The digital transformation provides the opportunity to increase the efficiency of the finance function and make it fit for the forthcoming challenges. Overview The future looks bright for a career in finance. ٦c-��Hr���{w��8��t����)��;���h!���R,�P�a鄖���=���ҋԐ9�q��Bk����P��+Rq�{{�� #��1>��x�þgE�w�z���깄Nj��GBA�+�z��5�hZ8��xuݾ�Y`�q�j��|��? And what it means for financial statement audits. %PDF-1.5 %���� However, there is an increasing awareness of the necessity of opening up finance functions to new technologies. Banking and insurance, in particular, are highly transaction-based industries that generate large amounts of data. ����k��(@ Ji%��t�$�8�t� �u��V����tM�����%�'��V����lO B���e��m�;��뱸x#O8�������|�������)�B�. "The principles of accounting remain the same, even in the digital age. For example, today’s Robotic Process Automation (RPA) tools are mature, their capacity and functionality known, but financial managers still do not trust these products and prefer to test them before … endstream endobj 151 0 obj <>>> endobj 152 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/Rotate 0/TrimBox[0.0 0.0 595.276 792.0]/Type/Page>> endobj 153 0 obj <>stream Digital tools meant to support financial functions. ίuK2+^l��X�~�0P����u֤���������O�55�m��vq33 M鏤���w�ߩ�B���4Z9>J�Y7�4g?��s��aO�i�����k*L}�{� �4`I�3 ���@�Â�'lC�g�h5X�u��;��gLa�^N� ;c�j)�j�T�#���+����>m�烷�k��� �� ��B��w�� W���m2�����C�`��o`���������{5�v��8� �KmISb��E�F@/�� K�CӬ�޹�r�N��4��xa��$��Ş��gm��E�h�٥�ϼ����?�դE��x�F�|�J́�E=�w^�v�r�5����WT`lxC�5�|i�7H�׸fU��S9�hٜ�-�ظT�ELP�-T��/��ĸH�,7L΀m�ZmQ�_��s��}8�� } xnl����d7�N턿�� �QP��f��hAkdV�U'����V��8f����a�����!��R���ނqY����dj���O�W ���Z��3T��N�����$�5=�XP�U0 ����,��-��S������*-��e��5�y���E�l���w8��0���`�/m�!o�|AȎKto%��7t� The digital tools meant for financial services industry focus more on improving and updating the existing competencies and core systems. Where OEMs and suppliers in Germany stand in this regard was examined by the management and IT consulting company MHP together with the Georg-August-University in Göttingen and the University of Groningen. Simple, easy to use, and widely adopted and mastered by financial professionals for decades, it has many advantages. h�bbd``b`��@��,\ �*��8"LA�B�: 1�e��$�����- ! The surveyed companies would like to make use of new technologies including AI, software robots (robotics) and blockchain. Focus more on it. ���4��U�t��%+S�٩l�43�^M3��{��fͨP�_w9��6����U�j ����2�s��v�a�t�����L-�s��h��ͻ�\���|"O��]ϳ��qnA��}�&�R�b�4�w�%�� PwC conducted the first survey in digitalisation of financial statement audits back in 2016, with 98 companies. However, there is an increasing awareness of the necessity of opening up finance functions to new technologies. A successful implementation of the digital transformation is of decisive importance for the long-term success of companies. By redefining its value contribution and self-perception, finance can seize the opportunities that digitalization offers to develop into a digital driver that shapes the digital landscape of the entire organization. DIGITAL TRANSFORMATION IN FINANCE FUNCTIONS The impact of digital technologies is an important topic for professional accountants working in businesses around the world. %%EOF H��V[��6��S�#��:F�� ��� ���@�H��i,�QY�G�����<>FS���[�jjmܠ&�Pr2�7��������߇ e��ՔK�G7IE����>�XMC&���h�0�fn�C H���[��8E�� Digitalization of the Finance Function in the Automotive Industry. Digital solutions can simplify a country’s security and intelligence systems, and its economy and infrastructure. ��is�ռj�hP�y|���A��s����&|ŰM~ M�5���[h'u����|���h�f��+|�k���L�5����� %5�=٠���ԓ�R�]�ҹ{X��C�~��1�r�����wč+�'q�uqk���[=�ngPQ��݌�[�&�tgT�He�y�9g�t�p�c.�_����$H���!M�����$��=����qtY�bZ�N�?ڧ��VL�h����1��� p�kM,q��8��g�����Rl�O��wz����H�T����"��֭Q�z1��;Hy���{Vy�(O��ձ��z��/�����_'s���a6[�!LG��j���Q���`a�.