In Spectrum’s view, the world of finance automation was impacted by two macro issues during 2020 and through to 2021; the ongoing impact of Covid-19 and the evolution of new technologies. Together these make up six more specific factors that are explored by Steve Motley, Head of Digital Solutions at Spectrum in this blog that originally appeared on their website.

 

1. The work from home revolution

Within days, companies across the UK had to gear themselves up to allow large swathes of their workforce to work from their kitchen tables.

Focus was on making sure people had access to the right equipment and systems to allow them to continue to do their jobs. This was quickly followed by secondary considerations.

How do we get sign off and process invoices that would normally have been passed around the office?

and

How do we manage a team of finance administrators when they are sat at their kitchen table and not in the office?

 

2. The winners and losers

One thing is for certain, when it comes to business in 2020 there were winners and losers.

Some sectors and industries have seen demand for their products and services increase many times over. Others have seen demand disappear to a fraction of 2019 levels. Businesses have again had to react.

How do we scale our finance processes to keep up with the increased transaction volume?

or

How do we make processes leaner and more efficient to help us ride out the downturn that Covid-19 has created?

 

3. Cash remains royalty.

Never has the statement ‘cash is king’ been as true as it is today. Unprecedented government support packages have been critical to keeping thousands of businesses afloat. But those packages alone have not been enough. Many businesses have needed to manage their cash position to the penny to ensure survival during this period. Conversations about debtor days have moved from the finance department to the Boardroom. Businesses have focused on managing their cash position. Improving their accounts receivable processes to make the time from invoice to cash as short as possible has been a critical process for many businesses.

That should not be a surprise.

Independent research from PYMNTS and American Express highlighted that firms that “rely on manual processes take 67 percent more time to follow up on overdue payments than those that use automated AR processes”. All these factors resulted in a sharp increase in businesses investing in automating their accounts processes during 2020.

Spectrum are not alone in witnessing this shift.

Research by PYMNTS and American Express identified that “approximately two-thirds of firms are moving away from manual processes and are planning to embrace technological solutions to upgrade their AR systems for faster processing, higher efficiency and lower costs and thus address what they view as their three main pain points”.

This certainly provides food for thought!

 

Technology unlocking further opportunities for automation

The pandemic is not the only factor changing this industry. Like every other industry, the rapid development of new technology is also a factor.

4. AI/Machine Learning

It is now routine for organisations to use Optical Character Recognition (OCR) technology to ‘read’ documents.

For example, invoices, whereby the technology can extract key information such as Purchase Order numbers and match them against a central payment system such as an ERP. In most cases this can provide good results with around 60%-70% of invoices being matched using this approach, thus significantly reducing the requirement for manual intervention in the process.

Yet, with advances in AI and Machine Learning we are now able to increase that match rate through systems’ ability to suggest and learn more rules. In doing so the software continues to reduce the overhead of having to manually review and process exceptions.

This saves time, reduces errors and improves efficiency.

 

5. Robotic Process Automation

Robotic Process Automation is another technology making an impact within the finance function. The ability for pre-programmed ‘bots’ to replicate previously manual tasks is a potential game changer for the function. The benefits are obvious. The bots can work 24 hours a day, 7 days a week, 52 weeks a year and they are not prone to the same accidental errors as humans.

But what are the use cases?

One example would be the requirement to pull or send invoices to and from portals for accounts payable / receivable purposes.

Bots can automate this process and feed the data into the OCR engine.

Another popular use case is the automation of the credit control process. Using bots to identify and pro-actively contact customers who are approaching or exceeding their payment terms.

This saves times and resource resulting in getting cash back into the business quicker.

 

6. Cloud

The final technology trend which continues to have an impact is the continued move towards cloud-based solutions. The ability to access technology and information from anywhere has been critical during 2020. More and more companies are adopting a cloud first strategy which we expect to continue well into 2021 and beyond. This is resulting in an increase in ‘off the shelf’ Software as a Service solutions for finance automation launching into the market. Whilst these products have their place, they are often built as standardised solutions for standardised processes. We have come across many examples where a business processes is anything but standard and this is often for a good reason. For this reason, businesses need to first review and then optimise their core finance processes before jumping into investing in an off the shelf finance solution.

