In the first two posts in this series (Part 1, Part 2), we went over how modern Finance teams are still struggling with the accounting and FP&A equivalent of manual labor. Delays, mistakes, and inefficiencies lead to a host of problems that have serious business consequences.
To make the most of their valuable time, finance leaders should embrace automated solutions for important financial functions like expense management.
Using expense data and reporting for financial planning and analysis can be a Herculean task without automation. Manual processes lower data quality while disconnected systems keep data siloed, making it impossible for decision-makers to have a holistic, transparent view of spending. Without quality data, data-driven “insights” could lead to dead ends, wasted time and resources, and poor business decisions.
Automation can ease these challenges by simplifying finance workflows while mitigating the risk of everyday human error. Not only does automation greatly increase workflow efficiencies, which allows valuable team members to devote more time to higher-impact endeavors, but it also leads to better data collection and analysis, too.
Let’s take a look at how data quality is impacted by outdated manual expense management and accounting practices.
Manual finance systems inevitably lead to poor data quality
It wouldn’t be an exaggeration to say that data quality is the foundation of true and lasting business success. The larger an organization grows, the more complex executive and managerial decision-making become. At the enterprise level, poor data quality can destroy businesses.
A recent Gartner survey (2020 Magic Quadrant for Data Quality Solutions) found that organizations pay a hefty price for poor data quality: $12.8 million per year on average. And in another Gartner survey of 126 enterprise-level respondents (2019 Circle Data Management Drivers Survey), decision-makers revealed their biggest data management challenges:
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Striving for data quality across data sources and landscapes (60% of respondents)
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Supporting data governance and data security (60%)
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Identifying data that delivers value and scoping data management activities (43%)
Why are finance leaders so keen on improving data collection and curation via automation? Because manual systems (which include workarounds for outdated, legacy expense management software) are highly correlated to compromised financial statement integrity and an increased risk of business fraud.
In a recent BlackLine survey of more than 1,100 C-level executives and finance professionals worldwide (one of the largest of its kind), 55% of respondents admitted that they aren’t confident in their data quality, nor do they believe they can identify financial errors before reporting results.
If you think that’s bad, 69% of finance teams confided that their CEOs and/or CFOs had made significant, consequential business decisions using what preparers suspected were inaccurate financials. Even worse, only 38% of finance professionals, including finance team members at all levels (think accountants, controllers, AP clerks, etc.) said they trusted their financial data.
The reasons for this widespread data distrust were varied: 41% of finance team members blamed manual data entry, while 56% felt that a lack of automated audits and controls, labor-intensive data collection, and spreadsheet errors were to blame.
When an organization’s financials and expense data are this unreliable, it opens up a can of worms that doesn’t just stop at mismanaged resources and poor business decisions. The specter of payment fraud looms large over these companies, and they can’t make it go away.
Automation boosts data quality and improves compliance
An automated expense management solution offers numerous benefits to finance teams struggling with siloed and unreliable data. Automated solutions come with 24/7 checks and controls, leading to more frequent, quality data collection and regulatory compliance.
Ease of access and input also means that team members will naturally adopt the solution and prefer to use it over legacy systems like spreadsheets. This not only gets everyone on the same page, creating a single source of truth for financial data, but it also limits the amount of time valuable team members spend on tedious manual data entry and report building.
And as we explained in previous posts in this series, when finance teams believe in the accuracy of their financials and are able to spend more time on strategic, high-value business activities (like analyzing data for actionable insights), employee satisfaction increases tremendously, which further increases productivity and efficiency. And companies with highly engaged employees enjoy 81% higher customer satisfaction
Gallup found that disengaged employees, on the other hand, costs their companies around 34% of their annual salaries. For example, the average accountant salary in the U.S. is $60,057, according to Glassdoor. So a disengaged accountant could be costing their organization $20,419.38 per year.
In other words, implementing expense management automation has numerous tangible and intangible benefits. Continuing to rely on manual systems, however, only has drawbacks (and plenty of them).
The biggest benefits of expense management automation
According to Forrester, which surveyed 311 global finance leaders involved in expense management decisions at their organization, the top business benefits finance teams observed after implementing an automated expense management solution are:
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Better data due to higher rates of employee adoption (75% of respondents)
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Improved process efficiencies and faster reimbursement cycles (71%)
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Improved employee experiences (62%)
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Increased employee productivity and satisfaction (57%)
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Better adherence to external regulations and government requirements (51%)
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More accurate reporting through data consolidation and analytics for real-time expense tracking (45%)
The study also revealed that finance teams that adopted an automated expense management solution find it significantly easier to analyze and use expense data and quickly create reports compared to teams that do not have an automated solution.
And when Forrester asked respondents to rank the difficulty of specific finance tasks, finance teams reliant on manual systems reported tasks being “very difficult” or “difficult” far more frequently than teams that were already employing automated solutions:
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Reporting current/future spending budgets to support real-time spending decisions and prevent overspending (37% of automated teams felt this task was difficult vs. 56% of teams reliant on manual solutions)
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Using expense reporting to drive discounts with key vendors (30% vs. 51%)
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Using expense data to improve employee spending behavior (29% vs. 44%)
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Using expense reporting data to drive cost savings companywide (20% vs. 45%)
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Sharing expense and compliance reporting with employees to drive better decision-making (23% vs. 40%)
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Using expense reporting to provide a centralized view of all sources of spending across the business (23% vs. 37%)
Data-driven decisions lead to better business outcomes
Finance teams that adopt automated expense management solutions find it significantly easier to carry out the important work of data-driven expense management.
These organizations are better able to collect high-quality data, analyze it reliably, uncover operational efficiencies, reduce waste, drive cost savings (e.g., negotiating vendor discounts), and support real-time spending decisions.
Perhaps most importantly, automated finance teams help decision-makers reach consensus faster and make critical business decisions much more confidently. No matter what industry or market you’re in, that’s priceless.
Interested in an automated expense management solution, but worried about costs and onboarding time? Take a deep breath—78% of Emburse customers who increased productivity by automating manual tasks saw ROI in under six months. And 98% of Emburse customers agreed that automating previously manual tasks allowed them to support a remote workforce.
If you want to learn more about how data-driven expense management can help your organization become more productive, efficient, and resilient, read the next post in this series:
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Automating Finance Part 4: Making The Business Case For Expense Management Automation (With 4 Case Studies)
Or read the previous post in this series: Automating Finance Part 2: How Automation Helps Finance Achieve Critical Business Goals