���p�7�[�r�]�"kW�ԍ��F�%W��z�w���z����Rd5��o`�Q���:7�vn�. The extent to which technology is used in auditing is still relatively low. ;$��ܓa��C� The typical obstacles to digitalizing the Finance function: Uncertainty about how to begin; Employee resistance to change; Long-term planning vs. quick wins; No best practice for fully digitized Finance functions; Gaps in digital capabilities; Missing support from management board; Conflicting responsibilities and priorities; Competition for resources Digital technologies can process data far more quickly and reliably than human beings can. of digitalisation in their own finance and accounting, how they combine new technologies with existing ones, what their finance and accounting departments are already using new technologies for, and what value artificial intelligence, robotics or blockchain in the finance function is adding to their company. The mining controller director confirmed that new technology capabilities have made his finance function more predictive and more agile in reacting quickly to any scenario. Technology provides finance functions with many opportunities to do things better, but it also changes the business context in which finance operates. As companies are transformed, so are their finance and accounting functions, and in turn, their financial statement audits. 171 0 obj <>/Filter/FlateDecode/ID[]/Index[150 34]/Info 149 0 R/Length 99/Prev 528737/Root 151 0 R/Size 184/Type/XRef/W[1 2 1]>>stream Here are the key findings: Digitalisation has arrived in finance and accounting, albeit later and more hesitantly than in other departments. For citizens, digitalization promises much needed improvement both in the delivery of public services, such as Government/Bank issued certificates, and other services, financial or other consultancy services. The survey clearly shows that the Excel era is swiftly coming to an end in finance and financial statement auditing. The Role of Finance in Digital Transformation. We decided to include some graphs comparing key findings of the current survey with the responses from 2016 to give more insights into overall trends. Objectives. All rights reserved. Digital transformation leads the fusion of online and offline, disruptive technologies and the radical change of entire industries. ���W�z֤��'F�#vS�Hu����`��oR��/���z��iO(!ܕ�?r:�W��)����kh� ;љO�� g^EB#�/�'ы�(f)���.j5WN�k���O��C�G�o�E�~�����X� s�QpV�������JC�sck珇��#�z暜�m��T�GWx�������ҎA{�XՓ������58p���"�^Č��Г���G1�]1�,ƾC�(�1��M����C��J�*:�JQ?t]&5��Աb}����4NSmt&$��I��V���%�O��‘���I���sp�Bo��x(~K�X�9ry�/����m���i��J��������(�����Bo��G0�A�9�`��^غл���\��Ei>�,u��q�Mٵ�x�oq1:���%>�Ɖ�P�st�?�q,����f���3݇"�x<$���x���j�q!_�2�V�#�K�� �${�'�m�G��&\�� qGn �@aN+#3��{���*�to��D��5�ǿϯd,4lO~�^)�5��ïr���~Շ{�`J�����{�8����xCuEjH�#���� They provide an opportunity to fundamentally redesign many financial procedures and generate added value. o�e�7!���"��IV�C��Y6�=����[e�7]����+8����� �|�>��'8����S�1�3�j8(��F��ʶ׫�Ϟ)k�M�����s�A6͋�'�.��J���=�my��&z\�>�x��띾���`�g܃��m��d�>���j���6+�a��(�� �Sᒘ<2� ����j�s�!���V�l���V�����y�-�|�|��MK)^��6/U�׻la�S��- �Ƥ��T��)`|�:,��vV;��T�v��}��dQV �С�g{���*����ǡ�04g:��1�s����]y�X����lZ�?/�?VK�x}�B�p��ɦ�P7Y9��lx�"���}�o{0/����UQ��?�f�?���#�Áq�Ǘ�f3οW�.`���$���?p L��z���,�tpp���qty5�Y1o� Combined, these trends are creating the conditions necessary for a total transformation of how finance functions operate. At its production line in Saarbrücken, Germany, ZF produces about 10.000 automatic gearboxes for cars per day. • Advice: digital outputs will assist finance teams in building trust-based relationships with stakeholders to solve problems and improve data-based decision making. Automation is a particularly important component of digital transformation for financial services companies. They are currently looking mainly at document recognition (22 percent), direct data processing with customers and suppliers (20 percent) and payment transfers (19 percent). Finance is the lifeblood of business without it things wouldn’t run smoothly. Breaking-down transformation steps: 1. Members are often collocated to improve lines of communication and ensure a true team effort. © 2017 - 2020 PwC. In contrast, the response rate in 2016 amounted to 27 percent. endstream endobj 156 0 obj <>stream We wanted to find out exactly and hence, we split this question into more than detailed 40 questions, asking officers from finance and accounting departments at 76 large and medium-sized companies based in Germany. Digitalisation of the finance function will be an evolving process as new technologies emerge and create better solutions to manage the challenges of today’s fast-changing business environment. Few topics are more intriguing—or disquieting—to today’s boardrooms and top executives than digital transformation. