Editor’s note: Automation can work wonders but it can also create challenges for the finance function. Sarita Singh (pictured), Regional Head & Managing Director, Southeast Asia, India, Greater China, Stripe shared her insights into how CFOs can redefine their functions and better position themselves as revenue growth leaders through automation.
Sarita Singh, Regional Head & Managing Director, Southeast Asia, India, Greater China, Stripe
FutureCFO: What are the major challenges facing CFOs and the finance function in 2024 in terms of automation?
Sarita Singh (SS): An overwhelming 89% of finance leaders in Singapore invest more than half of their time in manual back-office tasks, according to a recent Stripe study of 1,700 CFOs and finance leaders around the world.
This focus on manual tasks not only costs finance teams their time, but also increases the risk of errors.
As a result, 43% spend between 10-25 hours every month rectifying manual errors or discrepancies, and 36% have to reopen their books or restate earnings at least once a quarter because of errors that were made after their quarterly close.
These issues can add extra work for finance teams, slow down decision-making, and damage a business’s credibility.
It comes as no surprise therefore that the automation of financial tasks is a leading digital investment priority for finance leaders in Singapore (40%), second only to the digital transformation of go-to-market and sales (42%).
Automation—through the use of artificial intelligence (AI), large language models (LLMs), and other technologies—has the potential to change the anatomy of work and augment the abilities of individual workers by automating time-consuming manual tasks.
However, a core challenge for CFOs in this transformation is deciding which financial tasks should be delegated to technology completely, and which still require human intervention and supervision.
The division of labor between software systems and employees will vary across industries, but all businesses will have to identify the right balance.
For example, businesses such as Slack and Deliveroo have tapped into Stripe’s revenue and finance automation suite to automate processes that manage revenue flow and at the same time allow them to adjust the process to meet the business’s evolving needs.
The division of labor between software systems and employees will vary across industries, but all businesses will have to identify the right balance.
FutureCFO: How should CFOs tackle these challenges?
SS: In a difficult economic climate, CFOs have a critical role to play in driving data-led strategic transformation.
However, with their organisations’ financial data living across dozens of disparate tools, requiring hours of manual reconciling across these various systems, their ability to do this is being severely restricted.
CFOs need to have the right tools at their fingertips, powered by the right tech so they can make effective financial decision making.
Finance leaders can start this process by uncovering bottlenecks in workflows, and experiment with automation to solve these challenges.
By identifying the biggest source of manual effort for teams—for example, if teams spend the most time on manual accrual accounting to close books—they can then consider tools that can streamline this process.
They should also look for technology solutions that allow for human input and control so they can ensure it meets the unique needs of their business.
Getting this transformation right creates the opportunity for CFOs to redefine their function and better position themselves as revenue growth leaders.
FutureCFO: Which emerging trend in finance automation should CFOs take note of and why?
SS: According to Fortune, 8.1% of CFOs at Fortune 500 and S&P 500 companies were promoted to CEO in the first half of 2022—up from 5.6% a decade earlier. This rise reflects how business success and financial agility have become inseparable.
This sentiment was also reflected in a recent Stripe study which showed that 68% of finance leaders believe that streamlining financial operations is an essential part of their company’s strategic growth.
They see it as a prerequisite for entering new markets and launching new business models.
To achieve this, the ability for financial automation to grow revenue, as well as streamline the back office, have emerged as core trends.
This emergence reflects the changing role of CFOs from cost management and recovery to cost generation, and how the focus of back-office finance is evolving from just efficiency to insights that can impact revenues.
Using software to automate processes can sometimes create burdens of its own, and counter-intuitively restrict businesses' attempts to streamline the back office.
According to Stripe’s study, 63% of finance teams now use more than 10 different systems to get a unified view of their company’s financials and 55% want to consolidate the number of software programs they use within the next two years. Businesses need to be able to operate across multiple systems easily, and access data insights in real-time.
The second big opportunity for financial automation is its ability to deliver new revenue. The actual revenue returns from improving back-office systems can be huge.
As an example, 87% of Stripe invoices are paid within 24 hours, and Stripe’s revenue recovery tools alone helped users recover US$2.5 billion of revenue that would have been lost to churn in the first half of 2023.
