By Geoff Charles, Head of Product, Ramp
Time is the only asset a business can never fully recoup. For companies looking to become leaders in their industries, moving fast is the best way to outcompete the competition and expand. But it’s not exclusively speed that gives businesses an edge. It’s working faster without sacrificing financial accountability. It’s moving quickly but with the actionable intelligence you need to make smarter decisions and drive better business outcomes. That’s why automation is becoming the norm for finance teams looking to streamline their systems and gain a leg up.
According to Ramp’s recent trends report, 97% of finance leaders polled reported investing in some form of automation last year. Automation is becoming a necessity for teams that want to grow and succeed.
But if everyone is investing in this new technology, why are so many teams reporting automation failures? Our report shows that 59% of respondents can’t measure wasted spend and 49% lack real-time visibility in their financial processes. Something is broken within the existing automation status quo.
It’s time for a new kind of automation technology.
One that allows finance leaders to harness finance automation to its fullest potential and utilize its powerful tech across every payment, purchase, insight, and expense. That supports best-in-class financial operations (FinOps). That helps finance teams receive valuable time back so they can focus on more strategic projects, such as where to increase returns and boost growth in a business.
Finance teams deserve integrated, intelligent automation that works for them, instead of the other way around. It should create a new kind of financial visibility that generates maximum efficiency and cost savings so finance teams can finally become the strategic business partners they really want to be.
What’s wrong with the current state of finance automation
As I mentioned in my product recap last year, at Ramp we view finance automation as the software providing customers an unfair advantage: the ability to manage money faster, smarter, and with more peace of mind. And we see FinOps as the practice wrapped around this automation. Automation is the conduit for bringing finance and business operations together.
This combination of FinOps and automation should be leading a complete financial transformation. But the current state of automation is instead stymied by several issues:
1. Clunky automation slows down your org
Automation isn’t currently designed to be used by the entire organization. It’s being implemented in silos, resulting in different segments not being able to access the same automation benefits. Automation as it stands is actually slowing down not just your team, but your broader organization as a whole. This decelerates workflows and costs businesses valuable time and money. Finance teams don’t even realize how ineffective their current automation is. They’ve accepted these current solutions as necessary evils for their workflows.
2. A lack of context results in slow, disjointed decision-making
Context is king for successful processes. You have access to context in emails, Slack messages, and even invoices. It provides visibility and helps connect the dots to the information you need to make informed decisions.
But a lack of context defines the current state of most financial processes, slowing them down and leading to disjointed operations. It results in constantly having to ask others for context: what is this for? Who approved it? When is it due?
The current invoicing process most companies use is an exercise in context issues. For example, your CMO might know why team spending has doubled based on a particular vendor, but the finance team has no visibility of this knowledge. They are instead asked to approve an invoice based exclusively on a dollar amount and vendor name.
Without proper context of how money is being used, finance leaders are forced to stall workflows while they try to furiously track down missing information. They also wind up trying to clutch onto every dollar instead of leading the business toward strategic capital allocation. Teams are forced into a mindset of resource scarcity instead of abundance.
3. Lack of real-time visibility leads to suboptimal decision making
Real-time technology and visibility are critical for optimal decision making. Without access to real-time information, finance leaders are forced to make decisions based on historic data that doesn’t provide a snapshot of the most up-to-the-minute information. For instance, their budget decisions are made based on information that is refreshed monthly. Decisions on whether to pivot a business strategy are conducted on financial statements that are only updated quarterly. As a result, most companies are run by a finance team that lacks a clear understanding of the business.
A lot of companies are finance run, where finance holds the power by virtue of managing the money. They hold the cards on headcount, departmental budgets, and the process by which you can spend money.
Finance teams can empower business leaders who have the context (thanks to automation) and hold them accountable to clear financial performance that is centralized.
On its own, your finance function can’t grasp the intricacies of the product or the true nature of your business. But finance automation balances out the scales of power. With company-wide access to tools like real-time dashboards and category controls, other departments are empowered to also lead. The finance team can now act as a valued partner, instead of a bottleneck or policy enforcer.
Automation has already empowered other functions. It’s finance’s turn.
Automation as a competitive advantage is already happening across many business areas. Think about what HubSpot has done for marketing operations, or Salesforce for sales operations. Instead of manually emailing customers or uploading lead data, marketing and sales leaders are now able to think more strategically about maximizing business objectives. They’re able to leave tedious work behind in favor of focusing on higher order problems.
But up to this point, this hasn’t happened with finance. Too often finance teams are focused on the ROI of other business units instead of their own ROI. But if they optimize their own data intelligence first, finance teams will actually be able to better effect change throughout the rest of the org.
This is the value proposition that finance leaders don’t prioritize. They default to hiring an accountant to manage the paperwork. And before they know it, their finance team has ballooned to 50 people. Many finance leaders don’t realize that focusing on their own automation is what will actually help them unlock the business’s full potential.
What a true finance automation platform looks like
A good finance automation platform should be simple to use, rich in context, and able to provide the most up-to-date information. As our report notes, 89% of finance leaders believe finance automation will provide a competitive advantage in the next 3 years. That’s why Ramp is focused on building the finance automation platform of the future.
We’re creating our automation solutions based on a CFO’s hierarchy of needs. We started with automating payments to free up time, moved on to record keeping to enable real-time visibility, built workflows to enable context, and are now focused on building even more powerful real-time capabilities to equip teams with the most up-to-date information on reporting and budgets.
Intelligence is ultimately our top focus and the lens behind which we’re creating automation that empowers FinOps and drives growth. Intelligence can have multiple use cases, from understanding how much things cost, to discerning who is using what, to understanding what value spend is adding to the business (e.g. a sales flight to close a deal or marketing spend to attract a lead.)
The latest technology will help finance teams realize their full capabilities, generate intelligence for how the business is performing, and automate the pain away. Teams will have the ability to act on this intelligence to optimize crucial tasks such as revisiting budgets, financing payments, or changing policies.
The main question is: would you rather grow with humans or grow with technology?
Here at Ramp, we believe in harnessing the power of automation to help businesses scale, through both time savings and intelligence. The median time for businesses to close the books before Ramp was 8 days. But with Ramp’s finance automation capabilities, median time to close the books was decreased to just 8 hours. Imagine what your team could accomplish with that kind of time savings. And with the intelligence that Ramp provides through features like real-time reporting and savings insights, you’ll be better positioned to achieve superior outcomes, including boosting employee retention by allowing them to focus on more strategic work.
Interested in seeing how automation can take your business to the next level? Sign up for Ramp here and we’ll make sure an expert from our team contacts you. Discover how Ramp and automation can revolutionize your organization.
Ramp officially launched a new network of partners offering SBA loans, venture debt, and revenue-based financing to help customers find support for long-term debt needs beyond 90 days. Lighter Capital is a partner. Learn more here.