The 5 biggest myths about automating your finance operations

The 5 biggest myths about automating your finance operations
Hany Lynn
December 27, 2023
In this article:
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
See Ledge in action

Most finance leaders have been burned by painful software experiences. Maybe…

  • The roll-out and implementation took 10x longer than it was supposed to
  • The system was a nightmare to reconfigure every time you needed to change a workflow
  • There were nasty hidden fees or unpleasant pricing surprises 

We’ve all been there, and these bad experiences are enough to make some finance leaders we speak to cringe at the mere mention of “automation.”

But it’s a mistake to let any prior disappointments (or disasters) color your perception of all new automation vendors.

The finance stack has seen rapid innovation in recent years, and there’s a generation of new tools that are nothing like the clunky legacy systems that you may have worked with before.

In this post, we’ll debunk the 5 biggest myths about automating your finance operations and turn some common assumptions about finance automation upside down.

Myth #1: Automation will just bake in bad processes

We often hear the well-intentioned advice that you need to deeply understand and improve upon your finance processes before implementing automation. 

Otherwise, the fear is, it will just be a “lift and shift” of inefficient SOPs that then get hard-coded into rigid and inflexible automated rules that marry you to that workflow forever.

While getting started with finance automation can definitely present you with an opportunity to review and improve your current processes, it should by no means paralyze you from moving forward.

First of all, you don’t need to do it alone. A good automation vendor should work as your partner, leveraging their expertise and familiarity with different use cases, workflows, and best practices to guide you toward sound decisions. 

Maybe more importantly, your automation solution should be agile and built to be as dynamic as your business is. It needs to have the flexibility to allow you to experiment, refine, and optimize your processes as your business needs change – no need to have things perfectly buttoned up from the get-go.

Automating your finance operations does not need to be – should not be – a massive undertaking that takes years off your life. You’re not implementing an ERP or a CRM. Avoid tools that require this level of commitment and investment from you.

Find a tool that allows you to automate just one component of your workflow, see how it works for you, tweak it as necessary, and scale it to automate more processes when you’re ready.

Myth #2: Automation will take everyone’s jobs

The headlines have been inescapable: a quarter of senior finance professionals fear AI could put them out of a job. Accountants have the most exposed careers to the capabilities of generative AI. ChatGPT aced the CPA exam

While there’s no doubt that technology has the potential to dramatically change day-to-day finance operations, the fear that automation threatens everyone’s jobs is largely unfounded. 

The truth is that the accounting workforce is in crisis and without the implementation of automated technology, businesses are in real trouble. 

First, consider just how bad the accountant shortage is: The number of CPA candidates in 2022 was the lowest level it’s been since recording began and 87% of businesses say they find it increasingly hard to secure the talent they need for general accounting.

And the accountant shortage is beginning to take a serious toll on businesses. More companies are disclosing material weaknesses and have blamed the errors on a lack of accounting staff.

As for the accountants who are employed, the job often burns people out, leading to poor morale and high turnover. At least partially to blame is the fact that 40% of finance teams’ time is spent processing transactions, which is repetitive, mundane, and often unrewarding work.

Most finance professionals are hungry to do strategic, value-adding, and more creative work, and automating repetitive processes frees them to do that.

In fact, a recent survey shows that companies that offer a technology solution to their accountants are 80% more likely to retain those employees.

Myth #3: Automation will take forever to ramp up and show value

It’s true that rolling out some finance and accounting systems can take a while. A Gartner survey found that 59% of mid-sized multinational companies report that it takes 2 years to implement an ERP, and 22% say it takes 3 years. 

But automating your day-to-day finance operations doesn’t need to be a beast. There’s a new generation of plug-and-play finance tools that don’t require heavy and time-consuming integrations, and allow you to automate just one component of your processes within days.

Look for a finance automation tool that can plug seamlessly into and out of your existing stack and complement your existing workflows without requiring you to completely overhaul all of your processes.

