Ray Welsh, Head of Product Marketing, FISCAL Technologies
Finance teams have been one of the most heavily impacted internal teams over the past year as the COVID-19 pandemic turned the way we work on its head. During this time finance departments in all industries have experienced immense pressure, with their financial priorities rapidly changing; the need to tighten the purse strings and shifting operational challenges becoming the most common changes. While successful businesses have always placed a firm focus on ensuring their finances are in order, this has never been more of a focus than over the past year, while also being more of a challenge.
The pandemic put further pressure on finance departments to ensure their controls were as strong as possible during a vulnerable period that saw existing checks effected by the move to remote working and an increase in fraudulent activity. Learning from these challenges will support the future requirements of greater resilience and agility.

 

The new status quo

While the impact in some areas has been clear to see, there have been other areas in which things may have begun to slip through the system. With this in mind, we recently analysed our UK customer data* from the last two years to understand the true impact the COVID-19 pandemic has had on finance teams. Through this research, we found that finance teams have witnessed a 6% increase in reported input errors during invoice processing and a slower rate in the reduction of other processing errors over the past 12 months.
Crucially, FISCAL’s analysis found that across all sectors, the number of risks detected rose year on year by 20% on average, with the highest rise being 37% in manufacturing. In terms of risk value detected and prevented, the average increase across all sectors was 70% – a total of £240million in the 12 months to 23rd March 2021.
When the first lockdown occurred last year, there was much speculation over what would happen – organisations were worried about processes without access to paper documents and were rightly concerned about how remote working would impact security. But we quickly saw that the finance team is more resilient than first thought and the knock-on impact of the pandemic wasn’t as huge as originally predicted.
However, our data analysis did find that the rapid changes resulted in an increase in invoicing errors. Furthermore, the reduction in other processing errors declined at a 6% slower rate in the 2020-2021 period, compared to the same time the previous year. These insights clearly demonstrate that the move to working from home and a change in processes as a result of the pandemic led to gaps in existing control processes.
 

Filling the control process gaps moving forward

With many organisations now considering more permanent flexible working policies post-pandemic, this is an issue that organisations must address: Protecting the bottom line is always of the upmost importance, and as businesses rebuild and recover following the turmoil of the past year, it’s essential that they have the best measures in place to help them achieve this. Because of the rapid changes that had to happen last year, there will be an element of acceptance of some errors, as the acceptable price to pay for continued operations during the most acute phase of the pandemic response, but now that teams have settled into the ‘new normal’ this will not be acceptable going forward.
Organisations now need to ensure that their finance teams have the right tools to empower them to continuously and proactively protect working capital, reduce costs, and protect their P2P processing efficiency, whilst providing assurance to the business that strong financial controls are in place.
Investing in secure, end-to-end payable assurance solutions is worth its weight in gold when tackling third-party and internal threats. Not only do these solutions identify invoice payment errors before it’s too late, but also offers greater transparency. By offering finance departments a clear picture on any weaknesses or reoccurring issues – businesses are then able to address any inadequacies within their compliance processes.
Forensically analysing compliance breaches or process changes to find risks and where they originate will strengthen a finance department’s trust it has within its procedures. When  tasked with processing thousands of monthly invoices – having continuous, automated checking to validate approved invoice payments prior to the payment run will ensure finance professionals can uphold compliance standards – as well as reducing costs.
Having an end-to-end risk management solution also allows customers to forensically analyse 100% of supplier and supplier transaction data before payment. This is done by applying hundreds of checks using financial logic and sophisticated algorithms to achieve a complex analysis, with AI playing a significant role in making this process more effective. With the analysis taking place in the background, alerting your team only to the high-risk suppliers or transactions, their time is freed-up for higher value-adding analysis and modelling work.
Investing in the latest P2P risk management solutions will help businesses manoeuvre through the months and years ahead which will continue to present challenges that originated during the past year. Doing so will increase flexibility – the ability to make future changes without having to accept an increase in risks as the price to pay. Now that businesses are through the initial period of uncertainty, it’s essential we continue tackling the challenges that lay ahead. This means continuing to adapt, innovate and adjust. 
The prolific risks and demands on the Finance department, and the greater emphasis on saving and protecting working capital, means that forensic insights and protection of finances have never been so important.
*Analysis of 104 anonymised UK customers’ risk detection data over 24 months

Posted by Akeela Zahair