Why filing my taxes (at the last minute) made me think of digitalization in finance?
Tax filing season has just finished. E-filers typically fall into 2 categories. Kay Bell describes them as: 1. Early filers, who are usually getting tax money back and like the speed e-filing offers. 2. Late filers who wait until just before the tax deadline to hit the “enter” key. This year, I fell firmly into the second category.
However it got me thinking about the benefits of filing electronically. Already according to the IRS about 85% of returns are filed electronically. This makes sense. Filing electronically saves time and money. It is more accurate, as the software has built in checks, so it is easier to get it right the first time. You can file from anywhere and on any device. Early filers often get their refunds much quicker. Real- time status updates, with the option to have notifications sent to your device. Finally, it is much easier to detect and combat fraud and identify theft.
However there is still room for improvement. There are still many manual breaks in the process. Not all forms are available electronically, they need to come through the post and be entered manually. Even when forms can be loaded automatically, often more information is still needed. I have received an amended form for the last few years. This has delayed my filing or required me to send in an amended return which requires a trip to the post office. I assume that those businesses do not have a single source of truth. This year, for a short period of time the e-filing system was down, giving rise to a whole host of security concerns.
So there is still the opportunity to remove unnecessary manual steps and improve the automation of processes and information between the different institutions. This will result in a real-time, streamlined, single version of truth, maybe 1 click, 5 minute, tax filing process.
So how does this relate to the digitalization of finance? It is another example of how digitalization has impacted our lives, yet there is still more streamlining to be done. This is also true for finance organizations. Digitalization was the major theme at the SAP Insider at Las Vegas which I discussed in my last blog. Although big strides have been made in automation and efficiency, as with e-filing, there is still room for improvement. Thack Brown, General Manager of SAP’s Finance Line of Business said in a recent blog, that, “the impact digital transformation is having on their business is top of mind for CFOs.” For more detail on how Brown sees advances in technology helping this transformation become a reality, read the full post here
At the SAP Insider in Las Vegas, SAP ran a micro-survey to understand what aspects of digitalization are most important to finance. Across all areas of finance, the responses showed that there is still the opportunity for improving finance systems, business models and processes.
Some key insights from the survey:
- 90% of respondents felt that this was a time of massive transformation for finance.
- 91% felt real time data is important to improving decision making and 82% believe that real time visibility of cash flow and real time management of currency and country risk is still needed.
- 91% see the need for flexibility to implement new organizational structures, process or reports.
- 87% consider that planning must be more dynamic, with forecasting capabilities which include predictive algorithms and what if analysis.
- 85% think that compliance monitoring should be embedded into transactional systems.
- Finally, there can still be more automation across the ecosystem. 71% feel that there is a need to further automate finance processes through to business partners with business networks.
SAP Finance solutions can help drive the way to full digitalization of your finance organization and processes. Derek Klobucher explores this in a recent blog post about how S/4HANA Finance is helping businesses get closer to the digitized ideal. You can read his full post here
What does digitalization mean to you and your business? Join us at SAPPHIRE NOW to continue the discussion.