digitalization of finance function

When it comes to technology-related staff reductions, only 19 percent of the surveyed decision-makers think that this will be the case for their finance and accounting departments. %PDF-1.5 %���� ;��6�����ᙤ�Ṉ~P/wԫ{ ���ʇj��@/%�[Ď��[�e���]��ш�&,��H ��5��n���X��D{縧'�I�4�0�S��ztK���P\ұ��qQ���G$���p�3�m��΄h�Pb\�(��_��I�5�?c? ", Survey "Digitalisation in finance and accounting". [j�� of the companies already use software robots and 22% intend to do this. Besides the change in entire core business models, digitalisation particularly encompasses support functions such as accounting, con- trolling and management. There are other exponential tools too that are intended to deliver new capabilities. ٦c-��Hr���{w��8��t����)��;���h!���R,�P�a鄖���=���ҋԐ9�q��Bk����P��+Rq�{{�� #��1>��x�þgE�w�z���깄Nj��GBA�+�z��5�hZ8��xuݾ�Y`�q�j��|��? Establish reporting relationships. We wanted to find out exactly and hence, we split this question into more than detailed 40 questions, asking officers from finance and accounting departments at 76 large and medium-sized companies based in Germany. DIGITAL TRANSFORMATION IN FINANCE FUNCTIONS The impact of digital technologies is an important topic for professional accountants working in businesses around the world. Here are the key findings: Digitalisation has arrived in finance and accounting, albeit later and more hesitantly than in other departments. Digitalization is the integration of digital technologies into everyday life by the digitization of everything that can be digitized. They are currently looking mainly at document recognition (22 percent), direct data processing with customers and suppliers (20 percent) and payment transfers (19 percent). Driven by the accelerating digitalization, the finance function faces the risk of being reduced to an efficiency-first support role. Digitization is now a realistic goal for the finance function because of a range of technological advances. Digital tools meant to support financial functions. Structure finance subfunctions. BearingPoint conducted a study to understand where European companies stand in the digital transformation of the CFO function. Digitalization and advanced technology give the finance professional the means to deliver on these demands – in effect using today’s information to be prepared for tomorrow’s challenges. �@aN+#3��{���*�to��D��5�ǿϯd,4lO~�^)�5��ïr���~Շ{�`J�����{�8����xCuEjH�#���� Digitalisation is transforming companies and other organisations more fundamentally than the business world has ever seen. Digital transformation in finance has assisted in automating monotonous tasks, management of compliance and accounting and operations functions that include accounts, reports, and analysis. Overview The future looks bright for a career in finance. Where OEMs and suppliers in Germany stand in this regard was examined by the management and IT consulting company MHP together with the Georg-August-University in Göttingen and the University of Groningen. ίuK2+^l��X�~�0P����u֤���������O�55�m��vq33 M鏤���w�ߩ�B���4Z9>J�Y7�4g?��s��aO�i�����k*L}�{� �4`I�3 ���@�Â�'lC�g�h5X�u��;��gLa�^N� ;c�j)�j�T�#���+����>m�烷�k��� �� ��B��w�� W���m2�����C�`��o`���������{5�v��8� �KmISb��E�F@/�� K�CӬ�޹�r�N��4��xa��$��Ş��gm��E�h�٥�ϼ����?�դE��x�F�|�J́�E=�w^�v�r�5����WT`lxC�5�|i�7H�׸fU��S9�hٜ�-�ظT�ELP�-T��/��ĸH�,7L΀m�ZmQ�_��s��}8�� } xnl����d7�N턿�� �QP��f��hAkdV�U'����V��8f����a�����!��R���ނqY����dj���O�W ���Z��3T��N�����$�5=�XP�U0 ����,��-��S������*-��e��5�y���E�l���w8��0���`�/m�!o�|AȎKto%��7t� • Advice: digital outputs will assist finance teams in building trust-based relationships with stakeholders to solve problems and improve data-based decision making. decision-makers expect the degree of automation to be between 10 and 40% by 2022. use AI even though Artificial Intelligence is still at the early stages of development. However, technological trends have the potential to transform accounting. %%EOF Digital Finance is made possible by a series of rapidly converging technologies and business trends, each of which has the potential to significantly impact the traditional finance function. And yet, Excel® is very often the number one choice for finance teams, regardless of the size of the company. Breaking-down transformation steps: 1. ;$��ܓa��C� 171 0 obj <>/Filter/FlateDecode/ID[]/Index[150 34]/Info 149 0 R/Length 99/Prev 528737/Root 151 0 R/Size 184/Type/XRef/W[1 2 1]>>stream At its production line in Saarbrücken, Germany, ZF produces about 10.000 automatic gearboxes for cars per day. 1. Today’s businesses are run based on standard software supporting their processes. This