 

The View from Spectrum

In 2021, utilising technology to remove repetitive and mundane tasks is no longer a nice-to-have and is becoming essential for businesses to embrace. The global pandemic is forcing businesses to find ways to innovate their proposition. Whether we like it or not, this is shining a spotlight on those slow/painful processes lurking within our teams where we have not had the urgency to challenge until now.

The time to automate is no longer tomorrow, and the reasons are still the same:

• Improved productivity and efficiency
• Increased transparency
• Cost-saving
• Better employee engagement

So the question is: with many potential areas to automate, where should you start?

Ask yourself the question, are you one of those businesses that are thriving or struggling? You are likely to have different priorities depending on which category you fall into. If you find yourself thriving right now, you may find your current processes are struggling to keep up with the new demand, or you might want to prepare for the future. Our recommendations with productivity, transparency, and employee engagement focuses are most likely right for you.

Unfortunately, if you are one of the many businesses negatively impacted by the epidemic, we think your automation goals will be a bit more focused; after all, cash is king right now! In this instance our recommendations would be focused on productivity and cost-saving opportunities.

 

If you are interested in automating your finance processes, then we are here to help! Get in touch with us at [email protected] or 01482 586732. Visit our website for more insight at spectrum.tech.

 

Photo by Adeolu Eletu on Unsplash

This week (9-13 Nov) is Talk Money Week. In this blog, Brewin Dolphin explain why there are four key things to think about when talking to your family about your finances.

On Friday 4th December, Brewin Dolphin are holding a drop in session for Chamber members interested in finding out more about how to support your employees’ financial wellbeing – please see our Eventbrite for full details and to register.

Money is a notoriously difficult subject to discuss with family. But this is an extraordinary time, with concerns around ill-health amid an environment of rock-bottom interest rates, stock market volatility, and economic turmoil.

The current situation could provide an opportunity for openly discussing financial issues.

Here, we consider some potential topics.

1. Your estate

Inheritance is a hugely emotive subject. Yet while it may seem morbid to discuss who may inherit a portion of your estate after you have passed away, doing so could prevent future difficulties or disagreements. You can explain what your plans are and why you have made decisions.

This may also provide an opportunity to consider if your will needs updating, or any changes you want to make. Even if you already have a will you might need to amend this – for example, to benefit from the residence nil-rate band, introduced in April 2017. This rose to £175,000 per person in April 2020.

2. Lifetime gifting

While you want to avoid giving money away that you might need in the future – towards care costs, for example – you might want to consider passing on some wealth to future generations.

There are various ways you can do this by making use of pensions, trusts and life assurance. If you encounter difficulties, a financial planner can work with you to give you peace of mind that you’ve laid the firmest foundation for your family’s future.

You can also gift tax-efficiently during your lifetime using various allowances. Examples include:

• You can give away up to £3,000 per year free from IHT;
• You can also make any number of small gifts up to £250 to as many people as you like each year;
• You may make further tax-free gifts such as potentially exempt transfers (PETs).

3. Power of attorney

Dealing with a deterioration in mental capacity can be particularly tough on your family. If you are no longer capable of making decisions for yourself, you want to ensure someone you trust is legally in this position.

You can put in place a power of attorney, which is a legal document enabling you to name one or more people to look after your affairs if you lose capacity.

Without this document, an application must be made to the Court of Protection, (the sheriff court in Scotland), and this can be a complex, costly and lengthy process for your loved ones.

4. Complete a financial factsheet

Discuss where you will safely leave basic details of your bank accounts, savings, investment and utility providers. Compiling a list of these is time well spent. This could be invaluable to your family in the event you lose capacity or pass away.

Brewin Dolphin offers a useful document which you can complete and store yourself or give to a relative.

If you would like to find out more you can submit a callback request.

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The value of investments and any income from them can fall and you may get back less than you invested. Opinions expressed in this document are not necessarily the views held throughout Brewin Dolphin Ltd. Please note that the information in this article is for information purposes only and does not constitute advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Tax treatment depends on your individual circumstances; therefore, you should not rely on this information without seeking professional advice from a qualified tax adviser.