Tag: Automation in Finance

Role of CFOs

Role of CFOs in Leading the Innovative Digital Revolution

From Finance Chiefs to Digital Catalysts: A Look at the Evolving Role of CFOs

The past few years have witnessed a technological revolution, with advancements in artificial intelligence, block chain, robotics, and automation nudging businesses towards digital transformation. It was the Covid-19 pandemic, however, that truly served as a catalyst, propelling companies to embrace digital initiatives like never before. 85% of CFOs plan to increase their investment in the cloud according to Accenture, and Gartner reports that 78% will maintain or increase their digital investment through 2023. In todays world the Role of CFOs has expanded significantly, positioning them as pivotal leaders in steering their organizations through this era of digital transformation.

Leading the Way: The Role of CFOs in Driving Digital Strategy

In this digital landscape, C-level executives play a crucial role in successfully planning and implementing transformation strategies. Among these, CFOs find themselves at the forefront of the journey. BDO’s report, ‘Do CFOs Play a Leading Role in Digitally Transforming their SMEs?’ reveals that 76% of CFOs are involved in setting the overall digital strategy for their organizations.

Beyond Finance: Architects of Transformation Across the Organization

The CFO’s role goes beyond simply implementing new technologies in the finance department. They are, in many ways, the architects of digital transformation across the entire organization. As the numbers speak for themselves:

  • Digital Ambassadors: Bridging the Gap between Finance and Other Departments: 68% of CFOs provide suggestions to implement digital ideas for faster services and growth in other departments. They act as digital ambassadors, bridging the gap between finance and the rest of the organization.
  • Driving Enterprise Value Creation: CFOs are propelling Enterprise value creation to the forefront of strategic CEO agendas. They understand the transformative power of technology and are driving its adoption for maximum impact.

Transforming the Finance Department: From Back Office to Data Powerhouse

This focus on value creation manifests in the finance department itself, which is undergoing a digital revolution. Large-scale companies are increasingly adopting automation tools for accounting and data management, streamlining processes and unlocking new insights.

How the Role of CFOs Meets Evolving Expectations with Real-Time Data

But technology isn’t just about streamlining the back office. As CEO and board member expectations shift, demanding real-time, electronically formatted data for review, CFOs need to ensure their organizations can deliver. This necessitates transforming accounting, cash flow, and auditing with data visualization, advanced analytics, and real-time reporting features.

Embracing Automation: Optimizing Operations for the Digital Age

Ultimately, gathering, organizing, and accounting for data remains a core task of managing finances. However, digital transformation opens doors to new opportunities and expands the scope of business operations. Companies can now operate across borders, catering to a larger market, resulting in a higher volume of transactions that traditional manual methods simply can’t handle. According to McKinsey Global Institute, a staggering 77% of general accounting practices have high automatability potential.

Role of CFOs

The Role of CFO’s: A 7% Boost to Transformation Success

Undeniably, a company’s digital transformation success hinges on various factors like vision, organizational structure, and employee skillsets. But a CFO’s involvement in the process is a significant differentiator. Studies show that companies with CFOs actively involved in digital transformation experience a 7% higher chance of success. This is a testament to the transformative power of CFOs, who are evolving from finance leaders to catalysts for innovation and digitization in their organizations.

Conclusion: The Future Belongs to the Digitally Equipped

The future belongs to those who embrace technology and utilize it to unlock new possibilities. And in this digital age, CFOs are playing a critical role in equipping companies with the tools and strategies they need to thrive. By stepping beyond their traditional roles and becoming digital architects, CFOs are leading their organizations towards a brighter, more efficient future.

Customer & Vendor Reconciliation

Vendor Reconciliation Made Easy With Firmway

Mastering Customer & Vendor Reconciliation: How Firmway Increases Reconciliation Efficiency?

Mastering customer and vendor reconciliation is a crucial account closure process that ensures the composition of an account balance matches with customer/ vendor reports. It substantiates that balances in financial statements are free from errors or misstatements. As a part of internal controls, it ensures the accuracy and completeness of certain ledger balances, such as banks, fixed assets, payables, receivables, etc.

The world is rapidly moving towards digitization, and this transformation is equally impacting the field of accounting. Automation, while a powerful tool, will not replace accountants but rather complement their roles. In fact, according to the 2021 EY Smart Closing & Reporting survey, where over 40% of company representatives were interviewed, there is a growing demand for higher levels of automation in various accounting processes, including accounts payable, receivable, and general accounting. Enter Firmway, a cutting-edge software solution that not only automates but also simplifies a wide range of reconciliation tasks, aligning perfectly with leading technology standards.

Out of all the ledger balances, reconciling customer and vendor accounts is the most tedious task due to countless transactions. Let’s understand customer and vendor reconciliation and how Firmway can increase and automate the reconciliation exercise.

Understanding Customer and Vendor Reconciliations

Customer Reconciliation 

Customer reconciliation is a critical activity for every business. It involves analyzing the receivables statements to identify any errors or irregularities. Customer reconciliation is a useful tool to get a clear idea of the actual position of receivables. In certain exceptional cases, it can be effective in identifying fraudulent activities pertaining to accounts receivable.

Advantages of Mastering Customer Reconciliation

  • Transactions with customers directly affect the revenue. Reconciling their accounts provides evidence supporting reported revenue. 
  • With regular reconciliations, you can keep track of aging accounts to ensure timely follow-ups. 
  • Helps facilitate internal and external audit and identify prospective bad-debts at an early stage.
  • Significantly reduce the likelihood of errors in receivable account management.

