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For Clarity, CFOs Look to the Cloud

Bill.com survey shows early adopters are getting first-mover advantage as finance managers adopt the cloud.

For Clarity, CFOs Look to the Cloud
In today’s high-pressure economic climate, CFOs and other financial managers are aggressively searching for ways to save money, maximize efficiency, and drive growth. Increasingly, cloudbased financial tools are emerging as a solution that can help them accomplish their daily tasks more efficiently while improving their cash flow management and visibility.

Yet, while most CFOs are aware that other departments are moving to cloud-based solutions, early adopters are just becoming aware that tools exist for the finance department, according to a new research study by Bill.com. As a result, many CFOs remain stuck in the past, continuing to rely on paper-based processes and Excel spreadsheets to do their work.

The survey, taken in August 2012, includes responses from 355 CFOs and financial executives in a wide range of industries. The study is one of the first to provide insight into how CFOs are thinking about cloud-based financial systems, whether they plan to implement the systems, and what they see as the advantages and disadvantages of online tools for managing tasks like accounts payable, accounts receivable, and cash flow.

“We’re a fast growing company and the only way we’ve been able achieve that is by leveraging cloud-based systems like Bill.com. I can tell you if we didn’t leverage that, we wouldn’t be able to grow as fast and efficiently as we have.” David Ostrowe President, O&M Restaurant Group

Financial execs still foggy about the cloud

While CFOs in general were familiar with the cloud, most were not yet aware that new products were emerging in this space, created specifically to serve their needs. As a result, paperbased manual processes and static spreadsheets remain the standard tools for financial executives, and managing cash flow continues to be an imprecise, time-consuming task. When asked what system they currently use to predict future cash flow, 72.9% of respondents said they still use their old Excel spreadsheets, 8.5% use an ERP system, and 8.3% said they just do the calculations in their head. The remaining 10.3% said they don’t use any tools at all. (See Figure 1.)

For Clarity, CFOs Look to the Cloud

CFOs’ frustration with this status quo was clearly expressed in the Bill.com survey. When asked to name the top three challenges faced by CFOs today, respondents cited the inability to forecast results (51.1%) and manage cash flow (47.4%) as their most pressing concerns. These numbers indicate that financial executives could greatly benefit from tools that provide real-time visibility into the amount of money they’re paying out and taking in, at any given moment.

However, despite their general familiarity with the cloud, 16.5% of financial executives said that, as far as they know, cash flow management tools and systems are nonexistent in the market. Only 22% said they know the tools exist but their company doesn’t use them.

These results show cloud-based tools, especially those for cash flow management, are still emerging in the market place and that defining this new space and educating the market will be critical work for companies leading in this new cloud-based financial payments space. For early adopting CFOs, deploying tools that are on the brink of changing the financial industry will give them a competitive advantage as they leapfrog past other companies, due to their increased efficiency, effectiveness, and cost-savings.

Could misconceptions slow the move to online systems?

Why has it taken so long for CFOs to consider moving to the cloud? One theory is that some recall intense technology projects from a decade ago – projects that were notorious for going over-budget, sucking up time in intense user-training sessions, and not integrating well with existing systems.

As a result, some financial executives might dismiss technology initiatives as too risky and time-consuming. In fact, when asked what they think are the biggest challenges in moving to a cloud environment, 64.1% of survey respondents said integration with existing systems, 54.7% said system and network security, and 43.6% said introducing a new process.

There is a widespread misconception that it can take from six months to a year to implement any new technology, including cloud-based systems.

One CEO of a large franchise chain told Bill.com that he originally calculated it would take months to get all 25 of his locations up and running on a cloud-based financial system. When he finally made the transition, it took him under 2 hours.

In reality, cloud-based systems are easier to implement than other software packages, in large part due to new technology and open APIs. Most cloud applications are built from the ground up with the goal of lowering the cost, time, and risk of integrating them with existing on-premise and on-demand applications. This means companies can implement cloud systems in record time and users can reap the benefits with minimal training.

The more likely factor in CFOs’ responses is not misgivings from the past, but simply a lack of education around the space, a space that has only started to take shape in the past two years. When asked if they believe it’s possible to eliminate the hassle of paying bills with a cloud-based system, 33% of respondents said no and 37% said they were unsure. Only 30% thought a cloud-based system could offer a better way. However, organizations that have embraced cloud-based finance tools are realizing the tremendous value. A separate study of 541 U.S. finance executives by Dimensional Research found that 92% of organizations using cloud-based planning tools have seen improved results, demonstrating the first-mover advantage already in place.

