Consider for a moment how the Finance and Accounting (F&A) industries functioned five years ago. Then compare that to how we do things today — and what you expect things will look like five years from now. The differences over such short increments of time are staggering.
Moving away from human-centric processes
Though our journey started in stone tablets, the era of paper reigned supreme for the longest period in our history, until just the past few decades where transitions have come at lightning speed and there’s no sign of that transformation slowing down. In just the last 10 years, we’ve seen a fundamental shift — moving away from processes that are human-centric and toward new technologies that minimize human touch points in favor or digital interactions.
Some of the most prominent areas where we’ve felt these shifts have been in the switch from snail mail to electronic statements and payments; auto-coding of invoices that formerly required many manual touches; the elimination of paper PO requisitions in favor of online systems; and a shift from accounting departments having a floor full of data entry professionals to just a few trained hands to key in the outliers.
Still, at the end of day, many of these processes are largely people-initiated — and expensive. According to one APQC study, companies today spend anywhere from $4.98 to $12.44 to process a single invoice (incredible) but that tide is quickly shifting and the next five years promise a digital shift of unmatched proportions.
The digital shift is underway
It’s happening fast. Older models of transaction processing in F&A are quickly becoming outdated as new, smarter, digital interactions become the way of the world. And operating in this digital world means leaving behind (or minimizing) manual ways of doing things and ushering in a ‘new guard’ where blockchain technology, artificial intelligence (AI), the Internet of Things (IoT), data and analytics rule.
Here’s a quick snapshot of how each of these digital innovations are impacting F&A right now.
Blockchain gets a lot of buzz these days, and rightfully so. In F&A, blockchain technology is poised to take the place of manual data entry. With blockchain, instead of keeping separate records based on transaction receipts, companies write their transactions directly into a joint register, creating an interlocking system of enduring accounting records. Since all entries are distributed and cryptographically sealed, falsifying or destroying them to conceal activity is practically impossible.
Over ten billion “things” are connected to the internet today and those things are taking the place of people issuing transactions. From smart sensors that monitor supplies in a retail store and automatically place reorders (and a resulting invoice), to commercial electrical or HVAC systems that transmit data back to a billing department, connected devices hold a lot of promise for improving the accuracy of accounts receivable and accounts payable activities. They’re clearing a path to greater efficiency, and the long-term eradication of manual transaction processing.
Artificial Intelligence (AI)
AI is software that can draw conclusions from large quantities of data, and adjust its activities based on those conclusions — it’s software that can learn. In F&A, then, AI holds a lot of promise. For example, AI can learn a firm’s accounting rules — and automatically flag for correction anything that falls outside of the norm. AI can know your entire AR ledger, match up invoices against the ledger, and flag exceptions or past due payments. It takes the data an accounting team is already collecting and uses it to strategic advantage, over and over again without human interruption.
Data, analytics and actionable insights
It’s only logical that a fundamental shift toward digital represents enhanced data and analytics opportunities. More data is more readily available more quickly in a customer lifecycle than ever before. And with F&A teams spending far less time doing manual data entry or pushing paper, there is more time to spend on understanding what the data is saying. The implications of that are far-reaching for many different industries, but in the finance world we can focus on providing actionable insights rather than simple data presentation.
How are you navigating the new digital landscape in Finance and Accounting?
As the industry transforms, are you ready to transform along with it? We’re excited about the huge role of digital interactions in finance and the promise the near future holds for Conduent, our customers and the world. Tell us about your greatest triumphs and challenges in the comments below.