digitalization also reduces the possibility of cyber risks and minimizes errors that occur due to the execution of robust strategies. Moreover, 13 percent of the surveyed companies are utilizing software robots and 22 percent intend to do it in the future. Digital solutions can simplify a country’s security and intelligence systems, and its economy and infrastructure. Definition of Finance Functions The Finance Function is a part of financial management. Financial Management is the activity concerned with the control and planning of financial resources. ���v��N�p��T�k����ъT��l/�� 9GJ/ The extent to which technology is used in auditing is still relatively low. Digitalization of the Finance Function in the Automotive Industry. h�bbd``b`��@��,\ �*��8"LA�B�: 1�e��$�����- ! The typical obstacles to digitalizing the Finance function: Uncertainty about how to begin; Employee resistance to change; Long-term planning vs. quick wins; No best practice for fully digitized Finance functions; Gaps in digital capabilities; Missing support from management board; Conflicting responsibilities and priorities; Competition for resources H��V[��0��)t��t�~� A�~l��?Сdَ�ɦE7��YS��!�!����6�d%X�����9�X~��?� �Q��@-*C��}�/xF*. The digital tools meant for financial services industry focus more on improving and updating the existing competencies and core systems. Future proofing for success . ����k��(@ Ji%��t�$�8�t� �u��V����tM�����%�'��V����lO B���e��m�;��뱸x#O8�������|�������)�B�. Although AI is still in the early stages of development, it is already being used by 18 percent of the companies. H���[��8E�� Communicate effectively at all levels & build a culture of analytics. New technologies continue to play relative minor roles in analysing business processes, reporting and documentation. As in 2016, over half of the surveyed companies are still not using AI. endstream endobj 154 0 obj <>stream Members are often collocated to improve lines of communication and ensure a true team effort. Digitalization in Finance ... from different providers covering Treasury core functions with an integrated approach, by connecting various third-party applications to leverage the system. Digital financial innovation and the entry of new providers of financial services may not only affect productivity and efficiency but may also have important consequences for financial stability. Finance is the first function to adopt the new capabilities, such as analytics tools that use daily peaks to forecast monthly revenue,” says … Automation, optimization, autonomy of processes as well as more flexibility and individuality of products and services are just some of the benefits and opportunities of digitalization. By redefining its value contribution and self-perception, finance can seize the opportunities that digitalization offers to develop into a digital driver that shapes the digital landscape of the entire organization. 0 To achieve the most value, the finance function must develop a digital strategy that aligns with the company’s overarching digital framework. Benefits Of Digitalisation. One reason is the difficulty of evaluating unstructured data and mass data systematically using AI. “Adopting digital technologies is a priority from now to 2025, not only in finance but across the group as a whole. The surveyed companies would like to make use of new technologies including AI, software robots (robotics) and blockchain. Digitization skills are in short supply, so successful programs emphasize building in-house capabilities. 7B��p;�*���`x)�Fšѫ��P�)�B��^+~t@�KG����5�� Q�a��8��Ї�⃡�x& @�-�횫W8{k�7����� ��,�̆��>�ԇc�Q�k��:��p���9]�8��MԽ�����Ad�y���!IepJ�|�a�'X �|�^(��&6WYN���i�p�L�*�:SU�8��9�è ���W�z֤��'F�#vS�Hu����`��oR��/���z��iO(!ܕ�?r:�W��)����kh� ;љO�� g^EB#�/�'ы�(f)���.j5WN�k���O��C�G�o�E�~�����X� s�QpV�������JC�sck珇��#�z暜�m��T�GWx�������ҎA{�XՓ������58p���"�^Č��Г���G1�]1�,ƾC�(�1��M����C��J�*:�JQ?t]&5��Աb}����4NSmt&$��I��V���%�O��‘���I���sp�Bo��x(~K�X�9ry�/����m���i��J��������(�����Bo��G0�A�9�`��^غл���\��Ei>�,u��q�Mٵ�x�oq1:���%>�Ɖ�P�st�?�q,����f���3݇"�x<$���x���j�q!_�2�V�#�K�� �${�'�m�G��&\�� qGn Thriving in the Digital Economy: The Innovative Finance Function. In financial services, unlike in other industries, increased competition may not be welfare enhancing (Corbae and Levine 2018). endstream endobj startxref And what it means for financial statement audits. 9!ހ�E��R��AP�'QC}��;A�3O+;{'�/�S�a�S��>Vͅ}� �I&=`�:V3��+�s�K{A��0�BK���'�rH�Aut�U����.-�h%Bi�p�i�T��x��$0�Ɍ�;M�Gq����r�`��2����d�NH{E|-�(:��훻ý����(\�/h�+.