Automating finance work saves money: Accenture

Study reveals untapped potential of technology

Accounts payable, accounts receivable, invoices, purchase orders "�- boring stuff, maybe, but critical back office functions. Get them wrong and companies can go bust. Get them deliberately wrong and people will go to prison, eventually. A bad heart won't save you.

Corporate America woke up to the prison part a while ago. But it is still not fully aware of the benefits of automating various finance and accounting (F&A) tasks, says accounting firm and consultancy, Accenture.

In a survey it commissioned the Economist Intelligence Unit (EIU), of the Economist magazine, to conduct, Accenture found "a clear lack of awareness within organisations about the part technology could play in improving finance operations." This was the response of 40 per cent of the 120 CxO level executives EIU polled online in various sectors and geographies.

Anoop Sagoo, a partner at Accenture Financial Services, one of five businesses the firm has, said, "We aren't really surprised by the response on awareness:" Commercially available products for electronic data transfer, workflow tools, and optical readers, and various service providers in the domain have not been publicised adequately. And the use of these tools in conjunction with outsourcing is not clear to many yet, UK based Sagoo said. "It requires collaboration of firms with their customers."

These technologies can significantly increase the efficiency and accuracy of finance operations by automating processes and enabling proactive management, says an executive summary of the report based on the survey.

They are robust and secure means of automated data capture "that are probably already working well in other areas of most respondent's businesses, however, they have yet to make their way to the finance function," the summary says.

"Only 15 percent of companies surveyed currently transact 60 percent or more of their accounts payable and accounts receivable functions on a fully automated basis". So a number of firms are still using manual, labor-intensive methods of transaction processing. Yet, respondents were "generally" very clear about the benefits of automated transaction processing.

For example, it was a significant enabler for bottom-line benefits, credited with reducing the number of days sales outstanding, minimising bad debt and accelerating cash flow.

And, a majority of the respondents, 77 per cent, thought automating financial transactions "helped to create a single version of the truth," thanks to its involvement in effective integration.

The application of technology to business processes is an important component in boosting productivity and reducing transaction processing costs.

Seventy per cent of respondents stated the average cost of processing an invoice in their organisation was over $3 and nearly half estimated it at over $5.

More than a third reported their organisations did not know how much it cost to process each invoice it received. So 78 per cent of respondents highlighted the need to improve operational efficiency as a major challenge, and 68 per cent identified reducing the time taken to process transactions and 64 percent identified reducing the cost of processing transactions as major challenges.

Even though, F&A BPO is a fast growing business, "the challenge is," Sagoo said, "the IT departments of large organisations are overloaded with the 'front office' requirements," and the back office takes the back burner. "That is where Accenture comes in, for their back office is our core business," he said.

Some 49 percent of respondents reported that the introduction of web-enabled tools to facilitate communication with customers and suppliers was a priority for investment over the next three years, while almost as many reported that the development of accounts payable workflow and query resolution systems as a priority. In addition, 21 percent of respondents also cited the importance attached to joining an electronic settlement exchange, the summary said.

Outsourcing was one way of capturing the benefits of technology, Accenture said. Through outsourcing, overcoming the barriers to adopting new tools and technologies becomes the responsibility of the outsourcing provider, not the organisation. Not only does an outsourcing provider have previous experience of implementing such tools, the act of outsourcing can also help sidestep some of the other challenges and barriers that respondents identified.

For instance, cultural resistance, a barrier for 38 percent of respondents, disappears as the processing is carried out within the outsourcing provider's organisation where the use of such tools is already commonplace. Even the cost of acquiring the new tools and technologies, which some respondents cited as a barrier, ceases to be an issue.