Connect with us

Finance

Digital transformation for CFOs in practice

Published

on

Digital transformation for CFOs in practice

Digital transformation changes the business landscape in an accelerating speed. It is on everyone’s agenda. However, even though the pressure is on, organisations rarely meet objectives as planned. Research has shown that only half of executives think that they are executing well on their strategies (Wipro Digital 2017).

Too many executives believe that the essence of transformation is yet another software solution. Or even better, a completely new system. Even though new software might be promising, new ERP implementations fail alarmingly often. It takes too long. It is too costly. ROI is uncertain.

CFO as the new CDO?

Per Holmlund

Per Holmlund

Despite promises – and indeed also challenges – it is hard to determine exactly how to kick off the transformative journey.

What is the right approach, if new software isn’t the right starting-point? Is it business modelling? Internal operations? Infrastructure?

As digitisation at its core is a matter of adequately managing data aligned with business goals, few others have a better starting point than the true champion on processing, analysing and reporting on data – the CFO. As the enabler of sales and purchase transactions, the bloodstream of any organisation, the finance team must be regarded as the natural starting point.

However, too few CFOs are in the lead of this transition in a survey by IFS Digital Transformation only 35% state that they are in the driver seat.

To fundamentally be able to change operations within any organisation, this has to change. For those bold CFOs that are ready to take the leap right now, much can be gained by attacking it with the right approach.

Data first management

Digital transformation isn’t primarily about technology. It is about data. For CFOs, this implies that change should begin with the one aspect that runs through all vital parts of the business – your transactions.

Transactions come in many forms, but they are united by the fact that it is ultimately about data management. In a digital world, data thrives in the form of ones and zeros. It is the first milestone in any digitisation journey. With truly digitised transactions, end-to-end whether it’s within sales or procurement, you’ll start your transformative venture in the right end.

Here is perhaps where you will object – “Hey, we’re digitised already! Every invoice ends up in our workflow eventually, right here on the screen”.

Unfortunately, this is in almost all cases not true. Digitised processes are about have completely digital input and output data.

Scanned PDF documents and indeed paper formats are automatically disqualified. PDFs are images, and both formats waste continuously significant resources and require costly manual touchpoints.

Format reformation

With fully digitised transactions you will not only reduce errors and manual touchpoints, but you’ll also unlock the long-term potential of automation.

Automated financial processes realise the concept of the 21th-century knowledge worker – finance teams will be able to focus entirely on control, assessment and process development, rather than constituting the process itself.

So what is digitised transactions? Well, you have probably guessed it. Take control and digitise the primary carrier of B2B transactions – the invoice.

It is the true key to financial process automation.

Deviations, manual work, and errors derive from improper data management which in turn is made very complicated by the vast number of formats.

Today’s massive process hurdles like scanning and OCR technology and conversions require manual work. RPA, Robotic Process Automation, technologies have enabled many organisations to automate processes to a varying degree. The problem is the unavoidable deviations that come as a consequence.

In other words, these deviations create all the work. Even within the organisations that are investing heavily in RPA technology. The Pareto principle is still applicable; 20 per cent of the transactions create 80 per cent of the workload. Artificial intelligence isn’t part of the core solution. You can apply as much AI as possible, but it won’t do your organisation any good if the data quality is poor.

So, the sooner your organisation can adopt e-invoices in all transactions, the better.

If your systems and processes aren’t able to intelligently manage all the data yet, it doesn’t matter. Critical data won’t get lost anymore. You won’t need to recreate information in every step of your process, from purchase to pay to accounting.

So if you do it right, within your reach will also be the holy grail of accounting automation – the line-item information.

Know your supplier

Bringing your master data – the supplier registry – to the next level is another critical piece of the digitisation puzzle. Your supplier registry is the master data of all the relations that are tied to your organisation.

In parallel to transforming sales and purchase transactions, it is vital for any organisation to maintain an active and continuously updated supplier registry. It often includes thousands of companies.

If managed incorrectly, it is a source for costly errors such as wrong payments when addresses and bank account numbers aren’t updated or get mixed up. However, even more worrying is the risks of fraud or processing payments to bankrupt suppliers.