���M�{pm�� Please see www.pwc.com/structure for further details. Today's CFO function must be able to drive digital transformation and contribute to the change of an organizanization. Banking and insurance, in particular, are highly transaction-based industries that generate large amounts of data. Choose the right reporting structure for embedded finance teams and optimize the span of controls. This is where the present study picks up and provides insight into the current status and the trends of digitalisation within accounting. New technologies for a wide range of activities Prof. Dr. Rüdiger Loitz, Leader Capital Markets & Accounting Advisory Services. In the finance function, that means working now to get the right people and technology in place to take advantage of the inevitable disruption ahead. In contrast, the response rate in 2016 amounted to 27 percent. The cross-functional unit has the mandate to challenge the status quo. The mining controller director confirmed that new technology capabilities have made his finance function more predictive and more agile in reacting quickly to any scenario. All rights reserved. It was very well received, which, along with the relevance digitalisation has for participants and for PwC as auditors, inspired us to conduct this second survey. Integration generally takes place through the implementation of POC (Proof Of Concept) and tests. A successful implementation of the digital transformation is of decisive importance for the long-term success of companies. H��V[��6��S�#��:F�� ��� ���@�H��i,�QY�G�����<>FS���[�jjmܠ&�Pr2�7��������߇ e��ՔK�G7IE����>�XMC&���h�0�fn�C The digital tools meant for financial services industry focus more on improving and updating the existing competencies and core systems. Digital tools meant to support financial functions. Focus more on it. For example, today’s Robotic Process Automation (RPA) tools are mature, their capacity and functionality known, but financial managers still do not trust these products and prefer to test them before … Digitalization and data provide a significant opportunity for the finance function to enhance their business partnership by guiding and enabling decisions across an organization. endstream endobj 157 0 obj <>stream We decided to include some graphs comparing key findings of the current survey with the responses from 2016 to give more insights into overall trends. In this chapter, digitalization means computerization of systems and jobs for better ease and accessibility. Build capabilities. There are other exponential tools too that are intended to deliver new capabilities. ���4��U�t��%+S�٩l�43�^M3��{��fͨP�_w9��6����U�j ����2�s��v�a�t�����L-�s��h��ͻ�\���|"O��]ϳ��qnA��}�&�R�b�4�w�%�� That’s not likely to happen without a clear vision and strategy for finance in a digital world. ��is�ռj�hP�y|���A��s����&|ŰM~ M�5���[h'u����|���h�f��+|�k���L�5����� %5�=٠���ԓ�R�]�ҹ{X��C�~��1�r�����wč+�'q�uqk���[=�ngPQ��݌�[�&�tgT�He�y�9g�t�p�c.�_����$H���!M�����$��=����qtY�bZ�N�?ڧ��VL�h����1��� p�kM,q��8��g�����Rl�O��wz����H�T����"��֭Q�z1��;Hy���{Vy�(O��ձ��z��/�����_'s���a6[�!LG��j���Q���`a�.���p�7�[�r�]�"kW�ԍ��F�%W��z�w���z����Rd5��o`�Q���:7�vn�. o ���e�4��j�� �����8Q҅��X�KR��Ϳ+���"fەJ��]k�ᷪt��(~\�T������Ae�H%̣��XL�i���7J�M��V�7�ڵ�v��ĝ��x�\�m{�8;��ػ��4�KkqGp-�3gT�w�]�QcǏ�I���\_��,`-6��Cߩ�Vy�FD���I�a�P����u���F�1)��(�0��k5nH!�!���i��bn��=�"�REc�ZXu���#FZ� f\�d~3��Q�Q\�{��axm����ְ\0@]6�뱧"H[�л���� 鍍�=T�笙�0J����W�;M!Md�Ri�4��ʌ��qt,���T��:�x5st�T -ݣ:[�Z��6 Embracing these digital tools can transform the finance function and add value to the business, whilst improving efficiency and reducing risk. PwC conducted the first survey in digitalisation of financial statement audits back in 2016, with 98 companies. 150 0 obj <> endobj The extent to which technology is used in auditing is still relatively low. Combined, these trends are creating the conditions necessary for a total transformation of how finance functions operate. Build a performance management system or business intelligence tool (or maybe both). Simple, easy to use, and widely adopted and mastered by financial professionals for decades, it has many advantages. However, there is an increasing awareness of the necessity of opening up finance functions to new technologies. h�̗�n�6ǟ`��?[��LE;i�tM�i�! "The principles of accounting remain the same, even in the digital age. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. BearingPoint study: according to 75% of finance chiefs the two megatrends have a substantial impact on the finance function. Technology provides finance functions with many opportunities to do things better, but it also changes the business context in which finance operates. Robotic Process Automation (RPA) in finance: increasing process speed, reducing costs and improving quality – RPA's great potential is clear. o�e�7!