Can Financial Operations (FinOps) be truly invisible?

For a modern-day billing automation company such as ourselves, it is just another day at work when we hear of organizations that are bogged down by redundant in-house billing tools or billing vendors that just do not cut it.

You would often find us talk about why automation is the need of the hour when it comes to finance teams, and why modern CFOs should embrace it.

But even for us, there was one exceptional customer whose level of manual operations baffled us. So much that the example made it to this article.

This company empowers retired individuals with greater wealth and financial security. It serves thousands of advisors today including the likes of some of the biggest registered investment advisors (RIAs) and broker-dealer firms in the United States.

But the amount of manual work they had to do in their Financial Operations (FinOps) was at a very different level.

Each quarter, they would look at a list of 1,500 customers. For each customer, they would have seven different templates, which they would copy-paste individually for each customer before downloading invoices from Stripe, attach the invoices on email and send it out to all 1,500 of them manually. Every single quarter.

• The manual follow-up process was a broken record on repeat. After sending invoices, they'd wait a few days, then manually chase payments, rinse and repeat until everyone paid.
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• This billing nightmare was not only fragmented by its own design, but it was also time-consuming, inefficient and heavily prone to human errors.
  

• It was a productivity killer. Managing invoicing and reconciliation for as many as 1,500 customers was swallowing weeks of their billing cycle.

In 2024, it is not audacious for one to expect automation to enter and take away some, if not, all of these complexities. This level of manual intervention in billing systems only begets the question — is there a need for Financial Operations to be fully invisible today?

‍Before we try to answer that question, here is another example that exemplifies how fragmented FinOps really is, today.

‍Layers of Yembo‍

Yembo did not have a reliable automated billing solution. Instead, it was ensnared in a challenging manual billing and revenue recognition process. This was solely due to the complexity of their pricing model and the tools they used.

• The sales process begins with a salesperson, who manually inputs new deals or opportunities into HubSpot, detailing customer information, contract terms and pricing.
  
  
• This manual data entry extends to creating new contracts, where relevant information is transferred from HubSpot or a master sheet to the contract template.
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• Post-signature, these contracts must again be manually entered into HubSpot or updated in the master tracking sheet.

The company uses the Yembo app for tracking usage data, and for their usage-based pricing model that includes overage charges. While the app allows for some automation in pushing usage data to Stripe for invoice generation as per the predefined billing cycles, there are exceptions.

In special cases, another employee manually tracks usage data and generates invoices, adding a layer of complexity to the billing process. Even with partial automation, this employee is now tasked with reviewing all invoices in Stripe to ensure accuracy, before being able to forward them to customers.

The invoicing itself is fraught with challenges, as Yembo's model necessitates sending multiple invoices to each customer every month — one for prepaid baseline charges and another for usage or overage charges, leading to confusion among customers.

With around 200 customers, this kind of process remains manageable for the time being but is clearly not scalable.

The situation is further complicated by customers whose billing cycles do not align with calendar months.

‍Automation — the need of the hour‍

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Yembo is only one example from thousands of enterprises handling billing and accounting in their own ways, solely owing to a lack of an efficient tool that would rather automate every single one of these different steps.

Besides, the idea is to also be able to save valuable man-hours for the corresponding stakeholders involved.

As to why some of these components are not automated yet, already — “one of the big reasons is that different tools within the finance stack, do not necessarily communicate with each other coherently.”

Some tools manage to do everything together at the same time, while it also means that they do not do any one thing really really well.

Having tools that do one thing really well, that also talk to other parts of the stack — is one way to solve this problem at a holistic level, and improve the overall automation stack in terms of efficiency, thereby doing financial operations also really well.

While integrations are a core part of automating financial operations, a good integration is what really makes the difference and constitutes a huge piece of this spectrum.

Having said that, finance teams of today want only one thing — to not do anything manually.

Especially manual things that are repetitive by nature or design. Finance team members would love to spend more time on things that are rather strategic, over those that are mundane, operational and repetitive. And rightly so.

However, it is imperative to understand why the conventional means of financial operations are no longer relevant to 2024.

Why legacy FinOps systems no longer cut it

When businesses use legacy systems to handle billing and subscriptions without the help of modern automation tools — they often run into a plethora of problems that can slow them down significantly and even cost them money.

Here is a breakdown of how these issues can affect different parts of a business —

• Losing money or business — When bills have errors, it can lead to conflicts with customers, delayed payments, or even losing customers to competitors who do not make these mistakes. If a business cannot easily offer new pricing options or discounts because the overall system is outdated, it might miss out on its true revenue potential.
  
  
• Longer turnaround time (TAT) to get things done — If a company relies on people to manually create and send out bills and invoices, it takes longer to get this done. This slowness can make it hard for a business to quickly adjust or make important decisions. Managing customer subscriptions without automation means more time spent on updating accounts and recognizing sales, which can slow down business processes.
  
  
• Too much back-and-forth — Without systems that talk to each other, employees would have to spend a lot of time communicating back and forth to fetch provisioning data from product teams, or handover relevant financial data to aggregate, payment reconciliations, among other manual tasks. When there is a billing error, it takes a lot of coordination among different teams to make things right, which can be a large inconvenience.
  
  
• Extensive manual bookkeeping — Keeping up with accounting rules like AS606 or IFRS15 and making sure everything is documented correctly can be really tough without automation, which makes auditing a nightmare.
  
  
• Engineering bandwidth — Old systems need a lot of tech support to stay up-to-date, which means tech teams spend time on this instead of on the core product. Without ready-made ways to connect different systems, tech teams have to build custom integrations, which takes away even more time from working on core products or services.
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• Increased costs in support — Legacy billing and subscription tools can significantly increase support costs for a SaaS business, as they often lead to billing inaccuracies and generate invoices that are difficult for customers to understand.

All these problems can really hold a business back.

Moving to modern, automated systems for billing and managing subscriptions can help solve a lot of these problems. It can make things faster, reduce mistakes, and let businesses focus on growing and improving customer service.

An ideal world in automation

Transitioning to modern, automated systems for billing and managing subscriptions can help solve a lot of these problems. It can make things faster, reduce mistakes, and let businesses focus on growing and improving customer service. But more importantly, the idea is for CFOs and Finance teams to rather focus more on strategy and less on execution.

In an ideal world that is also futuristic, for enterprises, one would want to run a business seamlessly without having to worry about financial operations of all things.

This is how financial operations can someday be fully invisible, by means of automation —

• A software should be able to evaluate and identify all the number of things that are required to run financial operations, leaving no need for human intervention.
  
  
• A sales representative should be able to sell a product or service while there is a machine that is listening to this conversation and be able to draft a quote or a contract automatically.
  
  
• A team member should only have to hit a confirm button, maybe proofread the contract before hitting a send button to the customer.
  
  
• Once you hit the send button, all and everything downstream could technically be automated on a recurring basis, defining how to calculate this data, sending invoices, collecting payments, creating accounting entries, getting the right reports from analytics, among other components.

Case in point, Madhu Jagannathan, CFO at Lob, calls himself an optimist when it comes to tech and innovation. He takes the liberty to fantasy and imagines a world where the current graphical user interface that we all use today will become redundant.

He hopes to not click buttons and switch tabs anymore but only interact with software using natural language.

‍“We should be able to use plain old English to provide instructions not only to a computer but also individual applications, across all areas of technology and business, not just in Financial Operations.”

To explore how Zenskar can help streamline your billing processes and implement a scalable system, book a demo with us today.