Did you know that 80% of financial services firms are currently in the middle of some major digital transformation shift? Because technology is no longer optional for companies, no matter what field they are in, it’s become vital to gain a competitive edge!
When it comes to finance and accounting where leaving any scope for human error can end up in disasters, digital transformation is all the more important. It isn’t just good for securing a market advantage but also a must-have for optimal functioning. No wonder global spending in this sector is expected to reach a total of around 4 trillion US dollars by 2027. If you’re a finance professional who wants to learn all about digital transformation in finance and accounting, read along.
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Digital transformation in finance and accounting
Simply put, digital transformation is all about integrating digital technologies into every aspect of your finance and accounting operations. For finance and accounting firms, it means having an automation solution that addresses your desires regarding enhancing efficiency, improving customer experiences, and staying competitive. That’s because digital technologies will allow your firm to automate repetitive tasks, minimize errors, and get real-time insights so that you can make well-informed strategic decisions seamlessly.
Unlike traditional manual accounting processes that are both time-consuming and error-prone and can cause serious financial repercussions for firms, digital transformation can allow finance teams to streamline their operations and transform how they handle finance processes. But what drives such a great change?
Key drivers of digital transformation in finance
With the constant evolution in the finance industry, studying motivations that have caused this digital shift is essential for staying ahead. Here are some key drivers backing the digital shift in finance:
1. Automation of repetitive tasks
Are you interested in spending countless hours on tedious tasks like data entry and reconciliation in today’s age and time? No, right? So is the case with all other finance professionals and this is one of the primary reasons driving digital transformation in finance. Digital tools and software solutions can allow you and other firms to reduce the manpower required for such tasks and automate the processes.
Let’s take a look at Synder for a second: this tool can record your transactions automatically from 30+ sales channels and payment gateways like Shopify, Amazon, Stripe or PayPal right into your accounting software so that you don’t need to invest hours into manual data entry. Just let Synder take over and save loads of time while drastically reducing manpower.
Moving with digital tools like Syner means going forward to not only avoid mistakes that may pop up but also empower your team to raise the bar of productivity and make wiser, data-driven decisions.
Why not jump on the wave and move your workflow, as well as hundreds of other finance pros? Sign up for Synder’s 15-day free trial or secure your place at our Weekly Public Demo.
2. Cost and efficiency
If we talk about the bottom line, digital transformation can be a game changer for firms when it comes to saving their costs and is thus contributing to the shift. Through automation of several different processes, you can minimize operational costs and enhance profitability. For example, automation of data entry and reconciliation reduces manual effort, freeing the teams for more strategically correct tasks that could drive growth.
With digital tools, workflows are streamlined, and all inefficiencies ironed out, which reduces waste of time and resources further. So firms not only realize cost savings but also enhance overall productivity levels, better positioning them to address changes in the marketplace promptly.
3. Regulatory сompliance
With ever-evolving regulations, maintaining compliance gets challenging for finance companies. That’s where digital transformation comes to their rescue. It can allow you to implement systems that can facilitate regulatory compliance and minimize the risks of non-compliance.
These systems automate compliance checks, allow you to keep track of changing regulations and update as necessary—all in real-time. Moreover, when the use of digital tools results in record-keeping and reporting accuracy, the extent of non-compliance, as well as huge penalties, can be significantly reduced. It’s a proactive step, which not only leads to building trust with clients and regulators but also lays the grounds for surviving in an aggressive market.
How digital transformation is shaping finance and accounting?
It’s obvious that digital transformation is fundamentally changing the world of finance and accounting, making operations smoother and more efficient. Here are few of the many ways digital transformation in reshaping how businesses deal with their finance and counting operations:
Real-time financial data
Digital transformation is now allowing financial teams to access real-time financial data and use it for timely decision-making and to enhance their overall financial management.
In fact, 53% of financial service providers have embraced the power of real-time data analytics solutions. These kinds of tools help an organization to make operations smooth, with less error and more effective strategic decisions.
