Introduction
 

Business leaders don’t typically associate corporate finance with cutting-edge technology. The basics of accounting, after all, haven’t changed much since the introduction of double-entry bookkeeping more than half a millennium ago. Despite the ubiquitous bandying about of the catchy “FinTech” portmanteau, many would be hard pressed to identify major changes in finance beyond cryptocurrencies and the flashy algorithms that drive decisions of many traders and portfolio managers. Corporate finance is typically viewed as slowly and steadily making journal entries and approving expense reports in the background. 

As someone who’s worked in corporate finance for more than two decades, I can understand how many of us have earned the reputation of being a Luddite. I’ve been in the industry long enough to remember that my first purchasing manager tracked all invoices and purchase orders in a paper ledger. Granted, even at that time in the early 2000s, paper ledgers seemed a bit anachronistic. 

As I look back at that era, I realize I entered the profession on the cusp of a massive sea change in the way the work of accounting was done. I saw the last remnants of a fading era that were replaced by a more efficient and accurate system, one driven by technology. And it was that damned paper ledger that set me off on what has become my mission: to propel corporate finance organizations into the new millennium.

A digital transformation might look different depending on the size of your business and the software that your team has already integrated into your everyday processes. In general, it may include:
 

• democratizing the data available to the finance departments and departments across the company
• identifying the best Robotic Process Automation (RPA) to automate manual processes
• building or buying an Enterprise Resource Planning (ERP) system and integrating it with any current software
• creating a business intelligence team to apply ML to data for better analysis

Do not let unfamiliar terms distract you from the end goal. You cannot let your finance department (and overall company) fall behind the way those old paper ledgers and adding machines did in the last transformation. Throughout this book, you will learn the many opportunities that a digital transformation can bring to your business. At best, you will be an innovator in your industry, offering fast turnarounds and better predictions than any competitor who is still using manual processes. At the very least, automating processes and embracing innovative technologies can help you avoid a million-dollar mistake. 

Don’t Let Your Finance Department Make a Million Dollar Mistake
Early in my finance career, my planned path for advancement was to outwork and outhustle everyone else. I figured that the more responsibilities I could pull into my purview, the more valuable I would be to the company. As an ambitious twenty-something corporate guy with a freshly minted MBA, I worked 70+ hour weeks, constantly looking for ways to expand my corporate domain. And this approach worked…until it didn’t.

I managed to grow my responsibilities enough that I was given my first employee. I didn’t get to pick the employee but was glad to have the help. I had grown my responsibilities of tracking spend for a single department to an entire division. My first employee was “Gary,” a lifelong purchasing clerk, who had probably forgotten more about procurement and logistics than I would ever learn. Gary was a fountain of knowledge and a stickler for the rules. He was the perfect person to run procurement. He was so good at his job that we all overlooked the fact that he sat at his desk with a big computer he seldom turned on. Gary tracked everything in paper ledgers. He had a meticulous system for recording purchase orders, payments, inventory levels, deliveries, and returns. His desk was cluttered with mountains of papers that he manipulated with savant-level expertise. He could pull any invoice or requested document from the tangled stacks in seconds. I was young and inexperienced. Who was I to tell this purchasing legend how to use Microsoft Excel or Lotus Notes?

Gary and I worked for a startup technology company that had an annual capital budget of about twenty million dollars. Our typical purchase orders ranged in value from maybe fifty thousand on the low end up to maybe two million on the high side. And Gary tracked all of this. He would give me weekly reports that were sometimes handwritten and sometimes typed in a word document or an email. I would take these reports and manually enter them into spreadsheets that we used for tracking purposes. The process was cumbersome, but we made it work … until one year, as we were finalizing our annual spend, looking at next year’s budget, and preparing for what was likely to be a contentious board meeting. A call from our equipment provider was confusing us. We had an outstanding invoice with them for around one and a half million dollars. Gary and I poured through his ledgers. There was no outstanding purchase order. 

They referenced an invoice number of something like 132495 with a date of June 24 for the amount of $1,468,293.02.

“Well, here’s the problem!” Gary exclaimed. “They’ve got the wrong invoice. See this invoice here that we paid is 132496. Dated June 24 in the amount of $1,572,088.08. They’ve double-billed us!”

We were pretty excited to learn that it was a vendor issue and were really thankful to Gary for taking such detailed notes so we could point out their mistake.

