Real-Time Transformation: Creating a Connected Financial Office

When data flows are connected, it’s so much easier to make quick and accurate decisions. This is the principle behind the emerging notion of the connected financial office. But how can finance teams achieve the level of unity required to start unlocking the benefits? Gareth Priest, Chief Platform Officer, Bottomline Technologies, considers the keys to success. 

It might sound like a cliché, but the world really has changed. In the face of testing times, many members of the global business community have proven their resilience, turning the shock, uncertainty and volatility of the past couple of years into an opportunity. And they are coming at the new landscape stronger, faster, and smarter.

According to a recent Deloitte Insights Study, CFOs are “leaning forward, not looking back”. It indicates that business leaders are ready to push for growth, and that their respective finance teams are preparing to support their plans.

However, for those finance teams, realisation of full potential requires recognition of two key strategic elements: that transformation is an evolution, not a revolution; and that digitalisation is best achieved when leaders look within and across the business. In essence, the new world is about making strong and stable connections, and the finance office is a key enabler.  

For Priest, the concept of the connected financial office – and the intended outcome of ‘unified intelligence’ – has its roots in “the waves of digitisation and investment in technology seen in the world of enterprise applications”. It’s an outcome, he says, similar in effect to the way in which the arrival of the ERP-enabled operations, manufacturing and logistics to collaborate with far greater ease.

“As digitalisation of the world progresses, it’s led to big changes, with investment in a new and diverse set of tools to assist a full spectrum of activities, from customer engagement, to logistics, to manufacturing,” notes Priest. “Finance is in the next wave.”

The aim for finance, as with every function, is to add value to the business, and for this to happen, a broader view of the business must be facilitated. Previous advances in the finance space delivered tools such as the TMS, and accounting and specialist spend management software. While Priest says it’s useful to think about the connected financial office in the context of making these individual solutions work better together, he feels it is more important to consider how these solutions can go “beyond the four walls of the business”, unifying flows between the company, its customers, and its supply chains.

Setting expectations

Of course, notes Priest, depending on a department’s position within that continuum, its view of unification may differ slightly. For treasurers, many of the traditional responsibilities will not change, so the need for effective enterprise-wide controls over payments and compliance, and having optimal visibility over cash and liquidity, and making intelligent use of financial assets, remains the same. However, he states, unifying finance “dramatically increases treasury’s ability to carry out these activities”.

AR process transparency can, for example, provide a consolidated view of outgoing payments, giving a boost to working capital management efficacy. Previously, even creating estimates here demanded a lot of manual intervention. “We expect that the unified financial office approach to this will start to bring a far more digital, intelligent, predictable and predictive way of working,” suggests Priest. “It places many more control levers in treasurers’ hands, enabling them to plan further ahead, make smarter use of their cash, and better manage their risks.”

Of course, treasurers have to face these challenges now, but they’re overcoming them in a tactical manner, he comments. Adopting a unified model frees treasury from this approach. It offers an automated, predictive way of working, “which means that they can spend more time adding value and helping the business grow”.

Different perspectives

Some finance leaders may feel they are already on the path away from the tactical towards a far more strategic level of work. Priest acknowledges the need for Bottomline and others in the industry not to peddle a “brand-new vision”, because that’s not what the unified model is about.

“Our job, as bankers or financial technology providers, is to be the enabler, the orchestrator. Our job is to look at the legislation, the regulatory changes, events that are happening, and the new technology that’s available, and then bring that to bear on how we help them achieve their vision,” explains Priest.

The challenge is for the industry to accommodate client interpretations of what a unified financial office looks like. “For them, it’s a kind of Rorschach test: each will have a slightly different view,” he notes. “While the solution may lead to the same outcome, we have to understand that how each client achieves it, and in what order, will vary according to factors such as business-type, sector, where it [the business] is in the evolutionary cycle, and what it deems most important.”

Even with vendors such as Bottomline acting as enablers, Priest notes that timescales for client evolution towards unified finance will naturally differ according to point of departure. For some finance leaders, he notes getting a good grip on cash visibility and short-term forecasts is cited as a major challenge, and for a variety of reasons.

“It could be system proliferation, or complexity of geography and banking relationships created by a number of acquisitions. It gives us a starting point, and we would expect to see relatively quick benefits here because these are fundamental yet entirely solvable issues,” he notes.

Once on that evolutionary journey, Priest adds that although new challenges will emerge, businesses tend to become more attuned to finding solutions and quick wins. Progress ensues as businesses push towards the “next horizon”, where they begin improving their international payments franchise, managing risk and reducing friction for customer payments. “It’s at this point where we start to see the old finance back office moving towards its new role as a strategic partner for business growth.”

Expert guidance

The connected financial office is all about forging successful partnerships and Priest says Bottomline is “on a real mission to help our customers do this”. The vision comes from the client “and it is the job of the vendor to bring the technology to bear on that goal”.

Bottomline already has a strong set of capabilities around domestic and international payments and bank connectivity, and recently combined with TreasuryXpress to add robust cash management capabilities. “We are merging these with our domestic payment and accounts payable capabilities, and our new receivables capabilities, giving us all the elements needed to create an end-to-end cash life cycle, and enable clients to start planning their own journey towards a connected financial office.”

One of Bottomline’s chief areas of investment has been in how it handles data and intelligence. Connecting the pipes, and figuring out the workflows for the basics, exposed just how much data – and therefore opportunity – flows within the system, notes Priest. It led to the vendor exploring ways to create a unified experience with intelligence at its heart.

Now, analysing different risk scenarios, or leveraging the receivables pipeline to improve cash forecasting and help define the optimal working capital model, are made entirely possible. “By combining these components, we are able to remove the silos that often exist in the finance world,” he explains. “It enables finance professionals to become proactive. They are no longer looking at data as simply reflecting something that’s happened, but as a resource that helps predict what might happen so businesses can start planning how best to deploy their human, financial and technical assets.”

Data treatment

Some business leaders may worry that they’ve got too much data or not enough of sufficient quality to progress with transformation to a connected financial office. Priests notes too that finance, and even some technology professionals, are not always as data savvy as they should be, sometimes collecting data but then not knowing what comes next.

“There’s no need to be scared of it,” he says. “Capture the data, but then work with people who know what to do with it. At Bottomline, we have many techniques and tools available that enable us to work with it sensibly and safely.” He also advises that while sometimes there will be a clear purpose for data, often there is not. “It’s one of the points of data science that we look for patterns and outcomes that are as yet unknown, revealing information that is not immediately obvious.” 

Resources

There are plenty of resources available for treasurers considering a connected financial office project. Bottomline is an obvious first port of call, says Priest. But he refers to publications such as TMI and the wider industry push for a greater understanding of the power of unified intelligence, urging treasurers to “lean on these resources”.

While he admits there is plenty of industry jargon and acronyms to unwind, he urges treasurers to “engage with it and get educated about it”. Of course, Bottomline has teams geared up for just this purpose, he says. “We spend a lot of time educating our teams so that they are fully equipped to educate and partner with clients looking to establish a connected financial office.”

Initiating a project has long-term benefits, concludes Priest. “It’s an opportunity for anybody in a treasury or finance role to become a value-adding strategic partner of the business, and really raise the game across the industry.”