Finance controllers play an important role in maintaining the overall internal finances of a company and preventing revenue leakages. A much worse adversary is manual document processing that adds due time to the financial operations. Learn how an IDP can aid finance controllers to smoothen the operations and automate manual document processing?
Every organization is on its journey to become cash-rich. For this, logistics today tries to gather more clients and offer customized services to different aspects of an industry increasing trade. On the contrary, when a company is established each and every department is budgeted to a max cap. This budget starts crossing barriers once the organization becomes older leading to revenue leakages. It is estimated for a revenue of $1bn, an organization can end up losing $3mn annually in revenue leakage. To mitigate these revenue leakages, finance controllers are hired in organizations.
There is an entire gamut of responsibilities that are bestowed upon a finance controller in logistics. Much like any industry, a controller contributes in a wide array of functions for logistics such as:
The contribution can vary depending upon the scale of the logistics company. In a larger organization, every department can have their finance controller because of the massive amount of work. On the other hand in a small organization, a finance controller may be controlling each and every department. In the later case, the amount of work needed to be done may be less but the spectrum of responsibilities is much wider.
Finance controllers in many organizations are second to a CFO. They are not direct collaborators but rather a supervising power that makes sure each of the subunits that are required to perform data extraction and validation function properly in an organization.
Many times companies are provided with the shipment from the supplier but aren’t able to pay on time. This creates a gap that can lead to poor relationships and even penalties. In order to mitigate this problem, a finance controller tries to make the internal financial ecosystem as sustainable as possible. This is done by undertaking small yet crucial business functions such as debt management, inventory management, reviewing of purchase orders, etc that can mean long term assurance to the companies even when it is going through losses. To fulfill this assurance, error free transactional statements and ledgers are required by the finance controllers.
The roles & responsibilities of a controller can be divided into four broad categories, i.e, strategist, operator, stewardship, and catalyst. Of all the four, stewardship takes up most of a finance controller's time.
The biggest challenge that a controller faces in stewardship is approving invoices. This is because the time spent in invoice approvals can be very high for companies relying on manual processing. Accounts payable and finance controllers are tied together for the same reason. Also, controllers are no longer only responsible for managing the financial health of the company but timely invoice payments as well.
In a report by Deloitte, 800 finance controllers reported that 70% of their time is utilized in tactical operations like invoice payments. It was also reported in the same survey that they would prefer a 50/50 split for the strategic and tactical functions.
This hence, directly acknowledges the dire need of automation to aid stewardship specifically for invoice approvals considering it is the most time consuming and recurring task. .
In order to achieve that it is essential that companies start acknowledging automation solutions like IDP that can aid the internal departments heavily against erroneous data and reconciliations, while freeing up the controllers to work efficiently with strategic tasks. Much of the redundant and repetitive task of data extraction and verification can be done in bulk simultaneously using IDP platforms and can help controllers save time. It can also aid controllers to steer their companies away from erroneous data, duplicate data, time-consuming documentation, loss of cost, etc.
Finance controllers often act as a liaison between multiple departments. This entails them to cater different aspects of the organizational financial operations often known as controllership functions. It is important to understand these aspects to better understand the role IDP can play in improving them.
The strategic part of the controllership can be divided in two different functions i.e. financial strategy and stakeholder management.
Every organization is required to have a strategy to achieve its objectives and create financial sustainability. The asset management and resource planning that is done to achieve this strategy comes under the umbrella of financial strategy. A lot of components that are central to a financial strategy are profit and loss statements, cash flow statements, sales forecasts, balance sheets, etc. require verified data with zero errors.
The other side of the spectrum demands finance controllers to maintain a great relationship with the stakeholders often referred as stakeholder management. A healthy relationship is a much needed practice to appease the stakeholders and stay away from unneeded escalations. On the contrary, whenever a company goes through a long-term financial crisis stakeholders often turn away liquifying their stakes. This is often the end result of poor finance management that can surface because of delays in process and erroneous data.