Financial forecasting and planning
Advanced analytics enable organizations to conduct more accurate financial forecasting and planning. By harnessing data-driven insights, finance teams will go deeper in understanding historical performance, consumer behaviors, and market dynamics with the ability to anticipate market trends and shifts much more accurately. This will, in turn, drive proactive adjustments to strategies and resource allocation.
If data analysis indicates a potential downtrend in certain market segments, for instance, financial teams could rebalance their strategies to mitigate such risks and reallocate budgets or focus on more promising opportunities.
Enhanced data management
Digital tools improve data management by providing centralized access to financial information. This leads to better data accuracy and facilitates informed decision-making.
Consider this scenario: If you divided your five main financial functions among five different teams or used five distinct digital tools to manage the numbers, you could spend as much as 20 hours per month on these tasks. Assuming $50 an hour in either labor or service cost, this could add up to $1,000 a month in expenses.
Now let’s say you employ a comprehensive digital data management solution or a cloud solution that can integrate all your financial data and tasks in one system, would you require a lot of staff members for it? No. Plus, you can bring down the time spent on these tasks and reconciling data every month down to just 2 hours. This means you can not only enhance data management but also save big: $50 x 2 hours = $100 only vs. $1,000.
Risk management
Digital transformation enhances risk management by providing tools that identify potential risks early on. Here are some ways you can manage risks with digitalization and implement proactive measures to mitigate them before they escalate.:
- You can get early risk predictions using digital analytic tools.
- Using Governance, Risk, and Compliance (GRC) Systems can help you with mitigating and managing risks across several departments without any hassle.
- You can use a digital risk management platform or software that can offer you continuous monitoring services and automated threat detection alerts.
The role of automation and AI in financial processes
As we explore further, another important question would be the role of automation and AI in these financial transformations. Let’s now look deeper into how they reshape workflows in finance.
AI in accounting
Artificial Intelligence (AI) plays a crucial role in modern accounting practices. AI-driven tools can automate complex tasks such as data matching and anomaly detection, thereby increasing accuracy and efficiency.
Automation in financial reporting
Automation streamlines financial reporting processes like data entry or reconciliation, reducing the time spent on report generation. This allows finance professionals to focus on strategic analysis rather than manual data compilation.
Automation of client services
By automating routine client interactions, firms can enhance their service offerings. Examples include automating appointment scheduling, follow-up calls for appointments, answers to frequently asked questions, and even sending custom updates based on each client’s preferences can be automated. This leads to improved client satisfaction and retention as clients receive timely responses and personalized services.
The benefits of digital transformation for financial teams
Digital transformation offers huge advantages to financial teams in terms of efficiency and productivity. For instance, according to the PwC survey, companies are reaping the benefit of 10% to 15% higher employee satisfaction rates as a result of using advanced analytic tools and digital solutions. And here are a few more benefits to consider:
1. Collaborative tools
Digital transformation introduces collaborative tools that enhance communication within finance teams. These tools allow real-time collaboration when team members can share any insight or update with seamless ease, irrespective of their location. Cloud-based platforms thus facilitate working together on financial reports and budgets, while instant messaging and video conferencing make discussing complex issues simple and quick.
2. Increased efficiency and productivity
Automation significantly boosts efficiency by allowing teams to focus on high-value tasks rather than mundane activities. This results in increased overall productivity within the finance function. Research by Deloitte showed that 58% of finance professionals experienced a boost in their productivity as a result of automation.
3. Improved client relations
With enhanced data management and automated processes, finance teams can provide better service to clients. Improved client relations stem from timely responses and personalized interactions based on accurate data insights. Instant accessibility to the client’s information and history in finance allows finance teams to stay one step ahead of their clients, offering exactly what they need at the right moment, thus building trust and loyalty.
Wrap-up
The importance of digital transformation in finance and accounting is clear; it doesn’t just enhance operational efficiency but also positions organizations for future success.
If you also want to become a part of such futuristic companies and benefit from digital transformation, embracing digital tools like Synder can be your best bet. It will allow you to stay competitive in an increasingly automated landscape. Don’t forget the future of finance lies in leveraging technology to drive innovation and improve client experiences.
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