Figure 3: Created by Light
The Impact of "Open" on the Finance Function
Now, there's a lot happening for a finance leader, so let's try and nail a few things down that's gonna be key to keep an eye on.
1 — Streamlined Automation in Financial Operations
By automating traditional financial tasks, such as generating invoices, doing tedious reconciliation processes, monitoring payments and invoices, organising pay slips, and forecasting cash flow — all in a multinational operation workflow — will shift to being more strategic. Additionally, advanced providers can enable you to initiate cross-border payments and invoice requests directly from your accounting software, which is faster and more accurate than manually sending invoices.
It'll be a finance factory; transactions will be touchless as automation and blockchain reach deeper into finance operations. Now perhaps integrate this with a modern tool stack of Slack too and then we really start to talk.
2 — Improved Forecasting and Cash Flow in Business Finance Management
By aggregating all your accounts from multiple banks into one view, you will gain a comprehensive overview of your finances. With a clear understanding of your incoming and outgoing funds, you will have greater control over your cash flow. Additionally, improved data forecasting will provide you with accurate information, allowing you to effectively plan and manage your finances.
This also opens up revenue-based financing for you as a finance leader. Further, increased access to credit for businesses with limited financial history will be expanded. As open financial data provides businesses with real-time access to financial information, enabling them to effectively manage their finances through forecasting, credit applications, and faster payments.
3 — Getting Closer to Customers and their Financial Operations
Open finance allows third-party providers to access financial data held by banks, with the customer's permission. This means that businesses can send out a secure link to initiate a payment — rather than sending an invoice. Yes — scratch that invoice.
The link comes pre-populated with invoice details, eliminating the need for manual data entry. The funds are then sent directly from the buyer's account to the seller's in near real time. This process offers an alternative to traditional card or Direct Debit payments and ensures that businesses receive payments more quickly without the same transaction fees. By making it easier and quicker to receive payments, open banking can help finance leaders manage their cash flow more effectively and reduce the stress of waiting for payments to arrive.
4 — Data Analytics-Driven Financial Management Tools to Aid
By leveraging decentralized technology and smart contracts, open finance can streamline financial processes and reduce costs associated with intermediaries and manual processes. The role of finance then; with operations automated, finance will double down on business insights and service.
But… few organizations are putting in the effort to align and integrate their data, which prevents them from fully realizing the benefits of digital transformation. Those looking for a quick fix for their data issues will be disappointed as automation and cognitive technology can only make the process easier, not eliminate the hard work involved. This includes addressing issues such as commas, abbreviations, data-entry fields, nomenclature, and hundreds of similar factors that may seem trivial, but are crucial.
Data issues often go unnoticed by CFOs or other finance leaders, partly due to the technical nature of the problems, and partly because there is a lack of motivation for employees to bring them to the attention of top management. No one wants to be the one to deliver unpleasant news.
5 — Decreased Human Friction - Let My People Self-Serve
Most people don't require assistance with basic finance tasks and would prefer to receive answers from a digital voice instantly. Functions like budget inquiries, report generation, and more will be automated. Over time, intelligent agents will learn the specific business information a user needs and provide it proactively.
This shift will result in the replacement of data in spreadsheets with visually appealing and user-friendly information. Given the rising expectations for finance to be responsive and high-quality, it's crucial to get self-service right. If customers are left to handle things on their own, finance can't afford for them to become frustrated or dissatisfied.
In the End - There Is No Closing
With the capability to generate real-time actuals and forecasts, the traditional reporting cycles become less significant. The conventional distinction between operational and analytical data will start to fade away. Finance organizations will still have to fulfill the requirement for cyclical information from external sources, but there may also be a demand for more frequent performance updates from investors. The top organisations will adopt a new mindset: we don't close the books.
ERP providers are already incorporating technologies such as automation, blockchain, and cognitive tools into their offerings, but this won't eliminate competition. Expect changes in the ERP landscape as new entrants introduce specialized applications and microservices that complement and integrate with ERP platforms.
Also… why do we still call it ERP? This is finance.