At the operator front, a controller needs to fulfill two duties i.e. Audit Liaisoning and Budgeting. A finance controller is not only responsible for creating internal financial reports for auditing but also works with third-parties until compliances are met.
With budgeting, a finance controller will analyze the consolidated financial data to pick up financial trends, variations, and operations suffering budget deficiencies. This requires a long trail of paperwork and erroneous data often adds more time to the operation.
Stewardship combines a series of functions that a finance control needs to fulfill. These are approving invoices, internal control, cash flow management, internal controls, debt management, banking, compliance, and external reporting. A lot of these operations deal with multiple documentation procedures and manual operations that can be made faster using an IDP platform.
While saving cost in internal operation is the primary modus operandi of a finance controller, they are also responsible for reporting & analysis. Detailed reports are created with the help of accountants for further analysis. This analysis in turn helps in guided decision making and forecasting predictions for the organizations. With errors and delayed reports, the entire operation takes a huge toll with faulty predictions.
Almost 2/5th of the time is spent on stewardship by a finance controller. While going through multiple operations that have the capacity to be automated, a couple challenges lie significant in almost each problem statement. These challenges are:
Organizations are still dependent on old skool manual data entry systems. They would either hire a team of data entry experts or deploy a traditional OCR system. While traditional OCRs can only work with a fixed amount of templates & structured data, data entry operators are prone to human errors. Also, the amount of data duly processed comes from different sources making it unstructured.
Loss of data is a huge problem in logistics. With paper-based documentation systems, the data being stored is often lost and can’t be retrieved on time. This mostly happens with invoices that once lost causes havoc to the accounts payable department delaying further timely payments.
It is noticed that while entering a series of 40 numbers in a row, humans are capable of making at least two unconscious mistakes. Imagine this with huge volumes (approx. 550 billion invoices were produced in 2019 globally) of data. On the contrary, existing automation platforms like VisionERA can easily handle millions and thousands of documents without introducing any errors.
The time of reconciliation further adds to the process and with monotonous tasks such as data entry and verification, it is bound that even the experienced specialist will make mistakes at some point. This reconciliation adds more cost to the company’s fund in contrast to its generation.
With a manual system be it paper based or digital, duplication of data is a prominent issue in different industry verticals. The errors that lead to duplication can either be supplier driven, caused by the internal team, or occur while importing and exporting documents. It further adds more cost to the document processing, hampers personalization, and even impacts the overall productivity.
Each of the factors discussed above points towards adding more time to the process. These are challenges witnessed by almost every employee working in the finance department let alone a finance controller. It clearly points towards the delays that happen leading to more time in approvals.
Mentioned in an article by Gluent, an estimated cost of $3.1 trillion is incurred annually on U.S based companies because of poor data management. It is caused by high reconciliation costs and continuously occurring issues mentioned above.
VisionERA is an intelligent document processing platform especially designed to support document-driven industries. The platform is designed to automate processing of structured and unstructured documents at bulk and extract & verify custom data on the fly.
It is an industry and use case agnostic platform, thereby, helping create automation in any operation that requires data extraction and reconciliation. Its smart proprietary technologies like Artificial Intelligence and Machine makes it a one-stop solution because of its continuous learning capabilities and abilities to adapt.
Besides this, companies can deploy their own custom DIY workflow and use any document (as a source of truth) for data reconciliation in volume. It comes with a smart insights board for useful business related KPIs and offers ground-breaking features like auto gridling, text auto correction, image reconciliation etc. for both paper-based and digital documents.
It is tough to be a finance controller today because of varied responsibilities and growing demands. A controller is vested with so many tasks that there is so much room for errors. In situations like this, it is essential that companies start to integrate AI within their infrastructure to automate repetitive manual processes. IDPs are one such solution that help organizations to reduce turnaround time for processing exponentially and avoid errors that can be lethal to the company’s finances.
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