Help develop towards Finance 2.0 – FM.nl

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With the rapid introduction of new technology, Finance is becoming a kind of internal compliance auditor.

Partner contribution from:

By Anton Rademakers, CFO at 4CEE

The world of a finance professional has changed in recent years. In the past, you were primarily reactive, and data was manually extracted from all sorts of systems and used to analyze events from the past. Today, with all the new technologies and the huge amount of data you have available, it’s more than ever possible to be proactive. Analyze, interpret data and extract insights and actions for the organizations from it. As a financial person, you change with itagainst Finance 2.0.

Traditional financial role
Record expenses and income items in financial books, this is how we used to do it. Print invoices and then hand over stacks of paper invoices to people in different departments for approval. Then came accounting software and a digitization was made, but still with very manual work: purchase invoices, which you often still have to re-enter or scan and enter manually. You can imagine that a typing error has been made in the way that an invoice ends up in the wrong financial account or is paid too much or too little. An inefficient, time consuming and error prone process.

Developments in digital technology
Developments in the financial world follow each other in rapid succession due to the development of new digital technologies. The combination of artificial intelligence (AI) and robot process automation (RPA) can, for example, ensure that manual, repetitive work disappears. Thanks to technology, you no longer have to worry about booking invoices, almost all invoices can now be posted automatically. Or think of AI technology that helps detect scams, such as ghost invoices. For example, if you receive a new account number from your provider, it is doubtful whether this is really from the provider. AI provides insight into what (significant) changes are being made so that this can be controlled.

Finally, in the list of digital developments, e-invoicing is worth mentioning† This is a crucial development for push to pay process, because it saves time, is more secure and the invoice is paid faster. These new technologies have taken over very traditional manual work. A fine development that ensures that finances have time for other, more important things.

Technology = more data
Thanks to digital technology, you have more data at your disposal such as finances and time to analyze them. The amount of data is only increasing due to developments in cloud, mobility, IoT, social and analytics, which means that the opportunities are also increasing. All of this data allows you to look ahead and make predictions using reliable data in real time. For example, if you see that the prices of a particular item continue to rise. You can then make predictions, think about what it means for your purchase prices and how you can respond to this.

After technology comes financial laws and regulations
It is often seen that a new technology is introduced first and only then is it considered how this should be regulated. Finance thus becomes a kind of internal compliance auditor. It is important that steps in an economic process can be controlled. Does everyone in the organization follow the process? Where are the risks if this is not the case? Knowing your customer law (KYC) is also becoming increasingly important. Knowing who you are dealing with and knowing who he / she is dealing with. By having a good image of your customer, you can make sure that you do not trade with companies / individuals who trade fraudulently. Think also of European legislation for the control of a person’s online identity (eDIAS) or Peppol, a European network for sharing electronic documents such as e-invoicing, which is required by various governments to use.

The work of the economy is changing due to digital technology
Economics is also just people and like many others, sometimes hesitant to keep up with changes, perhaps for fear of making themselves redundant by embracing new technology. But digital technologies that make work more efficient and provide more insight do not make your role redundant, they make your work different.

If you want to make a difference for your organization as a finance professional, you need to combine financial figures with figures from other departments. With the combination of figures from sales, logistics and purchasing, the finance department can create connections, make better predictions and determine consequences. Ideally, you do this using fully automated (real-time) data streams so insights can be communicated quickly and efficiently to the rest of the organization. Finance can also do more with so-called what-if analyzes, in other words think about what impact a particular event has on the organization and how you can respond to it. For example, what happens to your organization if inflation is 10%? Which business units will be hit hard? And how can one respond to this so that the impact becomes less great?

Economy 2.0
By analyzing and interpreting data streams and extracting insights and actions for the business from here, other departments approach you for insight. You provide added value by not only describing what is happening, but by mentioning the consequences and proposing actions. As a finance professional, you need to be able to quickly intervene, adjust and drive change. Use of data and insight as a co-pilot of the company. Embrace Finance 2.0 and make your role as financially indispensable.

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