Automation in most finance functions has gone after low-hanging fruit
A February 2022 survey of 155 finance executives revealed that 55 per cent of respondents are aiming for a touchless financial close by 2025, according to Gartner, Inc.
“Most finance functions want to close faster, cheaper, and with fewer errors,” said Pritika Bhattacharjee, vice president, research in the Gartner Finance practice. “However, it is particularly noteworthy that over half of respondents say they are aiming for a touchless close by 2025.”
At least half of the respondents identified four financial close goals with the aim to achieve them by 2025. Eighty six percent said they wanted a faster, real time close, 68 per cent said they want a cheaper close, and 64 per cent said they want an error-free close by 2025. The most ambitious functions according to Bhattacharjee, were the 55 per cent targeting a touchless close in this period.
“Finance has invested heavily in technology to reduce time to close with three technologies deployed by more than half of functions already: general ledger technology, a financial close solution, or workflow automation. However, a touchless close is a goal that will require moving beyond basic automation towards autonomous finance,” said Bhattacharjee.
Autonomous Finance
A touchless close means that the entire financial close process is carried out autonomously without routine intervention from human employees. Although finance executives appear to be broadly optimistic about reaching a state of autonomous finance, few functions are making much meaningful progress towards it.
“Automation in most finance functions has gone after low-hanging fruit,” said Bhattacharjee. “Using technologies such as RPA, finance has successfully automated many simple, repetitive tasks, but typically this leaves behind many tasks that require human intervention to keep the process running.”
An autonomous, touchless financial close will require a big step up from existing automation in terms of digital maturity for finance functions. Autonomous finance yields augmented real-time insights, effortless compliance, and greater flexibility in financial strategy. It goes beyond an automated function in its ability to learn and act without human intervention.
For example, an automated accounting close has a bot perform reconciliations and sends exceptions and errors to a human for adjudication. In an autonomous finance function, technology embedded in the close process learns how to handle those errors and self-corrects on its way to a continuous real-time close.
“Most finance functions simply are not ready to implement the kind of technologies that can lead to an a touchless close,” said Bhattacharjee. “The lack the appropriate skills are hard and costly to source, and their data handling and processes are not ready for full autonomy.”
To help finance leaders understand what’s involved in autonomous finance, Gartner experts have prepared some examples:
- Back-office use cases, such as with AI-enabled process mining algorithms capturing all variations and exceptions in P2P and O2C.
- Middle-office use cases, such as blockchain enabling an audit-ready continuous close
- Front-office use cases, such as decision Intelligence powering financially savvy tactical and operational decisions
- Office of the CFO use cases, such as decentralized finance facilitating innovative options for raising capital and insuring against financial risk
