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Why does your CFO want you to know all about Autonomous Finance

18 January, 2022
4 min read
Patrick Petti, AVP, Value Optimization
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What you'll learn

  • How Autonomous Finance can help the CFOs office safeguard their AR in case of an economic downturn
  • The role of Autonomous Finance in running day-to-day finance operations with minimal human intervention
  • How the CFOs office can drive increased efficiency, higher productivity, and a better customer experience with autonomous finance
Understanding autonomous finance
What does an autonomous accounts receivable workflow look like?
Why should you strive for an autonomous finance structure?
Next steps: How to prepare your business for recession using autonomous finance
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The great recession of 2009 took the business world by surprise, forcing them to cut costs, reduce their workforce and realign budgets to remain afloat. Now 13 years after the financial debacle, we seem to be heading towards another recession. High inflation and interest rates, coupled with supply chain disruptions caused by high oil prices and global political unrest, are all telltale signs of an economic meltdown in the not-so-distant future. However, what makes recession 2.0 slightly different is that business leaders are better prepared to manage crises this time around, and have the capabilities to soften the recession blow. It also helped businesses fend off the challenges caused by the repercussions of COVID-19. That said, business leaders cannot be complacent and need to look inward in bolstering departments that require attention, like the finance department, which is one of the first to feel any ripple effects of an economic situation. AI-powered autonomous finance solutions can help CFOs maintain cash flow and preserve their bottom line amidst an impending recession. Let’s take a step back to firstly understand autonomous technology and how it can transform the finance department.

What is autonomous technology?

Autonomous technology is any type of technology that can function without human involvement under different types of circumstances or environments. They continuously learn from their environment to make improved decisions, just like humans learn and grow.Artificial intelligence (AI) is a classic example of autonomous technology. Advanced versions of AI (often referred to as autonomous intelligence) are capable of making decisions and acting on their own without human supervision. An ecosystem of connected solutions helps drive the autonomous revolution.Self-driving cars, functional robots, humanoids, chatbots, and drones are some examples of systems that utilize autonomous technology. With AI revolutionizing every industry and facet of business, corporate finance teams can’t afford to stay behind. Autonomous finance and accounting functions can change the way annual reports are prepared, books closed, and open invoices collected.

Understanding autonomous finance

Autonomous finance can be defined as the ability to run day-to-day finance functions with minimal human intervention. Forrester defines the term as ‘algorithm-driven financial services that make decisions or take action on a customer’s behalf.

Autonomous finance is driven by technologies such as cloud, robotic process automation (RPA), advanced analytics, natural language processing (NLP), and AI.

The below diagram captures the steps that finance teams routinely follow to reach 100% autonomy. While we are yet to reach a phase wherein the department is fully autonomous, some organizations have reached ~80% autonomy with AI-assistance while a vast majority would be in the 0-40% scale, edging to reach the 60% autonomous mark with RPA, AI, and analytics tools.

The steps to 100% autonomous finance

What does an autonomous accounts receivable workflow look like?

An autonomous accounts receivable (AR) process often starts with a credit risk assessment of potential customers. Automated credit scoring systems take in the customer company’s name, gather data from external (e.g. Bloomberg, DNB, etc.) and internal sources, run the data on its credit algorithms, and provide a decision on the credit limit that can be offered.

  • Based on this, the system gives the go-ahead to onboard the customers. Once the purchase orders are validated by another algorithm or bot, the sales orders are auto-prepared and the message sent to the inventory management team to prepare and deliver the goods or services.
  • The system simultaneously prepares the invoice that is delivered to the customer along with goods or services. It then keeps track of the incoming payments to check if the open invoice can be closed.
  • Once the payment is past its due date, the invoice goes to the aging list. Automated dunning emails are then sent till the cash reconciliation system is able to match the payments and the ERP system closes the invoice.
  • AR automation software and ERP systems often work together to help create an autonomous AR system. Plug-and-play integrators help make the integration faster and easier. Talk with our experts to see how RadiusOne AR suite seamlessly integrates with popular ERP systems.
AI processing helps reduce error rates

An autonomous AR or finance system does not imply that human involvement is not required. It is just that their efforts in mundane and clerical tasks are minimized. Finance teams can devote more time to strategic tasks such as building customer relationships, persuading aging accounts to pay, and building stronger credit models and policies.

Combat uncertainties with confidence! Keep your AR in high gear with autonomous finance.

Why should you strive for an autonomous finance structure?

Staying on top of your competitors is rather difficult if you have not adopted automation for process efficiency gains. Autonomous finance is the future and getting your business ready for it is crucial to reap benefits tomorrow.

Here’s a look at some of the key benefits you stand to gain by automating your finance operations and enabling them to run autonomously.

Increased efficiency

Automated solutions speed up processes, help clear bottlenecks, and reduce errors in the process.

Lower costs

With optimized resource allocation, autonomous finance technology helps businesses bring down expenses in several areas such as customer service, reporting, etc. by reducing the time and resources needed for it.

Reduce customer service costs by 30% using AI

Higher productivity

Autonomous finance technologies help automate most of the manual and time-consuming tasks, thereby freeing up time for your finance team to focus on high-value tasks and strategic activities.

Better customer experience

Autonomous finance helps customers resolve queries faster, interact seamlessly with your systems at any time, and get onboarded quickly. It improves customer experiences and helps increase customer retention. According to a Salesforce study, 89% of financial service leaders agree that those who are the first to implement autonomous finance will set new benchmarks for customer experience.

Competitive advantage

CFOs stand to have an advantage if their operations are fully automated. There’s more time to devote to high-value activities such as customer or investor relationship management. Finance leaders also get to expand to new markets faster, meet regulatory requirements accurately, and manage taxation rules easily.

Scale without the growing pains with the complete accounts receivable solution designed to maximize your cash flow

Next steps: How to prepare your business for recession using autonomous finance

Before you begin investing in AI technologies to build an autonomous finance structure to recession-proof your business, you need to prepare your current IT infrastructure to support it. Here’s how:

Storage, networks, and computing infrastructure

AI and deep learning algorithms use large data sets and scalable neural networks that require significantly higher computing capacity. Work with reputed service providers to upgrade your IT infrastructure before you invest in AI and NLP.

ProTip: Replace any legacy systems with modern, high-speed, and scalable IT infrastructure.

Data management and security

AI systems work on large data volumes. The data that is fed into the AI models should be clean and accurate. You also need to ensure that any sensitive data that AI tools use such as financial information or personal data is secured.

Get your workforce ready with the necessary skills

Skills gap is one of the top three challenges in AI adoption, according to a survey by Deloitte. Train your employees to be comfortable working with AI algorithms. They should also have a good understanding of the technology and be able to identify and troubleshoot in case the AI model gives erroneous results.

Job listings requiring AI skills in the financial industry increased nearly 60% in the past year, according to Glassdoor’s analysis. (Source)

Albert Einstein once famously said, “The measure of intelligence is the ability to change.” For the CFOs office to excel in uncertain times, its crucial for them to adopt new-age AR technology to sustain cash flow and provide experiential service to their customers. By integrating autonomous finance, businesses can not only be capable enough to withstand any economic volatility, but also build sustainability and growth that could be beneficial to them in the long run

Autonomous finance is the organic merging of all the technology innovations

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Highradius autonomous receivables software offers dedicated modules for e-invoicing, credit risk automation, deductions management, and collections prioritization. Our customers vouch for the efficiency gains they’ve received by automating their AR processes. Schedule a time to talk with us to explore opportunities to upgrade to a fully autonomous finance department.

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HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.

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