- Digital intelligence
- Business influence
On operational excellence, the survey found that only 13% of respondents have “scaled robotic process automation” across the finance function. And slightly fewer had “scaled intelligent process automation.” Respondents said the main roadblock was data security concerns.
When it comes to digital intelligence, nearly two-thirds of large organizations reported that “difficulty extracting data from legacy platforms” was a major challenge to fulfilling their data analytics goals. Less than half of respondents (39%) reported highly effective capabilities in integrating financial and nonfinancial data.
Do finance departments help their companies set direction? Nearly half of respondents said finance “is playing a significant and influential role in partnering with managers on decision-making.” But only a third “are playing a similarly influential role in mapping future scenarios for a more disrupted and volatile future.” The top challenges to finance playing a more influential role are competing core responsibilities, such as compliance and control.
From manual data entry to automated processes
Even decades after moving away from ledger books, finance departments have still had to create and process significant paperwork, such as invoices, purchase orders and shipping receipts. Clerks manually enter those documents in computer systems and submit them for approval and payment.
Modern software systems include AI or machine-learning capabilities that allow them to recognize, direct and export data into a company’s financial system, rather that requiring people to do data entry. AI can also:
- Vet new suppliers and customers by checking credit scores
- Set up new accounts in the accounting system
- Track pricing among a variety of suppliers
- Analyze expenses and expense reports
- Facilitate eXtensible Business Reporting Language (XBRL) reporting requirements for public companies
- Simplify end-of-month or end-of-quarter closing
Effective use of AI gives managers full access to real-time accounting data, allowing them to make better-informed decisions and, when necessary, take corrective actions. By automating routine transactional tasks, finance professionals have more time to focus on strategic planning and growth opportunities. In addition, AI can help lower transactional costs and minimize potential errors that can happen when transactions are entered manually.
As an added bonus, AI — often referred to as data analytics — can make financial statement audits more efficient and accurate. Instead of searching through file cabinets for paper records, auditors can follow a digital trail for each transaction in the accounting system. As a result, auditors can test 100% of a company’s financial transactions, rather than only a small sample, and perform sophisticated tests that can detect signs of potential fraud.
This also makes audit fieldwork easier on the finance department. With an electronic audit trail, in-house personnel may not be required to pull as many original source documents to satisfy auditors’ inquiries.
Use artificial intelligence to leverage human intelligence
In the 21st century, the best finance professionals may not necessarily be the best number crunchers. Instead, they’ll be the people who can understands how to analyze vast amounts of electronic data and use the resulting insights to shape their company’s strategy.
Weaver leverages data analytics in both financial audits and advisory services, and our professionals can help you understand how these tools can help your company make the most of information already in your financial systems. Contact us to find out more about how analytics and automated tools can help power your company’s growth.
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