Automating cross-border financial operations - an overlooked necessity

In today's global economy, automating financial operations, especially cross-border transactions, is increasingly essential. However, many companies hesitate to embrace these changes due to perceived high risks and the challenges of integrating new systems into established workflows. About half of global companies still rely on manual payment processes and do not digitise their payment processes. The accounts payable and receivable processes of over 1 in 4 companies are manual and disjointed. Despite borderless operations and innovations in technology and payments, why do so many businesses still rely on outdated procedures? In this article we will aim to answer this question as well as provide insight into which processes could be automated and when.

One major obstacle is the conservative nature of finance teams. Accountants and finance managers often stick to traditional methods because the status quo feels safe and familiar. The risk of failure with new systems is daunting. Additionally, finance teams are typically overwhelmed with work, making it hard to find the time to configure new systems. This challenge is compounded by the rapid pace of technological change, which forces finance professionals to decide whether to keep up with the latest advancements or risk falling behind.

Accountants and CFOs have their ways of doing things that "work" even if inefficient, without challenging how much better the process could be. Finance teams are stuck in a cycle, finding it difficult to implement these changes due to time constraints and fear of change.

Another challenge is managing multiple relationships with financial institutions. When operating cross-border, companies will likely have multiple banks to accommodate multiple currency needs and additional systems to manage payables, receivables, and expenses. The disjointed systems create manual work as you need to download statements, consolidate the data, and process payments from different banks and then reconcile. There’s also the issue of fees—firstly because it’s hard to get the best rate and you don’t even know when you will be losing money, and secondly at the reconciliation step, some accounting systems may not reconcile different currencies correctly, creating issues further down the line. Compounded with that is the risk of mistakes—when all that work is done manually, a simple mistake on an invoice can mean that revenue is not calculated correctly.

The advantage of the current situation is that many companies offer free trials or monthly subscriptions, making it possible to try out software for a limited time without much financial risk of committing to a long-term contract and selecting a wrong product.

Companies should aim to automate processes causing significant time delays and operational pain points. The key is to figure out which systems are high risk and cannot be "broken" and which are lower risk and can be tried on a new system, with, for example, a smaller sample. Usually, invoicing and payroll are higher stakes, and finance teams may be more averse to taking risks with new systems for these processes. However, payables and receivables are lower risk, and it’s easy to test a new system on a smaller batch of a few suppliers or clients before rolling out the system company-wide.

Another key process worth automating is expense management. Most companies still rely on very outdated processes involving personal expenses and reimbursement forms or traditional company cards. Implementing an actual expense management system with cards connected to a centralised dashboard that allows the cards to be easily issued and managed by the finance department and a way for employees to upload receipts on the go is a game-changer.

Automating financial operations can significantly reduce manual work. If 40% of the routine work of a finance team is automated, this means freeing up three to four hours per day for each team member or reducing monthly tasks, allowing them to focus on higher-value tasks. The goal of automation is not to make people redundant but to make them more efficient at what they do—giving them more autonomy and pleasure from their job so they can achieve more in less time and do more of what brings value to the business.

Transparency

Financial transparency is very hard to come by. CFOs often have an idea of the business cash flow, revenues, debt, and available funding. However, with financial information spread across different systems, this "idea" may not necessarily be very accurate, especially when operating across multiple countries and jurisdictions. While the CFO may know the numbers, other decision-makers may not, so getting these numbers in front of all financial teams and key decision-makers at all times, in real-time, can be revolutionary for better decision-making and business growth.

Risk Reduction and Good Governance

Automation helps to naturally reduce the risk of errors resulting from manual work in processing payments, invoicing, and reconciliation. When processes like payables and receivables are automated and there’s a seamless flow of data between systems, as well as rules and processes around approvals and fraud prevention, there’s integrity between the numbers, which will be reflected in month-end processes and audits.

Cost Reduction

The more automated company-wide processes are, the less additional staff needs to be hired to handle administrative tasks, reducing costs associated with mistakes, fraud but also additional systems and financial institutions needed to facilitate the business operations.

The best time to implement automation is as early as possible to avoid issues as the business scales to new countries and the volume of bills, invoices, and number of employees grows. Automating early on allows a company to expand faster and focus on growth rather than being slowed down by cumbersome processes and outdated systems. It should be the aim of all companies to continually improve and see if there are other areas that could be more efficient. The good news is that it is never too late to automate. If you decide to automate later in your business journey, you’ll benefit from seeing how much money the automation has saved you, how much efficiency has improved percentage-wise, or how much time you saved.

If you are interested in seeing how much time you can save by automating some of your finance processes, reach out to us by emailing [email protected] and we will look over your systems and give you an estimate.