Only it wasn’t their mistake. It was ours. Gary had received both invoices at the same time (probably via postal mail) and had thought they were duplicate invoices. The second invoice had never been entered. We had gone months without realizing this, and now we were going to have to head into a board meeting and explain how we’d missed our capital budget by 7.5 percent when we’d been telling them all year we were on pace?

Needless to say, the board meeting was quite painful, and for a while I thought the whole fiasco would lead to the end of my career. But instead it set me on the mission that would become my life’s work.

If necessity is the mother of invention, catastrophe is the catalyst that fuels it. After we took our licks from the board of directors, we shifted our focus to ensuring no mistake like this could ever happen in our department again. The paper ledgers were out and unfortunately Gary wasn’t far behind. We didn’t make Gary the scapegoat of our story. Gary was not terminated for his bookkeeping error. He chose to leave because he did not want to learn a new system. He did not want to let go of the processes he’d used for his entire career. He was not ready to move into the new era of accounting.

Over the next months and years, I was able to build out a fully connected, automated system of inventory and purchasing tracking that gave us near real-time access to information. Once I had more access to data and started automating processes, I was able to grow my team from being a lone contributor and director to a robust team of developers and report writers and Structured Query Language (SQL) experts. With the right tools in place, the sky became the limit for this business intelligence team. By spending less time on manual processes, we could provide insight that wasn’t accessible before. The results were phenomenal, both on and off the page. We identified trends, understood customers, and made better predictions that brought us to our goals much faster. Everyone felt like they were doing more than just crunching numbers. The finance department became the de facto source of information for the company when we had barely been given access to that information before. 

I didn’t stop there. My company had undergone a “digital transformation” of sorts. Forward-thinking companies saw this digital transformation and wanted a similar elevation in their own finance department. So I repeated the same path, learning more about the opportunities available through artificial intelligence (AI), machine learning (ML), and other types of software that were being built and perfected every day. In my current role, I continue to encourage finance teams and whole companies to take a similar path (without making million dollar mistakes). We democratize data, automate manual processes, and create systems that eliminate tedious tasks and elevate everyone’s role in the company. Smarter predictions are made with more data, time is better spent, and the bottom line increases significantly. The goal of Deep Finance is to help you create the same results. 

Who Is This Book For? 
Don’t let the mention of AI or ML confuse you–this is a book for Chief Financial Officers (CFOs) and anyone looking to bring automation to their finance department. Many CFOs will raise their eyebrows at taking on data-related tasks, but this book is not about how to become a software developer. You do not have to be able to build an app to lead a digital transformation, although you will need to become more familiar with code and software development. Do not worry about that yet. 

This book introduces the basics of technology in accounting, starting with the printing press. As accountants have encountered new forms of technology (punch cards, Excel, Quickbooks, etc.), they have had to make a choice. Do they step into a new age and use these new tools, or get left behind? 

Today, the finance world has to make a similar choice. Do they step into a new age of AI, ML, and big data, or will they stay in the shadows? For many, the choice to step forward feels like exposing themselves and the members of their field to an inevitable replacement by robots, but this isn’t correct. I will explain why as I run through the basics of AI, ML, data science, and RPA. These concepts may have already influenced your processes at work–they are a part of every smart technology in our homes, cars, and offices. They aren’t going to replace accountants, they will actually give them better, more fulfilling jobs. By understanding the basics of what these technologies can do, we can see the opportunities available within finance automation and beyond. 

In order to seize these opportunities, you and your team (whether you have one already or need to build one) must make a plan. This requires thinking like a coder and speaking the language of developers and data experts. If you haven’t partnered with these players yet, you will learn how to bring them onto your team and manage them properly in later chapters. Along the way, you will transform yourself into the New Age CFO, the leader that your company needs in this new age of analytics. 

Ultimately, this book is about riding the wave that has always pushed a finance department’s role forward in business. Without the right tools, you and your team might feel like a bunch of bean counters who don’t add significant value to your company. Many finance departments feel this way, and they are at the highest risk of being left behind as the wave brings more forward-thinking competitors into the age of analytics. Deep Finance will help you ride the wave with your competitors, shed the burden of manual processes, and spend your time on higher-level tasks. It’s effects are empowering, and although it will take work, you will start to see the payoff immediately. 

For now, let’s go back to the beginning. The history of accounting has been shaped by innovations in technology, and the transformations that finance departments are making today are no different.