Automation is no longer a nice-to-have for a finance team — it’s now a must-have. Nadia Asoyan, VP of Finance at Trusted Health, and Amer Ali, VP of Finance at Netlify, have been on the frontlines of the revolution in finance automation. They joined Airbase VP of Business Development, Dan DeVall, during the Off the Ledger LIVE! virtual conference to share the lessons they’ve learned about the benefits of automating early with tools that have a positive ROI.
Automation: An overdue revolution for finance.
“Today, there’s more recognition of the lack of automation of finance tools,” Nadia said, and Amer pointed to the increased investment in the fintech space. As a result, over the last five years, an amazing array of automated tools for finance teams have entered the market. Financial tools have also become more specific, with advanced features for particular functions, like forecasting and budgeting, and specific areas of accounting like accounts payable. Nadia noted that she’s seen a lot of focus recently on IPO-readiness and process automation in new products.
“It’s generally a very positive improvement for finance leaders.”
This is partly a result of the unbundling of software systems, which gives purchasers the freedom to move away from a single software vendor for their entire tech stack. But, it also makes integrations a vital part of assessing a software offering.
“It’s a necessary part of the checklist,” Nadia explained. “Which tools will this new tool integrate with? You need to make sure it can accommodate and integrate with more complex tech stacks.”
Building a tech stack.
“The typical CFO tech stack has become increasingly complex,” noted Amer. As a result, finance leaders should continuously evaluate the technology they use. It’s no longer a set-and-forget function. Amer explained that Netlify recognizes this is an ongoing process. Every quarter, they identify a process that could be improved and schedule that in.
“The core philosophy is that, in finance, there are a lot of different functions, like reporting, budgeting, and forecasting. So let’s try to focus on automating the repetitive, time-consuming tasks so the team can focus on higher-value functions that drive the business forward,” he said.
It’s also important to consider your company’s priorities. Nadia noted that different sectors have different focuses and problems to solve, whether it’s cash forecasting, inventory management, or accounts receivable. Those priorities should be built into the process of purchasing automation software.
Overcoming resistance to automation.
Despite the myriad benefits of automation, the move to automate more finance processes isn’t always embraced by everyone in a company. Often, it’s just a matter of not having enough time to implement new systems — even if those systems will save time in the long run. “I’d say one of the biggest blockers is that finance and accounting teams are perpetually understaffed, so it’s always a challenge to have the right resources,” Amer said.
The panel focused on the challenge of change management when it comes to implementing new systems. However, they pointed out that the longer the move to automation is postponed, the tougher it will be. Often, it’s a risk or compliance event that prompts the need for change, and it’s best to circumvent that possibility from the start. Amer explained that some processes are more critical and can’t be disrupted, so will be approached differently to prevent business disruptions. But, for every process, the sooner it can be automated, the better.
“It’s always a good time,” said Nadia. “You should be consistently working towards automation. In my career, I’ve never heard anyone say that they’ve over-automated.”
When asked if a company should wait until they bring accounting in-house before they start building their financial tech stack, Nadia explained that in her view, the visibility afforded by many products is essential in the early days of a company. “It’s good to have visibility through systems into where you stand as a business.”
The panel pointed out that knowing things like cash burn can help guide important decisions before the finance function is fully in place. Although a complex FP&A tool might not be essential until you have a CFO, seeing where money is spent can become a conduit to growth, so a spend management platform can help drive business decisions even without a full finance team.
Evaluating automated software offerings.
With so many tools available, deciding on the best automation software can be overwhelming. Amer recommended considering the stage of your company as a starting point. Complex budgeting or FP&A software may not be appropriate for an early-stage company.
When evaluating software, Nadia likes to create specific benchmarks and talk to similar companies — in terms of company size or stage — regarding those benchmarks to determine if the software can successfully solve the problems she wants it to address. She always makes a point of talking to the people involved in the implementation to get a sense of the time and complexity involved, noting that they often have a different experience than the eventual end-users.
Evaluating the success of automated tools.
“My North Star in evaluating the success of automation is time-to-close. The more automated we get, the fewer days we need to close the books,” Amer said. He also considers the buy-in from people outside of finance: “How has this software enabled you to collaborate better with others?”
Nadia again turns to specific benchmarks and objectives and key results, and agrees that a faster close is a good indicator of success. Forecasting accuracy and the ability to reduce manual labor are also good indicators, she said.
“Having a clear problem that you’re trying to resolve, and checking to see if it was accomplished, is very important. In my experience, some systems that seemed good to have are completely unused.”
She noted that financial tools tend to have very clear outputs and high adoption rates.
Another indicator of a product’s ROI from a budgeting perspective is evaluating headcount efficiency: Does the automated tool make it possible to do more with fewer people? Other areas to evaluate ROI include lower purchasing costs through automated procurement processes and cash back from software-enabled virtual cards.
The future of automation.
The future of automated finance tools is bright — but there is still work to do, according to our panelists. “I would like to see a lot of tedious manual tasks done faster, with less human effort, and the role of finance more related to driving strategic and analytical decisions, with the help of automated tools,” said Nadia.
Watch the recorded session from Off the Ledger LIVE!