Corporate finance teams were not simply tasked with finding ways to continue operations in a remote work environment as a result of the coronavirus crisis. For some organizations, the processes that broke down and the bottlenecks that intensified as a result of the COVID-19 disruption finally lifted the veil on some of the biggest problems in financial workflows — as well as the biggest opportunities to modernize.
As a result, finance teams across the business ecosystem began to prioritize digitization and optimization, and many of them drew the same conclusion: Access to data is imperative to efficient and effective operations.
According to Rajiv Ramachandran, senior vice president of product strategy and management at Coupa, the pandemic was a “wake-up call” for many finance leaders who experienced a jolting breakdown of key functions.
“Their entire process of cash management, payments and working capital came to a screeching halt because they didn’t have visibility into their ecosystem,” he told PYMNTS in a recent interview. “There were cases where some of these finance teams could not even understand what their cash visibility looked like.”
Discussing this lack of transparency, Ramachandran, along with Sinead Fitzmaurice, CEO of TransferMate, dove into the tactics that CFOs can deploy to address the weak points and wield data to drive total, real-time visibility into corporate finances.
The Biggest Pain Points, Revealed
While every organization is different, many business leaders came to realize some common pitfalls in their legacy operations that came to light in the midst of the pandemic.
Among the largest is the ongoing use of paper and manual workflows like invoice processing.
“Manual invoicing is your worst enemy,” said Ramachandran, highlighting its risks and challenges related to fraud, errors and inefficient auditing. With so many firms, particularly small and medium-sized businesses (SMBs), struggling with cash flow today, manual invoicing can threaten the health of the entire supply chain.
Fitzmaurice highlighted other key pain points CFOs discovered to be particularly acute, including cash management, as well as cross-border payments that have historically been dependent on the notoriously opaque correspondent banking system.
At the heart of many of these friction points is the fact that manual workflows fail to unlock the valuable data behind processes like payments and invoicing that can be strategically analyzed to drive business optimization. This challenge has been present for decades within many firms, but when combined with the market disruption of the pandemic, it became intolerable.
“When you mix that lack of immediate information with the disruption that businesses were facing, that’s when you have grave consequences for the business,” said Fitzmaurice.
Three important factors behind organizations’ continued reliance on manual workflows, even this far into the pandemic, include a lack of prioritization, a lack of awareness and a lack of leadership within the enterprise, according to Ramachandran. Once organizations shine a spotlight on these pitfalls, they’re able to move forward with a truly holistic modernization initiative.
Transparency Through Data
Though painful, the process of uncovering the most significant pain points in the financial back office opened the doors up for CFOs to lead broader modernization efforts across the enterprise. The need to unlock data stemmed from professionals’ dire need to gain greater visibility into operations amid the hectic volatility in order to best react, respond and predict the next steps.
Ramachandran listed three fundamental pillars to the enterprise modernization strategy: the elimination of siloed applications, the consolidation of processes onto a unified cloud-based platform and the elimination of inefficient, manual and paper-based processes. Finance and accounting workflows lend themselves well to these three pillars, he said, and Fitzmaurice agreed.
“It has to be one platform-integrated experience, combined with an embedded payment solution,” she said. “That provides for complete optimization of the supply, demand and cash flow aspects of accounts payable and accounts receivable systems — which allow for real-time, frictionless decision-making.”
The platform approach to modernization supports the need for data integration across various workflows and, as a result, creates an ecosystem in which data can be accessed and analyzed. Combining real-time analytics with the context of historical data can be particularly valuable in making more intelligent choices about key processes, including supplier payments and cash forecasting, Fitzmaurice added.
This integrated strategy also strengthens visibility and transparency for both buyer and supplier when supply chains are looped into an end-to-end workflow, Ramachandran noted, highlighting the opportunity to provide a “single source of truth” for businesses and their partners. When firms are managing troves of banking and supplier relationships, consolidating data across systems and processes can unleash the power of data that has historically been stuck in paper and siloed systems.
As organizations continue to weave through the market volatility, implementing change to the enterprise will not be easy or painless. As a result, CFOs are no longer going to embrace digitization for digitization’s sake; rather, they’re going to prioritize data integration and process unification, opening up new opportunities for their financial technology providers to embrace collaboration, too. Moving forward, said Fitzmaurice, will require focusing on the tools that can strengthen transparency and drive corporates toward their strategic goals.
“COVID has provided a lot of negative things, but it has shone a spotlight on the need to be agile, to concentrate on your core business and to access rich information in a fast-moving environment,” she said.