Digitalization is having an increasing impact on corporate finance. Most CFOs now recognize the need to drive a digital transformation of their department. Whether it’s to manage performance in the face of uncertainty, to develop new skills among employees or to engage in CSR, digitalization offers many advantages. Here’s how.
Digitalization is no longer as divisive as it was a few years ago. All market players now recognize its considerable potential, particularly with regard to the cloud and automatic analysis tools such as deep learning and machine learning. And the finance function is no exception to this profound transformation, as it is no longer limited to a minor improvement in productivity or the reduction of human errors, but is a means to create value and strengthen the company’s position in a competitive market.
Despite the uncertain environment in which companies operate, mainly due to raw material shortages and price inflation, the digitization of finance functions supports business teams to gain operational efficiency. A PwC study shows that 83% of Finance Departments are considering investing in the digitalization of the Finance function.
Algorithms and artificial intelligence enable the processing of large amounts of data in order to provide increasingly accurate analyses in real time. This upheaval concerns all departments of the company and improves business processes as well as the sharing of reliable information. CFOs can access critical information about changing consumer behaviors and can run business model simulations to help business teams make strategic decisions.
According to the PwC study, 65% of finance departments are planning to launch or have already launched a tax compliant project. In fact, 2.5 billion invoices are issued each year in France. This figure represents a cost that is as important for a company’s finances as it is for its carbon footprint. Dematerialization therefore has three benefits: improved productivity, profitability and reduction of the company’s environmental footprint. Communication and sharing tools such as the Cloud, intranet and social networks also facilitate the circulation of data and documents. They have quickly become essential tools. All this data can also be centralized and prioritized in dashboards (ERP or CRM) to facilitate and optimize monitoring.
However, the multiplication of servers and the fragmentation of the company’s information system can slow down processes and affect the reliability of the information. These tools also require employees to develop new skills to adapt.
All company departments are involved in the CSR approach, and the finance function is no exception. Investing in a Corporate Social Responsibility (CSR) approach can actually help companies reduce costs and financial risks. In case of non-compliance with environmental and social regulations, companies risk penalties that can be high. For example, in 2019, non-compliance with the obligation to carry out a GHG assessment cost 1,500 euros, but this penalty has been increased to 10,000 and then 20,000 euros in the event of a repeat offence following the energy-climate law.
In addition to the possible penalties, adopting a CSR approach can also help reduce costs and operational risks. For example, an energy audit can detect leaks or excessive energy expenses. In addition, social regulations, such as good practices in social dialogue, equal pay and non-discrimination, can also be beneficial for companies.
Finance is closely linked to CSR when it adopts a financial investment policy that respects ESG principles (Environment, Social, Governance). This involves excluding certain highly polluting or controversial sectors of activity, or on the contrary, investing in companies that respect the environment and social issues via labels. Another benefit is financial incentives for companies that perform well in terms of sustainability, such as green loans, green bonds and sustainability-related loans. Companies that meet their greenhouse gas emission reduction targets can therefore benefit from a subsidized loan rate.
To optimize and guarantee the creation of this value, the onboarding of employees and partners and their support as the finance function evolves digitally is crucial. In this respect, the implementation of a Digital Adoption Platform (DAP) is the ideal tool to optimize and ensure the adoption of the digitalization of the finance function within the various components that interact directly with the finance function.
K-NOW, digital adaptation platform, guides your teams in the adoption of your ERP modules. Like an application GPS, intelligent guides, alerts, notifications, feedback but also onboarding, real-time guided tours… everything is there for an easy and fluid learning curve.