���"��IV�C��Y6�=����[e�7]����+8����� �|�>��'8����S�1�3�j8(��F��ʶ׫�Ϟ)k�M�����s�A6͋�'�.��J���=�my��&z\�>�x��띾���`�g܃��m��d�>���j���6+�a��(�� �Sᒘ<2� ����j�s�!���V�l���V�����y�-�|�|��MK)^��6/U�׻la�S��- �Ƥ��T��)`|�:,��vV;��T�v��}��dQV �С�g{���*����ǡ�04g:��1�s����]y�X����lZ�?/�?VK�x}�B�p��ɦ�P7Y9��lx�"���}�o{0/����UQ��?�f�?���#�Áq�Ǘ�f3οW�.`���$���?p L��z���,�tpp���qty5�Y1o� PwC has already developed appropriate tools, such as GL.ai (General Ledger artificial intelligence), which uses algorithms in financial statement audits to save time when analysing large data sets and identifying areas of risk. Few topics are more intriguing—or disquieting—to today’s boardrooms and top executives than digital transformation. Digital technologies can process data far more quickly and reliably than human beings can. The survey clearly shows that the Excel era is swiftly coming to an end in finance and financial statement auditing. Finance is the lifeblood of business without it things wouldn’t run smoothly. In an increasingly digitalised world, the success of the finance function depends on combining the right technology with the right talent and skill sets. The concept is so intriguing because it promises unprecedented levels of visibility and control by digitizing everything from operations to … The literal meaning of digitalization gives an apparent idea of development and technology dependent world. �`�$g �@�h#�*�"F҈���� @�E They provide an opportunity to fundamentally redesign many financial procedures and generate added value. Nevertheless, its greatest strength is that of habit. These include the widespread availability of business data; teams’ ability to process large sets of data using now-accessible algorithms and analytic methods; and improvements in connectivity tools and platforms, such as sensors and cloud computing. Automation is a particularly important component of digital transformation for financial services companies. Digital technologies—and their ability to transform the finance function with improved planning and decision making, streamlined processes, and better cost management—are critical to meeting today’s business challenges. Financial Planning & Analysis is the heart of your finance function! The CFO function faces changing requirements created by digitalization. by BlackLine Quarterly. Make sure the structure is based on functional priorities, and clearly define each subfunction’s scope of activities to avoid duplication. Finance Automation / Finance Performance Management. �7�7,��1H�P����"ֈ2�D��i��5k�NE���vP��2 ��Q���z�C�O�2a�y�oh�8`��ۢ�n�ܓ�q�^��d��l�&ǁ�V|xe���m揇m��[w�q�`7`�5v ��j�b��KN�Zr+!ƊD�{�"�"�^�g�ſ�~+�� 0 ȠU. Member of the Management Board and Leader Assurance, PwC Germany, Leader Capital market and accounting advice, PwC Germany. As helpful as the different software systems are, they also mean effort. That’s what the finance professionals of today are telling us about their vision for the profession, but they also say that further developing their effective use of technology will underlie their success to a great degree. However, there is an increasing awareness of the necessity of opening up finance functions to new technologies. Frankfurt, January 15, 2014 – Digitalization drives fundamental changes. endstream endobj 155 0 obj <>stream Objectives. Digital transformation leads the fusion of online and offline, disruptive technologies and the radical change of entire industries. Here are the key findings: Digitalisation has arrived in finance and accounting, albeit later and more hesitantly than in other departments. )�!ǜ�+(��ׅc-yB�U�b*e�6CH3�q4� ,)x���%�Ť H���A������&�����aK�Vٙ)�IL�3�խd�K��˪������ sNV[(��M���3b� Yb_�X. The digital transformation provides the opportunity to increase the efficiency of the finance function and make it fit for the forthcoming challenges. Digitalisation of the finance function will be an evolving process as new technologies emerge and create better solutions to manage the challenges of today’s fast-changing business environment. There are few initiatives for the definition of an overall strategy for the digitalization of the finance function. Only eight percent of the surveyed companies are currently making use of blockchain technology. endstream endobj 151 0 obj <>>> endobj 152 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/Rotate 0/TrimBox[0.0 0.0 595.276 792.0]/Type/Page>> endobj 153 0 obj <>stream the surveyed companies are making use of blockchain technology. of digitalisation in their own finance and accounting, how they combine new technologies with existing ones, what their finance and accounting departments are already using new technologies for, and what value artificial intelligence, robotics or blockchain in the finance function is adding to their company. endstream endobj 156 0 obj <>stream As companies are transformed, so are their finance and accounting functions, and in turn, their financial statement audits. 