The storied history of accounting has undergone three major innovations. From its invention more than 7,000 years ago to the debut of double-entry accounting in the Middle Ages, the interval between these changes clocked in at a mind-boggling eight millennia.
Perhaps it’s time for accounting to take its next big leap. Today’s digital landscape is certainly part of the story, as is the world of modern finance. But it is still primarily about bean-counting, and as always, the focus is on getting the numbers right.
The big question is whether there is a big enough change on the horizon that can shift accounting from a mere numbers game to a position of strategic value for the organization.
The answer is unequivocally yes. Given the centuries-long slow pace of innovation in accounting, one might ask why now? What is it about the current business and technology landscape that promises to bring such change to accounting?
The answer is digital transformation, or the integration of digital technology into all areas of a business. With it bringing an end-to-end, customer-driven rework of the business that leverages technology to bring new value to all the people who interact with them.
Addressing shifting customer priorities is rightly the central focus of such transformations, although customers aren’t the whole story. Employees are every bit as important part of digital transformation. If an organization treats its personnel the same as it always has, it’s unlikely to be able to transform itself.
This focus on people is what promises to bring change to accounting. For 10 millennia its focus has been on the numbers. Getting the numbers right will always be absolutely crucial. But today, the process of how we get the numbers right — that is, how the people that support the accounting function in their organizations get their work done — is every bit as important.
To use an appropriate accounting metaphor, Chief Financial Officer’s (CFOs’) priorities have always been below and above the line.
As to the former, CFOs place great value in accuracy, efficiency, and transparency. They are simply not doing their jobs unless they excel in those areas — and yet, none of them are strategic to the enterprise.
Above the line, CFOs earn their place in the C-suite by focusing on strategic priorities: improving market share, delighting customers, and maximizing overall profitability. For today’s progressive organizations, digital transformation is essential to achieving such core strategic drivers.
To achieve both below-the-line and above-the-line goals, today’s CFOs must center their efforts on automation, integration, and simplicity. Accounting is simply too complex to depend on manual effort. Instead, automation drives efficiency and accuracy while simultaneously shifting the finance department’s day-to-day work from routine tasks to more valuable ones.
However, automation doesn’t work in a vacuum. It must work within the context of the many different software applications in place, as well as any other software relevant to the duties of the CFO’s office. In other words, integration is essential to the modern CFO’s scope.
Automation and integration won’t facilitate the strategic goals of digital transformation, though, if the organization doesn’t also achieve simplicity. The reason accounting requires change in the first place is because it is becoming too complicated — and with complexity come inefficiencies, inaccuracies, and in the end, poor business value.
This confluence of increased complexity, digital transformation priorities, and the changing context for the day-to-day work of finance personnel means we’re in need of real innovation in the finance department.
We need solutions that support day-to-day finance workflows while making jobs easier, simpler, and more efficient. Taking advantage of technology to streamline the step-by-step processes finance personnel must execute, from closing the books to reconciliation to audits.
Automation both improves the lives of the finance team and frees CFOs to focus on strategic tasks. No longer does the excessive complexity of the finance function need to absorb the bulk of CFOs’ attention. Instead, they can work with the rest of the C-suite to achieve the strategic goals of the business.
If you are a business owner or CEO within the San Francisco Bay Area or Silicon Valley, in need of an experienced part-time CFO to help your company plan and implement digital transformation, improve operational processes, cash flow, accounting and billing process management, as well as profit margins, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.
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