Automating portions of the reports freed up the time of highly skilled finance staff allowing them more time to resolve risks and pursue opportunities. This technology converts structured data into meaningful financial prose that summarizes and synthesizes insights. Likewise, a global consumer-package-goods company used natural-language generation (NLG) to provide an initial draft of the management discussion and analysis for its monthly operational review. As a result, the manufacturer has reduced the total cost of internal audits by 15 to 20 percent. These technologies have allowed audits to focus on the units that pose the greatest risks, and to reduce staff time needed to complete each audit. One high-tech manufacturer is now using machine-learning algorithms and analytics to monitor financial and business-continuity risks. With advances in computing power, machine learning and artificial intelligence (AI) can increasingly be applied to complex tasks, building on the lead started by robotic process automation (RPA) and similar technologies that are used to automate transactional activities. In contrast, our research found fewer efficiency improvements in the more strategic areas of finance, such as FP&A, optimizing capital structures, tax planning, controllership, internal audit, and financial-risk management. While most companies have room for further improvement, subsequent efficiency efforts will almost inevitably show diminishing returns as the cost base for these activities continues to shrink. Many leading organizations have substantially increased efficiency in transactional functions-by 39 percent or more-including areas such as accounts payable, accounts receivable, and other core accounting areas. Imperative #1: Look beyond transactional activities Four moves are especially critical for delivering greater real-time insights, minimizing human error and biases, and driving speed in workflows and decision-making. While the magnitude of improvement varied among sectors, ranging from 15 to 35 percent over the ten-year period, the decline in the cost of finance departments is consistent across industries (Exhibit 1).Īchieving the next frontier in finance efficiency and effectiveness will likely require finance executives to shift their thinking from the priorities of the past. These steps are already enabling companies to join the finance-function elite-while cutting audit costs by double-digit percentages, improving data quality (and reducing wasteful data-cleaning efforts), upskilling finance teams, and enabling the function to guide better decisions throughout the enterprise. Finally, reimagine the finance operating model so that it fosters new skills and capabilities. Third, strengthen decision-making through widespread adoption of data-visualization, advanced-analytics, and debiasing techniques. Second, boost finance’s role in managing data, whether consolidating, simplifying, or controlling the flood of information flowing across the organization. The first is to cast a wider net for new efficiency opportunities, reaching beyond the transactional activities that have long been the primary focus of attention.

What can companies do differently to join the finance leaders? The research points toward four imperatives. Finance leaders spent 19 percent more time on value-added (versus transaction-processing) activities than a typical finance department did.The most efficient cohort of finance departments (“finance leaders”) achieved similar cost improvement to the level shown by average performers-an impressive feat given that the finance leaders started from a lower cost base.Finance organizations have, on average, decreased their cost by 29 percent.After controlling for differences in sector, scale, and geographic footprint, several findings emerged: We have analyzed the finance functions of hundreds of companies to understand how cost and effectiveness have evolved over the past ten years. Leading finance departments are guardians of enterprise value creation, demonstrating stewardship of their own spend by lowering absolute costs and shifting work towards more value-added activities. The trade-off between cost reduction and increased effectiveness of the finance function is a false choice.

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