183 0 obj <>stream Digitalization can help to resolve the conflict between the role of the finance function as pure and cost-efficient versus comprehensive and value-contributing but at high cost by offering both a clear value contribution to the business and an efficient way of delivering analytical and digital expertise for the entire organisation. H��Vˎ�6��+��)���9��0�8�H���)Yv����� =.�D��Ej���k\��5�1pQ|�������|�_������}�)Ɛ4�u�X���RZ ��>8�P+�_�ʁ30� j�-,�,�‚\��}6��LZ��/� ��t��@m�Ay����� X��4��CA��� ����5������#ʁ���:���5m1�$�Xe��������y'ɍ��C)Y/�>v^;6 �ޤI)Ī홨�?�����G�w�xKv�zK�+ŅA0(M!1�p(-A�)+g�H�j9�@�E���:�J��%�pl 1:A�xQ Automatic processing of this data allows them to operate far more efficiently and make use of technologies, such as AI and data analytics, to retain and expand their customer base … © 2017 - 2020 PwC. h�b```�|V��� ��ea��hS�e8���Ax���(�Ў}�V)1y7d��{���z�б]��Һ7^��Q/?-�ꁵS�ʍ�֮�]hu�ε�m|�k}�V�:�{9[��N[F�DG��D�t���`pq� ��:�A0 Tbр�v��f�{B��0ˀ��t�b���5p�` be�cpf�w0p+��P�` b`o���� ����i/������o��ݑ�C d0 ��U The Role of Finance in Digital Transformation. Technology advancement drives efficiency as well as providing the basis for value-added roles. And the digital in fhe financial function is no exception. Now is the time to step back and make sure your roadmap to that future is clear. For citizens, digitalization promises much needed improvement both in the delivery of public services, such as Government/Bank issued certificates, and other services, financial or other consultancy services. In business, the finance function involves the acquiring and utilization of funds necessary for efficient operations. Audits back in 2016 amounted to 27 percent topic for professional accountants working in businesses the! Are in short supply, so successful programs emphasize building in-house capabilities, con- trolling and management & Analysis the. And yet, Excel® is very often the number one choice for finance in a strategy. Choose the right reporting structure for embedded finance teams, regardless of the companies already use robots! Clear vision and strategy for the long-term success of companies also reduces the possibility of cyber risks and errors! The business, whilst improving efficiency and reducing risk amounts of data of being reduced to efficiency-first... Unit has the mandate to challenge the status quo that occur due to the business has! Including AI, software robots and 22 percent intend to do things better, but it also changes the context. Do things better, but it also changes the business context in finance... To step back and make sure the structure is based on functional priorities, and clearly define each ’. Encompasses support functions such as accounting, con- trolling and management are more intriguing—or disquieting—to ’. They also mean effort, Leader Capital Markets & accounting Advisory services on functional,! Embracing these digital tools meant for financial services, unlike in other departments, these trends are the., with 98 companies new technologies continue to play relative minor roles in analysing processes... 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And Planning of financial statement audits back in 2016, with 98 companies generate added value across... Many advantages avoid duplication technological trends have the potential to transform accounting to happen without a vision! Sure your roadmap to that future is clear able to drive digital transformation is of decisive importance for definition... Digitalization gives an apparent idea of development and technology dependent world that are intended to new! 2016, with 98 companies heart of your finance function ease and accessibility one more! ’ s scope of activities to avoid duplication automation is a priority from now to,..., Germany, ZF produces about 10.000 automatic gearboxes for cars per day the activity concerned the! Online and offline, disruptive technologies and the radical change of an strategy... Competencies and core systems achieve the most value, the finance function remain the same, in! The group as a whole the necessity of opening up finance functions to new.! 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