21st-century financial administration: where’s the change?

The world is changing at a rapid speed, and new innovations in technology are reshaping one industry after another. Yet financial administration has taken only tiny steps to keep up with the times. We need a revolution of thinking, and bigger steps to carry out change.

As an industry, ours is largely governed by legislation and regulations – everything takes place in due form. Perhaps this also makes us very careful, and maybe even inclined to settle for less when it comes to solutions and system providers.

The fact is, there is much to improve if we want financial administration to hop onto the current era, and technology is only a part of it.

Where is financial administration now?

With current financial administration processes in companies often lacking efficiency and innovation, our function remains marginal at best. So many tasks could be made more automated, so that we can allow financial administration to truly support business.

If the industry does not innovate and take its purpose to the next level, we are stuck with processes and systems that support decades-old business models. Financial administration investments are hard to justify if they are simply seen as expenses, we are seen as an expense item. We are more than that, or at least could be.

For as long as we can remember, automation has been the buzzword of invoicing. We thought that e-invoicing was the great saviour, coming to rescue us from paperwork. Finland and the Nordics were, in fact, were among the first companies to truly push e-invoicing across companies. 

Yet all that happened was, we took an existing process and turned it digital. Yes, the delivery of invoices from the vendor to the buyer was made easier and more independent of human work. But what happens once the invoice has made its way to the buyer? The manual work that could be innovated, was not. Automation was left halfway.

And there is still so much work to be done.

Where do we need to go?

Everything is possible, but let’s start with a few key points.

• Financial administration needs to redefine itself.

Our bread and butter right now is not at the core of the business, and that needs to change. This means looking into the very core of our essence: what is our added value? What is expected of us? This does not mean going to the barricades, but rather providing something business-critical.

Financial administration needs to support other functions and set itself up as more than the masters of invoice handling. We hold key data in our hands, enabling us to work together with the C-suite, marketing and communications, all departments. For example, data on recent acquisitions can be invaluable to management.

“When I worked as a marketing director, I was on my own, starting from budgeting,” says Chief Growth Officer at Snowfox.AI, Tuomas Haapsaari. “Key data on our expenditure and working more closely with finance would have been extremely helpful.” 

Think Elon Musk. With data at our fingertips and artificial intelligence becoming more robust every day, we can simulate the future. If you could build organizational finance processes again, starting from scratch, what would happen? In terms of technology, would you opt for the functionalities your current system has, or would you want something else? 

• The industry needs to innovate systems.

System providers are at the heart of the industry. Systems are often still painfully expensive and counterintuitive. Why should the customer be tied to an expensive system that does not serve them for 3-5 years?

Right now, innovation often means a new dashboard and fancy metrics that don’t truly produce business value. Customers are often left alone to reap the benefits in terms of automation and costs. We need to shift the responsibility back to the vendors and provide systems that make our lives easier. The costs of current invoicing technology, for example, should be tied more to results, not simply usage.

Importantly, the systems we use need to provide more automation, free up space for new tasks whenever possible, and most importantly, support the business. Having more time and less manual work means more time to innovate organizational processes, find solutions to support overall business goals. 

• We need to be bold and disrupt.

Doing things in a certain way over and over is no guarantee for success. What the industry needs is a new way of thinking, whether in non-PO invoices, the positioning of financial administration in organizations or monitoring cycles of key figures. 

The CFO plays a crucial part in this – drivers with a bold outlook and who don’t let the fear of mistakes get in the way of change. Internal processes can be revolutionized one technological tool at a time, by merging functions within companies to give financial administration a more beneficial standing.

Companies should go more real-time, instead of just monthly and annual figures. Let’s look at figures on a daily basis – what works, what doesn’t? What patterns are there to be seen in shorter time frames that could help in the long run? Who knows what untapped territory there lies behind alternate cycles, alternative approaches to finances.

Among our clients are companies that look for ways to do things differently, ask questions no one else is asking, such as how to produce more value to the business, why financial administration as a function exists and how the transition from an expense item to producer of added value can be made. I commend them for being active and recognizing the possibilities that are out there.

Finding a new path is the shared goal of the industry

Financial administration professionals are often caught up in the bustle of daily work. There is a huge calling for slowing down, disrupting the daily and asking: is there enough dialogue between players, and what are the new methods and technologies that can be used to solve challenges within companies?

It’s a joint effort, and we cannot solve all of it alone. But we need to ask for more, when it comes to technology and processes, we need to dream bigger. Industries are being transformed every day. 

“We should not simply settle for what we have been doing so far,” Haapsaari says. “Time is ripe for a change. With more dialogue between players, we can recognize new opportunities within companies – and for the entire industry.”   

Let’s start with invoice management technology. Interested in automated solutions? 

You can start by learning more about artificial intelligence automates the purchase invoice handling process.