Is Your Finance Department As Efficient As Your Competitors’?

Benno Eberle

CFOs in organizations of every size and shape are reporting on the need to boost efficiency. How does yours stack up?

A quick quiz:
• Are you losing opportunities for maximum savings?
• Are high-volume accounts payable problematic?
• Are you experiencing bottlenecks because your operations are fragmented or disjointed?
• Do you need to improve turnaround time on delivering financial information?
• Are you unable to automatically post transactions to your general ledger and financial systems?

If you answered “yes” one time too many, you’re not alone. A recent study by the Aberdeen Group, an independent research firm, found that many finance departments are not availing themselves of automation that can dramatically speed up and improve a wide range of processes. The study also highlighted how automation, coupled with integrated systems, can address these issues and substantially improve the efficiency of financial operations.

Key pressures financial organizations face

Responses to survey questions, the basis for the report, pinpointed the following overall financial management pressures:
• 37% indicated that processes took too long and were too resource-intensive
• 33% cited the demand for faster delivery of information
• 26% felt pressure to ensure and enhance stakeholder collaboration

On the accounts receivable (AR) side, three major pressures were defined:
• 45% named the need to improve cash-flow projections
• 40% indicated the need to reduce days sales outstanding
• 29% cited the need to better manage credit risks, losses from bad debt, and collections expenses

From the accounts payable (AP) perspective, respondents most frequently cited these pressures:
• Need for real-time availability of data – 40%
• Insufficient staff to process high volume – 33%
• Difficulty locating and managing paper-based documents – 29%

Proof in the numbers for best-in-class organizations

The report categorized a number of organizations as “best-in-class” based on the efficiencies they enjoyed from implementing automated and collaborative financial solutions. Here’s how they compared to all other companies surveyed:
• 63% better at straight-through processing rates of incoming invoices received, validated, and approved for payment
• 45% more likely to automate transaction posting to general ledger
• 35% more likely to trust data when making decisions
• 2.1 times more likely to standardize invoice management processes and workflows across locations and business units
• 39% more likely to have the capability to directly import bank-cleared transactions

The report drilled down further and compared the differences between automated and non-automated processes in a number of specific financial areas. Here’s just one example: invoice processing.

Performance Comparisons   With Automation     Without Automation  
Invoices processes per month 23,084 5,886
  Supplier submitted invoices per month 2,851 1,297
Single-payment processing cost
from receiptthrough settlement
$5.13 $10.55
Straight-through processing rate 52%
7.65 days
8.40 days

The reduced costs from automation were equally compelling, with a 51% savings per invoice transaction.

The clear case for investing in automation Aberdeen summarized the findings with four key points:
• Automated processes can greatly improve operational efficiency, freeing up resources and greatly reducing costs.
• Enterprise-wide collaboration produces more accurate data in a more efficient manner.
• Integrated financial systems provide more insightful and analytical information across the enterprise.
• Organizations that employ automated solutions, especially in AP and AR, were significantly more likely to alleviate financial pressures while also achieving departmental goals.

Find out more about how CFOs can help their organizations reimagine efficiency, read The Evolution of Digital Capabilities in Financial Operations for Optimal Efficiency.

And find out how CFOs can gain instant financial insights with live business technology.

Benno Eberle

About Benno Eberle

Benno Eberle is senior director of Global Solution Marketing at SAP. He is responsible for product marketing for SAP's solutions for the Finance line of business. Benno focuses on the SAP S/4HANA Finance solution portfolio, which comes with mature but easy-to-use functionality for finance professionals and is crowned with the newest innovations and technologies in the cloud. His objective is to make existing and future customers aware of the fascinating business value this portfolio brings to successful organizations across the globe, helping them to transform and shape their organizations for the future.