Beyond the Numbers: Exploring why the Cost of Finance is so high and Finding Sustainable Efficiency
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In today's fast-paced financial world, organizations are grappling with an often-overlooked challenge: the true cost of finance operations. As we delve into this critical issue, we'll explore the hidden expenses, the potential for transformation, and the compelling case for modernization.
The Burden of Financial Processes
Whether we like it or not, the truth behind the end-of-period financial process is that it consumes vast resources, devouring thousands of hours for finance teams and cost/revenue center owners. Spreadsheets, the backbone of many financial operations, are ill-equipped to handle large volumes of data, lack proper audit trails, and hinder automation efforts.
While full-scale finance transformation programs seem like the obvious solution, many CFOs hesitate due to the perceived high costs. However, the benefits of such programs - enhanced data accuracy, greater transparency, and faster close times - are often difficult to quantify in terms of ROI.
The Four Pillars of Modern Financial Transformation
To build a compelling business case for investment in financial transformation, organizations should focus on four key areas:
1. Cost reduction
2. Efficiencies gained
3. Resource productivity enhancement
4. Data optimization
Low-Hanging Fruit: Quick Wins in Financial Transformation
Several areas offer potential for immediate improvement:
Eliminating spreadsheet dependence - the sheer cost of countless spreadsheets across an organization is highly significant.
Shifting to daily financial management - automation can reduce the month-end crunch, leading to significant cost savings.
Intelligent auto account attestation - not all accounts need manual review, automating the attestation for low-risk accounts saves time and maintains control.
Process centralization - centralized system allows for real-time monitoring and automated workflows.
Improving decision-making accuracy - with over 70% of senior managers distrusting their data, improving data quality is crucial.
Building the Business Case for Automation
Forward-thinking CFOs are turning to automation to deliver both short and long-term savings. Studies suggest that up to 50% time and cost savings are achievable, with some estimates indicating that 45% of workforce tasks can be automated.
Implementing modern reconciliation software can deliver operational cost savings of up to 75% by automating manual processes and enabling management by exception.
Out with the Old, In with the New
Legacy processes are creating unnecessary bottlenecks, increasing risk, and inflating costs. The reliance on spreadsheets and manual processes is outdated and incompatible with modern digitization efforts.
A successful modern financial control framework requires a shift away from disparate, manual processes towards an integrated, automated approach. This not only saves money but also frees up talent for more value-added activities.
In conclusion, the true cost of finance extends far beyond visible expenses. By embracing automation and modern financial control frameworks, organizations can unlock significant savings, improve accuracy, and position themselves for success in an increasingly data-driven world.
For more information on how ReconIQ can help you build a robust business case, structure a best in class Target Operating Model and help implement the right tool for your financial controls, get in touch!
