FRICTION IN FINANCE WITH RICHARD HURWITZ, TUNGSTEN NETWORK’S CEO
FRICTION IN FINANCE WITH RICHARD HURWITZ, TUNGSTEN NETWORK’S CEO
Published by Gbaf News
Posted on November 8, 2017
Many of us are all too familiar with the impact that time-consuming administrative tasks can have on employee productivity.
Richard Hurwitz
For Finance departments, such tiresome tasks can cause friction in the supply chain. Reviewing procurement catalogues that are out of date, re-checking invoices that are missing needed fields and handling enquiries from suppliers about the status of their invoices are examples of non-productive, non-strategic activity.
In order to understand the causes of friction and to help businesses overcome it, this year Tungsten Network launched its inaugural Friction Index.
The Index was developed for businesses to assess and identify the causes of friction within their processes. By analysing the current state of supply chain friction and the priority level of removing friction from procure-to-pay processes, the Index has created a friction score that Tungsten Network will review year-on-year.
Why did Tungsten Network conduct this research? “Witnessing workers distracted from the strategic focus of the company and spending an inordinate amount of time on menial tasks instead of ones which will accelerate the business is a big frustration for any CEO. Freeing up employees’ time to focus on the ‘bigger picture’ is vital to allow any business to grow.
“We are passionate about encouraging businesses to embrace digitisation and begin enjoying the benefits of a frictionless back office, and wanted to highlight the financial and cultural cost of the current paper-based and manual processes in order to shine light on the situation and the opportunity provided by FinTech.
“To understand the scale of the existing problem, we surveyed almost 500 businesses from all over the world, asking them what they consider to be the causes of friction within their finance function.”
Did any of the findings surprise you? “Our research revealed that finance departments are wasting 6,500 hours per year on clunky accounts payable processes. When multiplied by the average hourly UK wage (£13.65) this means businesses are losing as much as £88,725 a year resolving payment issues. This is an incredibly surprising figure and is not something that many businesses would consider to be affecting their bottom line.
“Factors identified to be causing friction included a lack of automated approvals, a high proportion of paper invoices and a high volume of supplier enquiries regarding invoices or payment status – all issues that are potentially easily resolved.
“Understandably, given the wasted money and man power, 36 per cent of businesses stated that removing friction from the payment process is a top priority for 2017. However, a full 20 per cent stated it is not a priority at all – perhaps an indication that the scale and cost of the problem is largely unseen.”
Why would it be beneficial for businesses to adopt automation in their finance department? “Identifying points of friction within a business is the first step towards removing them and in many cases, a targeted approach to automation can reap real rewards. Technology can do away with these cumbersome and menial tasks taking up precious time and instead boost productivity and efficiency.
“For example, every day businesses waste time and energy by checking invoice documents received from a growing global supply chain whereas if they joined an e-invoicing network, they would reject incorrect invoices before they were even processed. So too, cross border traders can recover time lost to culling invoices for opportunities to collect unclaimed VAT. Digitising POs and invoices automates these manual tasks.
“While automation in Finance is gaining pace and machine-learning techniques that are currently emerging will have unprecedented consequences for financial processing and oversight, thoughtful leaders can do more to articulate a digital strategy to automate their procure-to-pay work stream. The benefits of doing this are far-reaching. For example, instead of teams spending time responding to supplier enquiries about when invoices will be paid, an online platform can allow the vendor to find out themselves in real time.“Especially burdensome for businesses with staff based across multiple locations, is friction associated with inaccessible data – it is easy for duplications to occur and for too much time to be spent by different departments liaising with one another and questioning figures. Technology exists to support this form of collaboration and provide organisations with a wealth of data on spending patterns. Yet so often this unanalysed procurement data stagnates in paper invoices, instead of being quickly captured to highlight efficiency savings.”
What challenges are preventing businesses from embracing digital invoicing? “It can be an incredibly difficult and daunting task for businesses to completely overhaul systems to make the switch to digital. There is also often a misconception that adopting automation or switching to digital is a costly process and one which takes a huge amount of time when it comes to implementation. However, by taking simple steps, businesses can see a real impact.
“Automating back office processes like accounts payable has proven to enhance operating efficiencies. This is what the digital dynamic is all about: easing friction and demonstrating that technology is an enabler of the buyer-seller relationships and corporate development.”
What do you hope to see from your findings next year? What does the future hold? “We know that for 36 per cent of the businesses surveyed, removing friction is a top priority, so I hope that next year’s Friction Index sees a vast reduction in the number of hours and amount of money wasted due to supply chain inefficiencies and clunky payment processes.“Numerous processes in the financial world remain cumbersome and time consuming when they needn’t be. Technology means we can do away with the tiresome and menial tasks that clog business work streams and instead boost productivity and efficiency. It is surprising that in this tech-enabled day and age businesses are still spending so many hours per week managing a process that could be automated.
“If businesses aren’t tied up chasing invoices or receiving phone calls from suppliers doing the same, they have more time to explore opportunities for growth with existing customers and go after new ones. If all the data from past invoices is easily accessible, opportunities to identify variances that will target inefficiencies are more visible.
