Surveying a seminar room packed with CFOs and financial professionals, a McKinsey consultant asks the gathered audience: “How many of you believe digital technology will change your finance department?” All hands go up. Then she asks: “How many of you want to lead the change?” The room is silent. Not a single hand is raised.

The situation is typical for many companies – change can be frightening. It feels more comfortable to continue using processes that have always worked before. But whether we like it or not the pace of change is accelerating. Just five years ago, we were all talking about digital transformation in financial processes. Now it’s here in full force.

Digital transformation is here – so what’s next?
While most financial professionals acknowledge that automation and software-driven processes are the future, few finance departments have fully harnessed the power of digital technology. Many still rely on slow and costly manual processing, which can lead to high error rates and inconsistent results. Shockingly, one survey by Trintech-Adra showed that only 28% of financial professionals trust their reported numbers!

Rethinking roles, processes and systems
Despite the challenges and the tendency to stick to the “tried and true”, some CFOs and financial leaders are daring to rethink their roles and systems in order to be the winners in the emerging business landscape. So what are best-in-class companies doing, and what are their financial leaders thinking?

“The role of the CFO is changing from
number cruncher to strategic business advisor”

Morten Bille, Partner,
Head of Finance IT & CFO Services, Basico Consulting, Denmark

Start with strategy, not technology
According to Morten Bille, Partner and Head of Finance IT & CFO Services at Basico Consulting in Denmark, the key to success is to start by rethinking the strategic value you bring to your company. Technology comes later, once you’ve defined your goals and assessed the various steps and needs of your financial process management as a whole.

Becoming strategic advisors
“Tomorrow’s CFOs see themselves as strategic advisors,” Bille says. “It’s no longer enough just to be a number cruncher. To really create value, you need to get involved in risk management and business development. You should also act as a challenger and sounding board to senior management on strategic investment decisions.”

“The CFO of the future must
enable innovation and manage risk better.”

Ash Noah,
VP CGMA External Relations at the American Institute of CPAS (AICPA)

Making the transformation effective
Factors such as skyrocketing costs of financial reporting, the pressure to close faster and do less with fewer personnel drive the need for change. But it can be challenging. According to McKinsey, 46% of executives feel cultural or behavioral change is the biggest roadblock to achieving their digital strategies. In other words, management simply doesn’t “get it” or is not willing to make the required investment in time, money and personnel.

The rewards are substantial
But the rewards are considerable for companies that master the transformation. A recent EY survey of best-in-class companies showed they were able to deliver higher quality reporting less time with fewer resources. The companies:

     • Spend an average of just 5 days to complete the management report, a full 7 days shorter than the industry average.
     • Are more confident in their financial reporting, thanks to a stronger focus on risk and materiality, centralized processes, automation and system integration.
     • Spend 15% less on the finance function, amounting to 1.2% of revenue, compared to the industry average of 1.4%.

Turning change into opportunities
Clearly, cloud-based software and other digital technology is ushering in a new era of best practices in the area of financial close management. There are challenging along the way, but the need is great and the rewards are there for financial managers who step up and lead the change.

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