8 Key Digital Transformation Strategies for Finance Departments

Digital Transformation Strategies

Digital transformation is a growing priority for companies around the world and across industries. It brings a variety of benefits to efficiency, accuracy, and planning, and as it becomes more widely embraced, companies that haven’t embraced digitalization will find it harder to keep up with their competitors and customers.

Finance is one area where a digital transformation strategy can bring a number of benefits, whether it be in a major financial institution or the finance department of a company. Businesses rely heavily on the finance department to keep them running, ensuring that funds are available when they’re needed and that payments are coming in when they should. Improving the performance of the finance department benefits the whole company.

Finance digitalization is gaining momentum, with surveys showing that a strong majority of CFOs are considering it a high priority. Many are increasing their digitalization budgets and focusing significant amounts of time on it in order to improve the performance of the finance department.

Why is Digital Transformation Important?

When done manually, data entry and analysis can be a time-consuming process and one that is vulnerable to human error. Data also frequently ends up in silos, resulting in duplicated records and work, as well as inefficient communication both within the organization and between companies. Digital transformation can streamline finance operations in many ways, removing roadblocks and improving efficiency.

The Benefits of Automation

Many finance processes, such as monitoring transactions and other figures, are straightforward and repetitive, making them easy to digitize. According to McKinsey, roughly 40% of financial activities can be automated, which is particularly beneficial at a time when inflation is high and many countries are facing the possibility of recessions. Automating basic, repetitive tasks speeds up operations and frees workers to do other, more complex tasks such as forecasting and planning. Data entry, invoice creation, and payment reminders are all examples of tasks that can be automated. In addition to saving time, automating financial tasks can improve accuracy and consistency by reducing the opportunity for human error.

Data Analysis and Forecasting

AI can be a valuable tool for organizing and analyzing large quantities of data, as well as creating forecasts for a wide variety of scenarios. Digitizing financial data enables AI programs to discover patterns and insights that the finance department can use to improve its operations and plan for the future. It also makes it easier to access and analyze siloed data from other departments, integrating a company’s data to provide more complete and accurate pictures of that company’s current state and its needs, as well as ways that processes can be improved.

Cloud Advantages

There are many benefits to migrating data and functions to the cloud. It removes the burden of on-site data storage — which can require expensive infrastructure and regular maintenance — while allowing employees to access important information and tools when working from home or other locations. It also makes it easier for various systems to connect with each other and share data, improving the flow of information and enabling IoT integrations.

Digital Transformation Strategies

Digital transformation can be a big undertaking, involving significant investments and disruptions, even if the focus is just on one department rather than the entire company. Careful planning and budgeting is therefore highly beneficial, providing direction and cohesion as workflows and office setups are temporarily disrupted. Below are some steps to take when implementing a digital transformation strategy with a finance department.

1. Identify Goals

What is the company trying to improve? Will the department undergo a full transformation or will upgrades happen in stages? What tools are needed to facilitate digitalization?

All of these are important questions to ask during the planning stages. The company’s priorities will influence how the plan is implemented, and identifying factors such as weaknesses, bottlenecks, and available resources will provide direction. Having clear goals in the beginning will avoid the need for rebuilding or reorganizing either during the digitalization process or some time after it’s been completed. In-depth planning can also help minimize downtime and provide clarity to employees during a time of change. As the flow of operations changes, so too will workers’ roles, and having a clear plan of what those roles will be will help those workers adjust.

2. Identify Potential Obstacles

Transforming a department’s workflow can be complex and disruptive. Understanding the challenges ahead of time allows the company to plan for them and minimize any problems they might create. A lack of resources might necessitate taking things in steps rather than changing everything at once, while a lack of specialist knowledge makes it advantageous to train existing staff in advance or hire an expert. Challenges like these may also mean that outsourcing certain software or functions is a more practical option than setting up everything in-house.

3. Create a Digital Culture

Implementing new technology isn’t enough on its own. Employees need to be invested and comfortable with new software, processes, and roles. Getting workers involved early on can build excitement for the change and help them adjust. Early training will make it easier to settle in once upgrades are complete, improving confidence and minimizing the disruption that comes with learning new technology.

4. Develop Digital Skills

Working in a digitalized workplace requires digital skills, and employees will benefit from ongoing professional development. While familiarizing workers with the basics of a new digital environment is important, more can be gained by developing those skills further over time. A deeper knowledge of the available technology allows for greater efficiency and the opportunity to create programs and processes that are customized to the company’s unique needs. Keeping workers’ skills up to date also makes it easier to adopt new and better technology as it becomes available.

5. Embrace the Cloud

As discussed above, there are many advantages to moving operations to the cloud. For small and medium-sized businesses in particular, it can be much more cost-effective to adopt existing infrastructure and software through the cloud rather than building systems and expertise from scratch. There is a wide variety of software and services available that can be integrated into the company through the cloud and automate many financial processes, as well as provide analysis and insight based on financial data.

6. Centralize Data

In order to build the best analyses and predictions, it’s important that data from across the company is accessible. Data from different departments often ends up siloed, making it difficult to gain a complete picture of the company’s operations. Consolidating that data in a centralized location removes barriers and allows for deeper and more insightful analysis, and avoids duplication of records and labor.

7. Automate Basic Processes

Automation brings significant gains in efficiency and cost reduction. It can perform basic tasks faster and free up employees to do more complex work, reducing the total amount of resources needed by the finance department.

8. Take Advantage of Analytics

Consolidating data and reducing the number of work hours devoted to basic, repetitive tasks creates an opportunity to focus on financial analysis and prediction. Digitizing data as it comes in enables analysts to produce insights with the newest and most relevant data possible, improving the accuracy of predictions and strengthening decision-making abilities.

Digital Transformation can be a significant undertaking for any business, and having the right partner to supply financial products and services can make all the difference. That’s why Bizvibe’s B2B platform provides detailed insights on close to 200,000 finance companies along with tools for comparing and connecting with potential business partners, all available to try for free.

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