Early adopters reap results, reaffirm that cash is king

Early adopters who have switched to cloud-based financial systems told Bill.com they have greatly improved both their accounts receivable and accounts payable processes. Saving money and time are significant motivating factors for companies that are considering a cloud-based system. 65.2% of survey respondents said saving dollars and hours would lead them to the cloud.

Indeed, knowing when customers will pay is the number one problem faced by finance departments on a daily basis, according to the Bill.com study. Almost 59% of respondents cited it as a top concern. Other high-level concerns, survey respondents said, are difficulty estimating cash flow (55.7%) and slow action by those employees who are tasked with approving invoices to be paid (46.3%). (See Figure 2.)

For Clarity, CFOs Look to the Cloud

This last number comes as no surprise, given the inefficient workflows and approval processes that hobble most organizations. Financial executives have long complained about paper-based invoices and expense reports that take weeks or months to be approved, because people put them aside, forget about them, or file them under a pile of other papers. As a result, bills get paid too late and cash flow forecasts grow ever more unpredictable.

The cloud can alleviate many of these problems, say CFOs who have adopted online invoicing and billing systems. For instance, online finance services enable them to better track bills and monitor the approval process. That’s because these payables tools eliminate the inefficiencies of manual processing. Instead, invoices to be paid are automatically routed to the right person for approval and prioritized for attention.

On the receivables side, finance professionals who use cloud-based tools said on average they get paid faster than they did using traditional paper systems. In addition, when asked how much it costs their Accounts Receivable organization to process and send an invoice, 38.7% of respondents said under $5 and 32.2% said $5 to $10. In fact, the majority of respondents are likely underestimating the cost because they’re not fully factoring in the price of labor, materials, and other inputs. According to industry standards, the average cost of processing and sending an invoice is actually over $22. (See Figure 3.)

For Clarity, CFOs Look to the Cloud

However, by using the cloud, companies could reduce the cost of sending invoices, while collecting receivables 2 to 3 times faster. In terms of hard numbers, a small company sending an average of 100 invoices a month would cut their expenses from $2200 to $750 per month by using the cloud, according to separate research conducted by Bill.com.

Similarly, financial executives are discovering that, by putting their AP process in the cloud, they can cut the work by more than half and slash the cost by 50% to over 70%, a saving that amounts to tens of thousands of dollars for many organizations. In fact, a company with an average of 100 bills a month that uses a cloud-based system can reduce costs from $3800 to $309 a month, according to industry research.

Financial executives who have adopted online systems also value the ability to approve bills remotely, wherever they happen to be. One CFO noted that a cloud-based system unchained him from the office and allowed him to approve an important invoice from his mobile phone, while watching his child compete in a local swim meet.

Another priority that was uncovered in the survey is that CFOs are looking to implement systems that can help their business grow. Some 43% of respondents said scalability was one of the factors that would influence them to adopt cloud-based services. Only 24.8% said scalability was not a factor, while 32.2% said they were unsure.

Another incentive for moving to the cloud is the chance to reduce the flow of paper bills and transition to a paperless work environment. The vast majority of survey respondents (85.5%) said reducing paper was either very important or somewhat important to them. Only 14.5% said it was not important at all.

Cloud opens new horizons

There is nothing more important to CFOs than control—control over cash flow, payables, and receivables. At a moment’s notice, they need to know what the business is doing and where it’s going. They need intelligent financial systems that can accurately predict what will happen and when—systems that give them deeper insight to their cash flow and help them discern looming shortages before they happen.

In fact, when asked the one piece of advice they’d offer as an industry expert, 31.9% of survey respondents recommended implementing business controls, while 26.8% said automating to avoid human error.

As cloud-based financial tools gain wider attention, CFOs will increasingly turn to these solutions to achieve better control, efficiency, and ROI. For early adopters, deploying cloudbased tools will result in a significant advantage in an increasingly competitive marketplace, which will be driven by more pioneering cloud-based solutions as the cloud business payment space matures.


Lundi 12 Novembre 2012

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