Is automation in finance the silver bullet?

Navigating the Automation Paradox: Insights for Fractional CFOs

I recently transitioned from the security of a full-time job to take on fractional CFO/COO assignments. Over the past couple of months, I’ve engaged with several CEOs and founders who embrace the idea of automation in finance. However, many of these businesses are in their early stages and lack mature processes, leading to a significant challenge: automation might not be the immediate solution they hope for.

Automation: A Double-Edged Sword

The allure of automation is undeniable. Everywhere we turn, new providers promise seamless solutions that automate finance with minimal errors at twice the speed of sound. Despite these claims, it's crucial to understand that automation alone isn't a panacea. Founders and CEOs are understandbly attracted to the idea of having a lower cost finance function, but this is not possible out of the gate.

Understanding Finance Automation

Finance automation involves using advanced technology to streamline and automate specific manual tasks. While this is beneficial, it is not a substitute for a skilled finance team capable of exercising judgment and providing critical insights to support decision-making. There is a misconception that automation means you need fewer people in finance. In my view you still need the people, they can just spend their time on value add matters rather than repetitive administratively heavy processes.

The Importance of Defined Processes

To leverage the full potential of automation, businesses must first establish well-defined processes and policies. This ensures that automated systems are integrated seamlessly into the workflow and produce reliable, actionable outputs. Implementing a software solution without these fundamentals in place often leads to poor outcomes. The old addage of garbage in garbage out!

Building a Strong Foundation

My recommendation to early-stage businesses is to invest initially in a high-performing, skilled finance team. This team can lay the foundations upon which automation can be effectively leveraged. What I have also realised in helping some businesses find candidates for these roles is that people who do not invest in keeping their skills updated and understanding of new technologies in finance current, will struggle in the current market.

Seeking Insights and Experiences

I’m eager to hear from others who are navigating similar challenges. Are you seeing the same trends? How are you balancing the push for automation with the need for robust foundational processes and solid finance teams.

Author: Zaid Aboobaker,

Founder and CEO, CompassPoint Consulting

[email protected]

https://compasspoint-consulting.com/