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. In business, the finance function involves the acquiring and utilization of funds necessary for efficient operations. Embracing these digital tools can transform the finance function and add value to the business, whilst improving efficiency and reducing risk. Financial Planning & Analysis is the heart of your finance function! One reason is the difficulty of evaluating unstructured data and mass data systematically using AI. Integration generally takes place through the implementation of POC (Proof Of Concept) and tests. Choose the right reporting structure for embedded finance teams and optimize the span of controls. New technologies continue to play relative minor roles in analysing business processes, reporting and documentation. That’s not likely to happen without a clear vision and strategy for finance in a digital world. BearingPoint conducted a study to understand where European companies stand in the digital transformation of the CFO function. This digitalization also reduces the possibility of cyber risks and minimizes errors that occur due to the execution of robust strategies. 7B��p;�*���`x)�Fšѫ��P�)�B��^+~t@�KG����5�� Q�a��8��Ї�⃡�x& @�-�횫W8{k�7����� ��,�̆��>�ԇc�Q�k��:��p���9]�8��MԽ�����Ad�y���!IepJ�|�a�'X �|�^(��&6WYN���i�p�L�*�:SU�8��9�è That’s what the finance professionals of today are telling us about their vision for the profession, but they also say that further developing their effective use of technology will underlie their success to a great degree. endstream endobj 155 0 obj <>stream Member of the Management Board and Leader Assurance, PwC Germany, Leader Capital market and accounting advice, PwC Germany. �`�$g �@�h#�*�"F҈���� @�E The cross-functional unit has the mandate to challenge the status quo. Thriving in the Digital Economy: The Innovative Finance Function. endstream endobj startxref h�b```�|V��� ��ea��hS�e8���Ax���(�Ў}�V)1y7d��{���z�б]��Һ7^��Q/?-�ꁵS�ʍ�֮�]hu�ε�m|�k}�V�:�{9[��N[F�DG��D�t���`pq� ��:�A0 Tbр�v��f�{B��0ˀ��t�b���5p�` be�cpf�w0p+��P�` b`o���� ����i/������o��ݑ�C d0 ��U Digitalization is the integration of digital technologies into everyday life by the digitization of everything that can be digitized. As in 2016, over half of the surveyed companies are still not using AI. Here are the key findings: Digitalisation has arrived in finance and accounting, albeit later and more hesitantly than in other departments. ;��6�����ᙤ�Ṉ~P/wԫ{ ���ʇj��@/%�[Ď��[�e���]��ш�&,��H ��5��n���X��D{縧'�I�4�0�S��ztK���P\ұ��qQ���G$���p�3�m��΄h�Pb\�(��_��I�5�?c? There are few initiatives for the definition of an overall strategy for the digitalization of the finance function. Frankfurt, January 15, 2014 – Digitalization drives fundamental changes. Digital technologies—and their ability to transform the finance function with improved planning and decision making, streamlined processes, and better cost management—are critical to meeting today’s business challenges. And yet, Excel® is very often the number one choice for finance teams, regardless of the size of the company. H��Vˎ�6��+��)���9��0�8�H���)Yv����� =.�D��Ej���k\��5�1pQ|�������|�_������}�)Ɛ4�u�X���RZ ��>8�P+�_�ʁ30� j�-,�,�‚\��}6��LZ��/� ��t��@m�Ay����� X��4��CA��� ����5������#ʁ���:���5m1�$�Xe��������y'ɍ��C)Y/�>v^;6 �ޤI)Ī홨�?�����G�w�xKv�zK�+ŅA0(M!1�p(-A�)+g�H�j9�@�E���:�J��%�pl 1:A�xQ When it comes to technology-related staff reductions, only 19 percent of the surveyed decision-makers think that this will be the case for their finance and accounting departments. The digital tools meant for financial services industry focus more on improving and updating the existing competencies and core systems. H��V[��0��)t��t�~� A�~l��?Сdَ�ɦE7��YS��!�!����6�d%X�����9�X~��?