Vendor Reconciliation

Vendor Reconciliation 

It involves comparing general ledger balances of vendors (suppliers) with statements from concerned vendors to identify and resolve differences.

Vendor reconciliation means reconciliation of a vendor’s account with the statement provided by the vendor.

Benefits of Mastering Vendor Reconciliation

  • Vendor balances are a result of credit purchases. Therefore, vendor reconciliation statements provide supporting evidence of purchases. 
  • Regular reconciliations help you resolve disputes and ensure the timely settlement of vendor accounts. 
  • Process checks the entity’s payables to vendor and vendors’ outstanding balances. This enables the company to identify duplicate invoice bookings.

Reconciling vendor and customer balances involve the study and analysis of countless transactions. KPMG’s Automation of financial reporting and technical accounting, September 2019 report, shows that more than 50% of businesses prepare financial records using MS Word and Excel. Furthermore, it is not a sustainable solution to accommodate the growing number of e-commerce transactions. Additionally, customer and vendor reconciliations provide corroborating evidence for two major account heads – revenue and purchases, of an Income statement. Moreover, the quality of these accounts is afflicted by manual intervention. As a result, inefficiency in the reconciliation process enhances the susceptibility of financial records to errors and misstatements.

Streamlining Reconciliation with Firmway’s Automation Software

To address these deficiencies effectively, it is essential to standardize and streamline the reconciliation process using automation software. With Firmway’s Reconciliation software, data retrieval from customers and vendors is automated, ensuring a seamless experience. Moreover, using the embedded algorithm and smart AI tool, it can swiftly convert it to Excel format, organize it, and meticulously compare it with accounting records of respective companies to identify discrepancies. As a result, it saves accounting staff a considerable amount of time, allowing them to efficiently analyze the above-found differences.

Firmway: Your Solution for Seamless Customer and Vendor Reconciliation

Firmway is a web-based SaaS software providing automation in the space of confirmations & reconciliation. It offers multiple tools and services to automate all-round reconciliation and confirmation exercise whether it’s Customer & Vendor Reconciliations, 26AS Reconciliation, MSME Confirmations. It helps accountants and auditors utilize time and resources on analytical work rather than gathering and reconciling information. How are you dealing with reconciliations and confirmations? Time to do it with Firm-way!

Auto Reconciliation

AI and ML Unlocking New Potential in Auto Reconciliations

Transform Auto Reconciliation with Breakthrough AI and ML

In this digital age, forward-looking organizations are adopting cutting-edge technologies, such as Artificial Intelligence (AI) and Machine Learning (ML), on a continuous basis. AI and ML and other technologies, including Auto Reconciliation, are not just trends; they are driving transformative changes. According to Mckinsey’s The State of AI in 2021 report, 56% of businesses are actively working to incorporate AI into various business functions, including finance, operations, marketing, and others.

AI and ML

Understanding of AI and ML

As AI and ML are in their infancy stages, people often confuse them as being the same. AI is a technology that uses math and logic to simulate computers to mimic human behavior. In contrast, ML is the application of AI through mathematical models to enable continuous learning and improvement in computers. For instance, Google Assistant is an example of AI and Google’s Search Algorithm is an ML.

AI and ML benefit not only the IT operations of companies but also prove advantageous in all other business operations, including accounting, finance, supply chains, etc.

 

The Urgent need for AI and ML in Finance Automation

One of the most monotonous and tedious tasks in accounting is reconciliations. Traditional reconciliation involves the collection of ledgers manually by the accounts team & reconciliation with the support of excel & spreadsheet formulas. Imagine the following scenario

  • Lacs of line items
  • Large vendor base also compel to undertake separate GST reconcile, therefore Indirect Tax team also needs to be involved
  • TDS applicability for all the transactions can lead to separate reconciliation of TDS receivable or 26AS. 
  • Payment and/or receipts are being recorded on adhoc basis.

AI and ML can enable the system to process various complex transactions into simple rules, offering customization opportunities within seconds. For example, TDS and GST reconciliations can be simplify by coding computers to learn the method of identification and application of different rates without any human intervention.

AI and ML will not only save employees time and effort but also lower the scope of human errors. According to Accenture’s CFO Reimagined, automation can cover a substantial 60-80% of accounting activities. Moreover, automation will greatly boost data integrity, preventing significant unidentified differences and freeing up employee hours for analysis. AI and ML also offer automated communication, reconciliation, and early loss identification, expediting settlements.

Firmway: Pioneering Auto Reconciliation with AI and ML

Firmway is one such SaaS-based interactive platform that simplifies reconciliations. It automates all the steps involved in reconciliations (communication with third parties, obtaining accounting records, reconciling, and generating summary reports) and strives for minimal human intervention. Businesses are rapidly transforming with technology, but there is still room for improvement, especially in accounting and reconciliations. Anticipating a revolution in the world driven by artificial intelligence and machine learning, Firmway plans to wholeheartedly embrace AI and ML to technologically advance accounting and auditing in the coming years. By effectively utilizing AI and ML, it aims to streamline and expedite reconciliation processes, ultimately saving users time and money. Moreover, it is diligently developing tech-savvy solutions for clients, actively putting innovations to work.