In the very near future, all finance teams are bound to let go of backward-looking disclosure operations and concentrate their efforts on future-focused opportunities for the business
As the business world accelerates towards an everything-as-a-service economy, the next few years will be pivotal for organisations and their finance departments in making the transformations necessary to update their offerings and ability to deliver service excellence.
Several trends are converging over the next few years that could set the stage for a successful service-economy shift, and put CFOs in the driving seat. It’s not unreasonable to conclude that 2018 will be a pivotal year for finance due to the widespread adoption of four disruptive technologies.
1. Blockchain and self-driving finance
As the foundation of crypto-currencies, blockchain has already played a vital role in next-generation finance tools. There is another aspect of blockchain that could prove to be even more influential though. As a technology that optimises efficiency and accuracy of any transaction, blockchain applications are underpinning the growth of self-driving finance if they could be connected to the organisation’s internal ledger. One indication of what this means is that nearly all major financial institutions have given a vote of confidence to blockchain in the form of heavy investments. Peer-to-peer distributed ledgers have made real the dream of simultaneously edited financial documents with real-time synchronization. For auditors, blockchain ledgers have the potential to solve the problems associated with standardization, reliability and compliance all at once. The goal is to create a transparent, reliable, universal standard to verify business transactions. It’s difficult to overstate the potential impacts of this technology on the lives of financial managers.
2. Unified ledger integration
A corollary to the adoption of blockchain involves how the new unified ledgers will be integrated with performance management systems at the highest levels. What this means is the final realisation of the “single version of the truth” that the C-Suite has long sought in data consolidation initiatives. This would deliver quite literally 24/7 real-time intelligence into the board room. Accenture estimated that by replacing fragmented financial databases based on transaction processing with a new unified ledger system, companies could unlock 50 percent of costs in business operational compliance and drop costs up to 70 percent for financial reporting.
Streamlined processes with lower error rates and the vast amount of data made available will make it possible to greatly enhance the accuracy of forecasting and Artificial Intelligence (AI)-assisted decision-making. It will allow CFOs to access both period reporting data and real-time reporting with no need to close. That also means that CFOs can perform better data analysis and calculate more complex KPIs than the competition, directly from the finance dashboard. Deeper insights, faster turnarounds and the release of more operating capital for investment are just the beginning of this new paradigm.
3. AI in expense management
As mentioned above, AI and the closely related technology of machine learning have evolved to the point where they have become indispensable additions to the finance toolkit. Automated processes are much easier to update with variable financial rules and changeable governmental regulations than human brains. This has proven especially true for enterprises with independent or contract mobile workers who must adhere to local laws and financial reporting guidelines.
Now, AI programmes instantly handle the company’s accounting consolidation, arbitrage and legal compliance needs. Invoices can be generated more rapidly and accurately as remote workers enter their data directly into the time management system. Enterprise chatbots and digital assistants will integrate seamlessly with services like Office365, and Microsoft Azure’s LUIS (Language Understanding Intelligent Service) to support natural language queries and cognitive services — even capturing data like travel expenses and billable time as they occur.
4. Digital invoicing (UBL)
In 2018, standardisation and automation will help finance teams make their invoice processes completely self-driving. Universal Business Language (UBL) is an open library of standardised XML for documents like purchase orders, invoices and transport logistics.
Although it has been in use for a decade, UBL was expected to be mandated by European Directives in 2018. It now appears early 2019 will be the final date when European firms will be required to receive and process e-invoices using UBL.
One of the biggest benefits of adopting UBL is that invoices instantly become booking proposals that clients can then process in their financial or ERP systems. Finance professionals in both companies will save a great deal of time and effort by not having to recreate invoice data. Like blockchain, UBL removes one layer of potential for human error in copying data from one form to another.
5. Integrated business planning
These four technologies – blockchain, unified ledger integration, AI and digital invoicing – indicate a dramatic restructuring of the financial landscape in the year ahead. All of these trends are coalescing to simplify the application of predictive technologies to integrated business planning, from strategy to business to budgets. In the very near future, all finance teams are bound to let go of backward looking disclosure operations and concentrate their efforts on future focused opportunities for the business. In 2018, prepare to spend more time on rolling forecasts and performance-first planning. That will be the foundation of the next generation of CFO-led strategy.