Get going

  1. Determine your digital transaction ratio

What is the ration between analogue vs digital input data? How many supplier invoices are e-invoices? How many come as paper or PDF? Establish a plan to force or incentivise your suppliers to adopt e-invoices. By determining your ratio, you will get an indication of your efficiency potential.

  1. Map your process

Who does actually what in your workflow? Map your process from beginning to end. How does actually what? What does the workflow look like? Which systems are involved? This mapping provides an overview of the complexity, potential bottlenecks and costs associated. It also indicates weaknesses, as data flows through integrated systems, data loss is inevitable.

  1. Wash your supplier registry

Which systems, software, documents, and processes are involved in managing and updating your supplier registry? What characterises an active supplier for your organisation? Are there financial risks related to your suppliers? Define criteria for deadlines and make sure your systems are set to support. With an active supplier registry, your organisation will reduce risks such as errors in accounts payable and fraud.

  1. Perform a risk assessment

Are you compliant to SOX and VAT regulations? How transparent and traceable is your audit log? How likely is it that your invoices are paid to the wrong recipient? List your organisation’s risk factors and assess importance.

Bio

Per Holmlund is the chief marketing officer of Qvalia, a Stockholm-based financial process automation company. He has recently released the ebook CFOs Guide to Business Automation.

Finance

Digital Finance: Unlocking New Capital in Disrupted Markets

Published

on

Digital Finance: Unlocking New Capital in Disrupted Markets 1

By Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises the ability they need to improve cash flow and revenue through better use of data and improved analytics-driven visibility.  

Businesses everywhere are scrambling to recover lost revenues and protect cash flow. But as countries globally grapple with a dreaded second wave of the pandemic, imposing far more stringent localised lockdowns and new restrictions, it is set to be the hardest winter in living memory for many sectors.

The likelihood of winter peaks, so often the saviour of sectors such as travel and hospitality, benefitting businesses is diminishing rapidly. While many have pivoted to a greater or lesser degree, few have been able to offset the impact of falling revenues on cash flow. Even retail, riding an e-commerce boom in many regions, is finding itself in choppy waters, with 17 percent of consumers switching brands due to the economic pressures and changing priorities caused by the pandemic.

As one McKinsey article notes, “With some companies losing up to 75 percent of their revenues in a single quarter, cash isn’t just king – it’s now critical for survival”. Where then do businesses find new sources of cash to sustain their operations through the coming months?

Tapping Overlooked Cash Opportunities

For many, the answer could depend on whether they have digitally transformed their finance department. Why? Because many organisations are sitting on unidentified opportunities, funds that could be vital in shoring up businesses over the next few months or plugging the gap between operating costs and government bailouts. Yet those that have been slow to start their digital transformation journey are at a disadvantage;. At the same time, it is possible to identify these hidden seams in an analogue organisation, the process is time-consuming, manually intensive and, without the right digital tools, prone to human error.

Where deploying digital tools helps is by bringing speed, automation and reliable data to the fore. Connecting them with digital finance and accounting systems can give businesses clear insights into how money is being spent, where wastage is occurring, and where opportunities for optimisation exist.

Krishnan Raghunathan

Krishnan Raghunathan

It might be something as simple as automating the accuracy checking, issuing and chasing of invoices and late payments. This could reduce errors and invoice disputes and ultimately lead to faster payments. Accuracy and organisation are also important in billing – better records enable faster billing for work completed, and in turn, should deliver quicker payments.

It could also be around having the ability to review the supply chain and procurement data and identify where a supplier is subsidising a larger customer’s product line through drawn-out payment terms, or where a variety of vendors are on different terms across the business.  Using that data and overall knowledge of the business to negotiate better terms that work for both supplier and customer can create new opportunities. It could even be to identify late-paying customers, determine the reason for late payments, and use that intelligence to develop products or financing solutions that continue to support those customers (and improve loyalty) without increasing the burden on the balance sheet.

Generating Reliable Insights for Faster Decision-making

To do any of these manually would take months, generating data slowly that would quickly go out of date. But digital finance departments have evidence they can trust to inform business decision-making. That’s because old, manual processes built around Order-to-Cash lack the flexibility and agility that businesses require in today’s markets. The fact is that even before the global pandemic crisis, the pace of digitisation across all sectors was demanding new approaches to finance and book balance.