� �Q��@-*C��}�/xF*. “Adopting digital technologies is a priority from now to 2025, not only in finance but across the group as a whole. Digital tools meant to support financial functions. ", Survey "Digitalisation in finance and accounting". Digitalization can help to resolve the conflict between the role of the finance function as pure and cost-efficient versus comprehensive and value-contributing but at high cost by offering both a clear value contribution to the business and an efficient way of delivering analytical and digital expertise for the entire organisation. Driven by the accelerating digitalization, the finance function faces the risk of being reduced to an efficiency-first support role. Structure finance subfunctions. Digitalization and advanced technology give the finance professional the means to deliver on these demands – in effect using today’s information to be prepared for tomorrow’s challenges. Nevertheless, its greatest strength is that of habit. There are other exponential tools too that are intended to deliver new capabilities. h�̗�n�6ǟ`��?[��LE;i�tM�i�! 1. Finance Automation / Finance Performance Management. Build a performance management system or business intelligence tool (or maybe both). by BlackLine Quarterly. Only eight percent of the surveyed companies are currently making use of blockchain technology. the surveyed companies are making use of blockchain technology. Make sure the structure is based on functional priorities, and clearly define each subfunction’s scope of activities to avoid duplication. Digitization skills are in short supply, so successful programs emphasize building in-house capabilities. [j�� )�!ǜ�+(��ׅc-yB�U�b*e�6CH3�q4� ,)x���%�Ť H���A������&�����aK�Vٙ)�IL�3�խd�K��˪������ sNV[(��M���3b� Yb_�X. Today’s businesses are run based on standard software supporting their processes. 150 0 obj <> endobj Financial Management is the activity concerned with the control and planning of financial resources. Definition of Finance Functions The Finance Function is a part of financial management. And the digital in fhe financial function is no exception. The literal meaning of digitalization gives an apparent idea of development and technology dependent world. Moreover, 13 percent of the surveyed companies are utilizing software robots and 22 percent intend to do it in the future. Today's CFO function must be able to drive digital transformation and contribute to the change of an organizanization. decision-makers expect the degree of automation to be between 10 and 40% by 2022. use AI even though Artificial Intelligence is still at the early stages of development. Communicate effectively at all levels & build a culture of analytics. �7�7,��1H�P����"ֈ2�D��i��5k�NE���vP��2 ��Q���z�C�O�2a�y�oh�8`��ۢ�n�ܓ�q�^��d��l�&ǁ�V|xe���m揇m��[w�q�`7`�5v ��j�b��KN�Zr+!ƊD�{�"�"�^�g�ſ�~+�� 0 ȠU. Now is the time to step back and make sure your roadmap to that future is clear. o ���e�4��j�� �����8Q҅��X�KR��Ϳ+���"fەJ��]k�ᷪt��(~\�T������Ae�H%̣��XL�i���7J�M��V�7�ڵ�v��ĝ��x�\�m{�8;��ػ��4�KkqGp-�3gT�w�]�QcǏ�I���\_��,`-6��Cߩ�Vy�FD���I�a�P����u���F�1)��(�0��k5nH!�!���i��bn��=�"�REc�ZXu���#FZ� f\�d~3��Q�Q\�{��axm����ְ\0@]6�뱧"H[�л���� 鍍�=T�笙�0J����W�;M!Md�Ri�4��ʌ��qt,���T��:�x5st�T -ݣ:[�Z��6 This is where the present study picks up and provides insight into the current status and the trends of digitalisation within accounting. Digital transformation in finance has assisted in automating monotonous tasks, management of compliance and accounting and operations functions that include accounts, reports, and analysis. Automatic processing of this data allows them to operate far more efficiently and make use of technologies, such as AI and data analytics, to retain and expand their customer base … Digitalisation is transforming companies and other organisations more fundamentally than the business world has ever seen. Prof. Dr. Rüdiger Loitz, Leader Capital Markets & Accounting Advisory Services. PwC has already developed appropriate tools, such as GL.ai (General Ledger artificial intelligence), which uses algorithms in financial statement audits to save time when analysing large data sets and identifying areas of risk. In an increasingly digitalised world, the success of the finance function depends on combining the right technology with the right talent and skill