Here are some common finance processes that are great to automate and can show nearly instant time-to-value:

  • Reconciliation of high-volume transactions that are fragmented across PSPs, banks, billing solutions, databases, and your ERP
  • Travel and expense management so you no longer have to manually wrangle expense reports and employee reimbursements
  • Cash flow management when you’re juggling multiple bank accounts and PSP log-ins, painstakingly calculating currency conversions

For example, from the moment that Papaya Global signed on with Ledge, it took just a few weeks until they integrated automated reconciliation into their processes and saw over 90% reduction in time and resources spent on bank reconciliation.

Myth #4: Automation will take a ton of resources to implement and maintain

It’s also true that many finance and accounting systems have traditionally required significant R&D and IT resources to implement and maintain.

Whether the solution needs upfront development resources to integrate your systems and processes, or ongoing IT support every time you want to pull a report, this degree of reliance on external stakeholders has been an acute pain point for finance professionals.

According to a recent survey, 66% of finance professionals feel that they’re too reliant on IT and only 28% of organizations are completely satisfied with the relationship between finance and IT.

The good news is that there are finance automation tools today that are specially designed for finance professionals to implement and use on their own – no R&D, IT, or system integrators required.

When thinking about finance automation, look for tools that:

  • Have pre-built integrations to your finance and tech stack so you don’t need R&D or IT resources to do any of the heavy lifting
  • Enable you to add new banks, PSPs, and other tools yourself on the fly as your business needs flex and change
  • Have the flexibility to easily change workflows when your processes change without having to rely on engineering or external implementation partners
  • Can seamlessly unplug from your systems and processes without disruption to your operations if you decide to discontinue working with the provider 

Myth #5: You don’t need automation – manual processes are enough

Sometimes finance professionals are simply skeptical that automation is necessary at all. 

If you’re dealing with low volumes of transactions and your flows of funds are relatively straightforward, it indeed might be the case that you can manage most of your day-to-day finance operations in Excel just fine.

But most businesses reach an inflection point once they achieve a certain level of scale. Your volumes increase, you open another bank account, add another PSP, accept a new currency… and all hell breaks loose. 

That’s when manually managing your finance operations in Excel actually becomes a high-risk endeavor, where you’re risking any and all of the following:

  • Material losses that mess with your P&L
  • Increased overhead costs related to investigations across the organization
  • More painful audit prep and long and costly audits
  • Tax compliance and regulatory risks
  • Real damage to customer, client, and user relationships
  • A higher risk of internal fraud
  • Damage to investor relationships and market performance

Finally, and maybe most importantly, you can’t be a strategic asset to your business when you’re stuck deep in the mud trying to maintain control over your books. Companies that reach a certain scale need finance leaders who guide them strategically, and the right automation provider can give you the time, data, and insights to be an analytical decision-maker.

It's an exciting time for the CFO tech stack

While other sectors have seen significant investments, advancements, and innovations, many finance teams have been operating pretty much the same way for decades.

That’s because the CFO tech stack has been really overlooked until now, and rightfully so, finance leaders have been wary of any system that involves a slow, expensive, and very high-touch implementation process. 

  • They’re cautious of long ramp-up times where they can’t demonstrate value quickly.
  • They don’t want to rely on R&D, IT, or system integrators to go live and maintain the system
  • They are uneasy when they can’t start small and instead have to commit upfront to go all-in.

But finally, we’re seeing the market beginning to change.

There’s now a new crop of solutions that are built specifically for finance teams that you can implement and configure on their own and see results instantly.

It’s a very exciting time for the CFO tech stack, and if you’re a finance leader, there’s never been a better time to look for systems that automate your finance operations and allow you to be a strategic, value-adding decision-maker.

We're on a mission to automate and simplify finance operations for teams working at scale.

New York

325 Hudson St, 4th Floor, New York, United States 10013

Tel Aviv

8 Shaul HaMelech St. Tel Aviv, Israel 6416202