The opportunities are significant – from cognitive credit and improved forecasting accuracy to enhanced customer analytics. All use similar tools, based on artificial intelligence and quality, trusted data. Cognitive credit can be deployed to quickly make decisions on whether to advance or restrict credit, based on individual company positions and available data. Doing so enables businesses to either capitalise on opportunities (for instance, agreeing credit for a supplier that has run out but is a supportive and integral partner) or avoid risk (in the cases where a business might be in administration).

With more accurate forecasts, businesses can better manage their currency purchases and deposits, selling currency that is not required or buying more where predictions identify an upcoming demand.

It is the same with customer analytics – with a greater understanding of customer needs, businesses can make decisions based on the right mix of the product (and how it meets demand) and supply chain suitability (such as production costs and location in relation to customers).

In many ways, the events of the past year have accelerated the process. In doing so, the problem is the pandemic has also accelerated the speed at which failure to act can lead to obsolescence. Therefore, it is vital that businesses, and more particularly their finance and accounting departments, kick start their digital transformation. This will enable them to deploy the tools and analytics that is needed to capture data, generate insights and drive fast, accurate decision-making to uncover previously untapped sources of cash and reverse revenue degradation.

The Importance of Digitally Enabled Finance Teams

Forward-thinking CFOs have already begun the process of digitising their departments, but for those that have been slow to start, now is the time to push forward. It is only through digital tools and analytics that finance leaders can identify both the internal and external opportunities to recover revenue and improve cash flow. Whether that’s releasing working capital, minimising revenue loss and accelerating revenue recovery, reducing total cost of ownership or enhancing customer retention – only digitally enabled finance teams will be in a position to capitalise and, ultimately, bolster business performance during what will be a trading period like no other.

Continue Reading

Finance

O-CITY enters Kenya to drive contactless payments across Matatu bus service

Published

on

O-CITY enters Kenya to drive contactless payments across Matatu bus service 2

Up to 10,000 buses to become cashless with O-CITY’s M-Pesa-based ticketing solution

O-CITY, the automated fare collection provider by BPC, today announces its initiative to drive contactless payments across bus services in Nairobi, Kenya. The O-CITY pilot, designed to reduce the use of cash in response to the COVID-19 pandemic, was launched in partnership with transport savings and credit specialists, NikoDigi, and Kenyan payments firm, Tracom, to accelerate the deployment of cashless fare collection.

Used by 70% of the population in Kenya, Matatu buses are a dominant transport mode across the country whereby passengers traditionally pay in cash. O-CITY’s automated fare collection platform leverages the M-Pesa mobile wallet, which is used by 90% of the population in Kenya. Passengers enter a code on their phone and a debit is made on their wallet, which can be instantly seen by drivers to grant access to ride. The platform removes unnecessary tickets and cash payments, instead offering an accessible payment solution that consumers already use, via a device already in their hand.

O-CITY’s platform is also built to make fare collection more transparent between the bus owners and drivers. Buses and routes are privately owned by several operators who ‘lease’ to drivers who must meet daily financial fare targets, before generating their own earnings. Fare pricing differs depending on the route and a range of factors, so digitising the transactions enables visibility and reliability of fare data. With heavily congested routes in Nairobi, digitising fare collection also serves to remove the friction of exchanging money and time taken for drivers to pick up passengers.

An important part of O-CITY’s pilot is an educational campaign to get the bus owners and drivers on board to become champions on the service. With teams on the ground at drop off points promoting the benefits of the service, buses and drivers can enrol in as little as 10 minutes. Local marketing on buses also promotes the ability to pay digitally to passengers.

Patrick Karera, MD at Nikodigi: “Having provided savings and credit management solutions for both the Matatu and Boda Boda (motorbike taxi) sectors, Nikodigi understands the needs of vehicle owners and drivers. Together with our partners, we have designed a product that automates fare collection without taking control away from the drivers and conductors or radically changing how they operate. We dubbed the solution “Lipafare” meaning ‘pay fare’. The platform has been embraced by passengers because of its ease of use, but also because it eliminates cash transactions during the COVID-19 pandemic.”

