What are the exact characteristics and qualities of leading financial departments — those who have evolved to fly instead of crawl? What actions do these trailblazers take to succeed? These are the questions we sought to answer in our Fintopia survey, an original research project that explores the state of US financial departments today.
"Successful digital transformation is like a caterpillar turning into a butterfly,” MIT researcher George Westerman once said. “It’s still the same organism, but it now has superpowers.” Westerman added, “Unfortunately when it comes to digital transformation, many senior execs aren’t thinking about butterflies. They’re just thinking about fast caterpillars. And it’s hard to keep up with your competitors if you’re crawling ahead while they can fly."
Westerman is right. There’s something dramatically different between those who have figured out how to evolve in the digital age and those who haven’t. We sought these answers in our Fintopia survey, an original research project that explores the state of financial departments today.
What we found is that the leaders in financial departments today truly are working at a completely new stage of evolution, flying instead of crawling.
Here’s what these trailblazers are doing to reach Fintopia, the state of digital bliss for financial departments.
1. Trailblazers automate the accounts payable process.
Only 9% of respondents — the trailblazers — say their accounts payable process is highly automated. Compare that to the 58% who say their process is semi-automated, and the 33% who say their process is completely manual, fully paper-based.
Think of what this means over the long term. As the trailblazers consistently optimise their automated process, they exponentially cut back on the time it takes for them to get through their workflows, freeing them up to dig into more strategic decisions. In a sense, they’re flying while their competitors are crawling and in the process falling further and further behind.
2. Trailblazers automate e-invoicing.
When it comes to invoicing, financial departments are even further behind the times. Still, 3% of respondents say invoices are submitted in a format that can be processed straight through without human operator intervention. While over 11% say almost all of their invoices are processed this way.
Contrast those trailblazers with the 52% of respondents who say that none of their invoices are submitted in an electronic format that can be processed straight-through without human operator intervention. Think of what that means, day in and day out. Hundreds of thousands of invoices working their way through the manual system. Workers stuck dealing with the mundane task of invoice processing instead of doing creative and strategic work that adds value to the finance department and the company as a whole.
3. Trailblazers process invoices quickly.
Trailblazers use artificial intelligence for exception handling, which gives them the ability to process invoices at an incredibly efficient rate — one day or less.
The competition is far behind on this front, with most financial departments taking 2-6 days, followed by 7-14 days. All this time adds up, especially as people increasingly get used to the instant, on-demand nature of the digital world. When people experience instant money transfers via companies like Venmo in their personal life, they’ll be less and less accepting of 14-day delays in their business dealings. It’s another example of how trailblazers have evolved to function at a completely new level.
4. Trailblazers auto-capture data.
Just like the percentage of financial departments who say they automate their accounts payable process, 9% of respondents say that all information is automatically entered into their ERP or other systems of record.
These trailblazers stand apart from the 44% of respondents who say they manually enter this information every time they get it. As illustrated by Blackline Magazine, manual data entry comes with heavy risks. Workers get tired or distracted or hungry, and the next thing you know, you’re dealing with an enormous problem. We’ve all heard the stories. A Samsung employee accidentally gave $140 billion away. Deutsche Bank accidentally gave $6 billion to a hedge fund. These mistakes could happen to anyone since humans are constantly prone to error when manually entering data.
Trailblazers use automation to cut back on these human errors.
5. Trailblazers are mobile ready.
Trailblazers represent the one-third of companies that offer a mobile app, giving internal and external team members the ability to work on the go. This way approvals can get taken care of quickly, while a team member is in line or even during a two-minute break at a conference. Consumers demand the ability to use mobile products. They expect nothing less.
That’s why companies that haven’t made the move to mobile are set to fall further and further behind the competition. By 2020 — more than a decade after the rise of the iPhone — not having mobile offerings makes your company seem behind the times.
6. Trailblazers optimise collaboration.
Like the number of financial departments that say they’re mobile ready, one-third of companies say their accounts payable department has the ability to collaborate online with internal stakeholders to resolve invoice exceptions. The other two-thirds say they cannot collaborate online with stakeholders.
As time goes on, the lack of communication will become more and more apparent, as companies that have the ability to communicate instantly via digital platforms are able to pivot more quickly and adapt to the technological changes that are inevitably ahead of us. By contrast, not having the ability to collaborate leads to frustrated suppliers, as they too often remain uninformed of changes and delays.
In our survey, we outlined essential best practices for trailblazers:
Use a highly automated accounts payable process, with very few or no manual processes
Process electronic invoices straight-through without human operator intervention
Automatically capture all early-payment discounts
Offer a mobile user experience
Provide suppliers with self-service real-time visibility into the status of invoices and payments
Process invoices in one day or less
These practices will help you evolve more efficiently, setting you up to fly instead of crawl.
Ready to learn more?
To see more about how you can evolve, read the full report on Fintopia: The Current State of AP Efficiency in the US here.