sets. The concept is so intriguing because it promises unprecedented levels of visibility and control by digitizing everything from operations to … The extent to which technology is used in auditing is still relatively low. Future proofing for success . endstream endobj 157 0 obj <>stream Besides the change in entire core business models, digitalisation particularly encompasses support functions such as accounting, con- trolling and management. Build capabilities. Digital Finance is made possible by a series of rapidly converging technologies and business trends, each of which has the potential to significantly impact the traditional finance function. 183 0 obj <>stream Although AI is still in the early stages of development, it is already being used by 18 percent of the companies. Digital financial innovation and the entry of new providers of financial services may not only affect productivity and efficiency but may also have important consequences for financial stability. Benefits Of Digitalisation. Automation, optimization, autonomy of processes as well as more flexibility and individuality of products and services are just some of the benefits and opportunities of digitalization. of the companies already use software robots and 22% intend to do this. There are other exponential tools too that are intended to deliver new capabilities. Digitalization in Finance ... from different providers covering Treasury core functions with an integrated approach, by connecting various third-party applications to leverage the system. New technologies for a wide range of activities In the finance function, that means working now to get the right people and technology in place to take advantage of the inevitable disruption ahead. ���v��N�p��T�k����ъT��l/�� 9GJ/ 9!ހ�E��R��AP�'QC}��;A�3O+;{'�/�S�a�S��>Vͅ}� �I&=`�:V3��+�s�K{A��0�BK���'�rH�Aut�U����.-�h%Bi�p�i�T��x��$0�Ɍ�;M�Gq����r�`��2����d�NH{E|-�(:��훻ý����(\�/h�+.���M�{pm�� In financial services, unlike in other industries, increased competition may not be welfare enhancing (Corbae and Levine 2018). To achieve the most value, the finance function must develop a digital strategy that aligns with the company’s overarching digital framework. However, technological trends have the potential to transform accounting. Technology advancement drives efficiency as well as providing the basis for value-added roles. Digitalization and data provide a significant opportunity for the finance function to enhance their business partnership by guiding and enabling decisions across an organization. Digitization is now a realistic goal for the finance function because of a range of technological advances. In this chapter, digitalization means computerization of systems and jobs for better ease and accessibility. endstream endobj 154 0 obj <>stream The CFO function faces changing requirements created by digitalization. Finance is the first function to adopt the new capabilities, such as analytics tools that use daily peaks to forecast monthly revenue,” says … As helpful as the different software systems are, they also mean effort. BearingPoint study: according to 75% of finance chiefs the two megatrends have a substantial impact on the finance function. These include the widespread availability of business data; teams’ ability to process large sets of data using now-accessible algorithms and analytic methods; and improvements in connectivity tools and platforms, such as sensors and cloud computing. Establish reporting relationships. Robotic Process Automation (RPA) in finance: increasing process speed, reducing costs and improving quality – RPA's great potential is clear. It was very well received, which, along with the relevance digitalisation has for participants and for PwC as auditors, inspired us to conduct this second survey. 0 Are other exponential tools too that are intended to deliver new capabilities to happen without a clear and! Total transformation of how finance functions operate without a clear vision and for. Future looks bright for a total transformation of the surveyed companies digitalization of finance function software... 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