Tokhir Abdukadyrov, SVP of smart city and transport solutions at BPC: “A mobile money revolution has been happening in Kenya with the ubiquity and success of M-Pesa. The move away from cash to contactless public transport is an important part of this movement. At O-CITY, we know that innovation does not always require new technologies, but instead new ways of performing a task. By connecting our O-CITY platform to mobile wallet M-Pesa, we’re able to build a simple contactless fare solution that is familiar to the customer and likely to encourage adoption. Moreover, it enables us to scale fast to rollout the service at a time when cashless payments have a newfound importance.”

Continue Reading

Finance

Can companies really afford to WFH?

Published

on

Can companies really afford to WFH? 3

By Carmen Ene, CEO of 3StepIT.

Firms scrambled to enable Working from Home (WFH) at the beginning of the Covid crisis, but ten months on, corporate IT strategies are becoming far more challenging as new work patterns emerge.

Recent research from 3stepIT confirms that technology investment over the next 12 months will be heavily influenced by the changes required to manage the Covid-19 pandemic and support a new-look mobile workforce.

Almost a quarter (24%) of 2019’s annual IT budget is set to be swallowed up by remote working demands. At the same time, with 29% of desktops sitting unused in deserted offices, companies are having to accelerate the retirement of IT equipment, raising serious questions regarding the security and legitimacy of asset disposal strategies.

The implications are stark: in a bid to support the requirement for flexible working, companies risk jeopardising other strategic IT investments that could be key to delivering the agility required to survive the pandemic.

As Carmen Ene, CEO at 3stepIT insists, a more affordable and sustainable technology acquisition model is required.

New Working Environment

Covid-19 has driven an acknowledged shift to WFH, but the new working environment is far more nuanced. Government policy continues to shift. Working in the office was encouraged for a few months in the bid to reinvigorate the urban economy; now we are back to WFH.  The day-to-day experience for the majority of working adults continues to chop and change.

The business implication is also varied, with companies enjoying different levels of employee productivity. According to the Office for National Statistics (ONS), while around half of companies have seen no difference in productivity, nearly a quarter said it had fallen.

Just 12% have seen an increase in productivity. The Bank of England’s Chief Economist has recently commented that WFH risks stifling creativity and cuts people off from new experiences.

Despite the challenges for businesses and employees alike, the WFH trend is set to continue. A survey from the Institute of Directors confirmed nearly three quarters (74%) of company directors plan to retain increased home-working post-coronavirus – whenever that may be.

This attitude is confirmed by research from 3stepIT which reveals 60% plan to allow employees/more employees to work from home and 56% to offer more flexible working hours.

The question for businesses then is how best to achieve this new flexible employment model, especially given the continued economic uncertainty and the many demands on the corporate budget?

IT Investment

The initial response from many companies to enable WFH was impressive – companies of every shape and size closed the doors and embraced remote interaction. Hastily allocated laptops and video calls addressed the immediate challenge.

As the pandemic rolls into month ten and many nations enter lockdown two, organisations are facing up to the reality of increased investment needed to fuel a mobile workforce for the long-term, as well as an urgent review of the temporary and emergency technology packages that were put in place to enable home working.

For many companies, this will demand a significant and unplanned upfront cost, potentially draining company cash reserves when they can least afford it.

Almost half (47%) of businesses in Europe expect to increase investment in remote working over the next 12 months, with IT strategies becoming increasingly focused on facilitating social distancing (47%) and increased home working (46%) to reflect the changing needs of employees.

Investment Model

The need to allocate investment to support a remote workforce is unquestionable. Yet there are many other immediate priorities facing IT budgets as businesses work hard to adapt to extraordinary change.

From the physical events that have gone virtual to supply chain challenges and the sheer uncertainty of demand in every market, technology has a vital role to play in enabling agile business.

The majority (61%) of IT decision-makers expect IT budgets to rise next year but with the shift to home working demanding nearly a quarter of annual budgets, funds will have to go much further than before.

How can companies support the investment in technology required to enable secure and productive remote working without compromising on short-term capital investment in essential digital transformation projects?

New thinking is required, however the value of financing rather than purchasing IT equipment outright has been proven over the past few months.

89% of companies already using finance to acquire some or all of their assets have been able to make investments in additional IT hardware to enable employees to work from home, and over half (54%) are more likely to use finance to acquire assets over the next two years.

