Far-reaching digitisation is the new standard in finance. Smart, fully automated processes eliminate manual transactions and complex spreadsheets. No hands accounting, as it’s known at Exact. Exact CFO Onno Krap, and Kevin Mottard, manager of the Dutch CFO community at Alex van Groningen, explain the radical impact of digitisation on companies.
How digital is Exact? Do you lead by example as a developer and supplier of business software?
Krap: “We’re constantly scrutinising all manual activities, which has resulted in the elimination of most manual transactions. This high level of automation allows us to focus on the exceptions, which we also aim to digitise in future.”
Is technology the sole cause of radical change in companies?
Krap: “With no hands accounting (also known as robotic accounting), technology is only part of the story- and maybe not even the most complex part. No hands accounting is closely related to the design of the organisation (people) and processes. Technology is the final piece of the puzzle, which makes it all possible. With regard to Exact, perhaps a little history might be helpful here. We’re a global organisation with offices in seventeen countries. In the past, different local offices implemented processes in their own way. There isn’t much point in automation if you’re only carrying out a few non-standardised transactions in different locations.
When I arrived in 2012, we formulated the theme of Centralisation, Standardisation, Automation. Now all our locations are served by a back-office organisation focused on three locations: Delft, Kuala Lumpur and the US. Routine transactions are processed centrally; the processing of invoices, for example, is handled entirely from Kuala Lumpur. This has allowed us to create transaction volume at that location. In order to achieve this, we created a single global purchase to pay process from our various local purchasing processes. In what is a fully automated process, suppliers from anywhere in the world can send an invoice, which is then read and matched with a purchase order authorised by the budget holder. At the same time, we work with our suppliers to offer as much digital invoicing as possible, as this leads to the improvement of our own process as well. This type of transformation affects the entire organisation and its environment, and has a major impact on both people and processes. And as you can see in this example, technology is the final step.
We’ve applied our experiences from designing the purchase to pay process to the rest of the financial function. This has now been fully established in three global process groups, officially known as purchase to pay, order to cash and record to report. We’ve appointed global process owners for each of these processes, who are globally responsible for the most efficient and effective design of their processes.
Are other CFOs just as tech savvy as Onno Krap?
Mottard: “Lots of companies get rid of the no brainers. Large companies started doing this five or six years ago and have come a long way. SMEs followed three years ago. But digitisation isn’t an end in itself. The real question is how you apply digitisation to advance your business. Robotization can be a flywheel for efficiency. But efficiency doesn’t equal effectiveness. It’s about people too. We too often assume that staff are keeping pace with the developments currently underway. But you can’t always teach an old dog new tricks. You might want to consider an alternative place for certain people. Because if process A is being automated, it doesn’t necessarily follow that the same person can handle process B. Some people evolve, others have to be let go. This allows room to acquire other profiles."
How does Exact help other entrepreneurs with no hands accounting?
Krap: “We do this in various ways. To stick with my previous example of our purchase to pay process: invoicing is old-fashioned but we still send lots of invoices. This is because it seems hard to standardise. The government recently made it compulsory for all its new suppliers to invoice in UBL (Universal Business Language); you can’t do business with the government without using it. Large companies often require suppliers to invoice them in a standardised format. We’re doing our best to get Dutch businesses to embrace electronic invoicing. Not only because Scan & Recognise and e-invoicing happen to be products we’ve created, but because it helps the economy move forward and saves considerable time and money.”
Where will these developments end?
Krap: “They never stop, it’s a journey. It’s not just a matter of tinkering with a few issues one day and being able to handle your financial processes hands-free the next. The image of the financial function is undergoing rapid change, however. There are fewer personnel processing transactions and relatively more analysing information which contributes to better business management.”
Which developments will determine the future of finance?
Mottard: “These days we’re constantly talking about disruption, about how companies such as Uber and Airbnb are disrupting entire markets. But sometimes companies fail because the organisation is too complex and too bureaucratic, with a lack of critical internal discussion taking place. In the ideal organisation we address issues, constantly challenge each other, propose ideas, and focus on the customer. You can get ten senior staff to generate ideas or use the brain power of thousands of people throughout the whole organisation. It’s crucial that finance standardises and automates what it has to, but also allows adequate room for entrepreneurship. Otherwise there’s too much top-down management, and that’s a waste of talent. The involvement of employees is more important than the level of automation, in my opinion.