“Tools exist to remove this supply chain friction, which can cause stress, waste time and ultimately impact the wider economy, and we want to challenge UK businesses to proceed with confidence on a digital journey to embrace the benefits of a frictionless back office.”
Many of us are all too familiar with the impact that time-consuming administrative tasks can have on employee productivity.
Richard Hurwitz
For Finance departments, such tiresome tasks can cause friction in the supply chain. Reviewing procurement catalogues that are out of date, re-checking invoices that are missing needed fields and handling enquiries from suppliers about the status of their invoices are examples of non-productive, non-strategic activity.
In order to understand the causes of friction and to help businesses overcome it, this year Tungsten Network launched its inaugural Friction Index.
The Index was developed for businesses to assess and identify the causes of friction within their processes. By analysing the current state of supply chain friction and the priority level of removing friction from procure-to-pay processes, the Index has created a friction score that Tungsten Network will review year-on-year.
Why did Tungsten Network conduct this research? “Witnessing workers distracted from the strategic focus of the company and spending an inordinate amount of time on menial tasks instead of ones which will accelerate the business is a big frustration for any CEO. Freeing up employees’ time to focus on the ‘bigger picture’ is vital to allow any business to grow. “We are passionate about encouraging businesses to embrace digitisation and begin enjoying the benefits of a frictionless back office, and wanted to highlight the financial and cultural cost of the current paper-based and manual processes in order to shine light on the situation and the opportunity provided by FinTech. “To understand the scale of the existing problem, we surveyed almost 500 businesses from all over the world, asking them what they consider to be the causes of friction within their finance function.”
Did any of the findings surprise you? “Our research revealed that finance departments are wasting 6,500 hours per year on clunky accounts payable processes. When multiplied by the average hourly UK wage (£13.65) this means businesses are losing as much as £88,725 a year resolving payment issues. This is an incredibly surprising figure and is not something that many businesses would consider to be affecting their bottom line. “Factors identified to be causing friction included a lack of automated approvals, a high proportion of paper invoices and a high volume of supplier enquiries regarding invoices or payment status – all issues that are potentially easily resolved. “Understandably, given the wasted money and man power, 36 per cent of businesses stated that removing friction from the payment process is a top priority for 2017. However, a full 20 per cent stated it is not a priority at all – perhaps an indication that the scale and cost of the problem is largely unseen.”
Why would it be beneficial for businesses to adopt automation in their finance department? “Identifying points of friction within a business is the first step towards removing them and in many cases, a targeted approach to automation can reap real rewards. Technology can do away with these cumbersome and menial tasks taking up precious time and instead boost productivity and efficiency. “For example, every day businesses waste time and energy by checking invoice documents received from a growing global supply chain whereas if they joined an e-invoicing network, they would reject incorrect invoices before they were even processed. So too, cross border traders can recover time lost to culling invoices for opportunities to collect unclaimed VAT. Digitising POs and invoices automates these manual tasks. “While automation in Finance is gaining pace and machine-learning techniques that are currently emerging will have unprecedented consequences for financial processing and oversight, thoughtful leaders can do more to articulate a digital strategy to automate their procure-to-pay work stream. The benefits of doing this are far-reaching. For example, instead of teams spending time responding to supplier enquiries about when invoices will be paid, an online platform can allow the vendor to find out themselves in real time.“Especially burdensome for businesses with staff based across multiple locations, is friction associated with inaccessible data – it is easy for duplications to occur and for too much time to be spent by different departments liaising with one another and questioning figures. Technology exists to support this form of collaboration and provide organisations with a wealth of data on spending patterns. Yet so often this unanalysed procurement data stagnates in paper invoices, instead of being quickly captured to highlight efficiency savings.”
What challenges are preventing businesses from embracing digital invoicing? “It can be an incredibly difficult and daunting task for businesses to completely overhaul systems to make the switch to digital. There is also often a misconception that adopting automation or switching to digital is a costly process and one which takes a huge amount of time when it comes to implementation. However, by taking simple steps, businesses can see a real impact. “Automating back office processes like accounts payable has proven to enhance operating efficiencies. This is what the digital dynamic is all about: easing friction and demonstrating that technology is an enabler of the buyer-seller relationships and corporate development.”
What do you hope to see from your findings next year? What does the future hold? “We know that for 36 per cent of the businesses surveyed, removing friction is a top priority, so I hope that next year’s Friction Index sees a vast reduction in the number of hours and amount of money wasted due to supply chain inefficiencies and clunky payment processes.“Numerous processes in the financial world remain cumbersome and time consuming when they needn’t be. Technology means we can do away with the tiresome and menial tasks that clog business work streams and instead boost productivity and efficiency. It is surprising that in this tech-enabled day and age businesses are still spending so many hours per week managing a process that could be automated. “If businesses aren’t tied up chasing invoices or receiving phone calls from suppliers doing the same, they have more time to explore opportunities for growth with existing customers and go after new ones. If all the data from past invoices is easily accessible, opportunities to identify variances that will target inefficiencies are more visible. “Tools exist to remove this supply chain friction, which can cause stress, waste time and ultimately impact the wider economy, and we want to challenge UK businesses to proceed with confidence on a digital journey to embrace the benefits of a frictionless back office.”