A growing number of companies are starting to realise that access to technology is more important than ownership.

Technology Lifecycle Management

It is important to recognise, however, that finance is just part of this equation. The pandemic may have forced companies to accept flexible working on a scale previously deemed impossible, but there are still significant challenges for IT management to address.

The initial equipment acquisition is, in many ways, the easy bit. What is the strategy for remote support, which is critical if employees are to be productive? How will aged equipment be securely retired and disposed of when employees rarely, if ever, come to the office? How do you keep track of where devices are and if they’re in health?

Effective remote working requires a comprehensive Technology Lifecycle Management model that supports the business from acquisition through support to disposal.

With flexible working here to stay, IT managers have an ever increasing list of demands – and a need to demonstrate the value of every expense. The widespread adoption of WFH is not the only dramatic shift in strategic approach precipitated by Covid-19 – there has also been a change in attitude towards IT device ownership.

Focusing on providing employees with secure, effective access to technology rather than owning it, provides IT managers with a chance to not only release essential capital budget but also manage the IT lifecycle more efficiently and sustainably.

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2020
2020 Global Banking & Finance Awards now open. Click Here

Latest Articles

Track and Trace and Other Lost Data 4 Track and Trace and Other Lost Data 5
Technology38 mins ago

Track and Trace and Other Lost Data

By Ian Smith, General Manager and Finance Director at Invu  You, like me, were probably amazed by the now infamous...

Why ID verification is no longer a barrier to global growth in banking 6 Why ID verification is no longer a barrier to global growth in banking 7
Banking2 hours ago

Why ID verification is no longer a barrier to global growth in banking

By Barley Laing, UK Managing Director at Melissa Issues related to effective identity (ID) verification have restricted the global growth...

Digital Finance: Unlocking New Capital in Disrupted Markets 8 Digital Finance: Unlocking New Capital in Disrupted Markets 9
Finance3 hours ago

Digital Finance: Unlocking New Capital in Disrupted Markets

By Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises...

Beyond the bottom line: why brands must show they care to connect with customers 10 Beyond the bottom line: why brands must show they care to connect with customers 11
Top Stories4 hours ago

Beyond the bottom line: why brands must show they care to connect with customers

By Vadim Grigoryan, Partner, Lunu Over the past few years, we’ve witnessed an ever-growing activism among consumers, with public opinion...

O-CITY enters Kenya to drive contactless payments across Matatu bus service 12 O-CITY enters Kenya to drive contactless payments across Matatu bus service 13
Finance4 hours ago

O-CITY enters Kenya to drive contactless payments across Matatu bus service

Up to 10,000 buses to become cashless with O-CITY’s M-Pesa-based ticketing solution O-CITY, the automated fare collection provider by BPC,...

Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year 14 Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year 15
Business5 hours ago

Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year

Yolt launches evolved app to help shoppers save whilst they spend Across the UK, consumers are set to spend £6.4bn...

Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday 16 Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday 17
Business5 hours ago

Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday

Half (52%) of European consumers plan to do Christmas shopping around holiday sales, including Black Friday, compared to previous years...

The largest event in e-commerce history? ‘Tis the season 18 The largest event in e-commerce history? ‘Tis the season 19
Top Stories5 hours ago

The largest event in e-commerce history? ‘Tis the season

By James Booth, VP Head of Partnerships for EMEA, at PPRO Sometimes, change happens slowly. Other times it chases you...

Optimum Finance bolsters its offering in three regions with two new sales directors and commercial director promotion 20 Optimum Finance bolsters its offering in three regions with two new sales directors and commercial director promotion 21
Business6 hours ago

Optimum Finance bolsters its offering in three regions with two new sales directors and commercial director promotion

Leading invoice finance provider and fintech firm Optimum Finance has appointed two regional sales directors to fulfil the funding needs of SMEs...

Bank of Idaho Selects Teslar Software to Enhance Customer Service 22 Bank of Idaho Selects Teslar Software to Enhance Customer Service 23
Banking6 hours ago

Bank of Idaho Selects Teslar Software to Enhance Customer Service

Partnership enables bank to spend more time with borrowers, better meet their needs Teslar Software, a provider of automated workflow...

Newsletters with Secrets & Analysis. Subscribe Now