Automation is quickly shifting its place in companies’ priority lists to become one of the top three strategic developments to focus on in 2022. With that, key processes within finance & accounting continue to distinguish themselves as the most business-critical automation examples to focus on first. This is driven by an impressive record of successful automation developments and a proven fast return on investment.
Main characteristics of processes that are highly automatable
Automation can save your business up to 40% of losses resulting from accounting errors. With so many processes still being highly manual and inefficient, it’s super easy to get excited about automation but hold on a moment. Not every process you’re dealing with is “eligible” for automation. For an automation project to be successful and to achieve a quick and substantial return on investment, the processes involved should have the following characteristics:
- highly repeatable
- high volume
- rules-driven
- with low exception rate
- with inputs that are electronic or machine readable.
All processes that meet these criteria are highly automatable and should be prioritised for automation.
Keys automation examples to prioritise within finance
Now that we know what processes we should be looking for, let’s look at the keys ones within finance to automate first. There is a vast amount of processes within finance & accounting that are perfect candidates for automation. As such, we will group them into four different function categories. This is namely: accounts payable, accounts receivable, compliance, and month-end reporting.
Automation examples within Accounts Payable
Ensuring effective supplier due diligence and correct and timely payments for all purchases made are two simple-sounding but certainly not easy goals to ensure and track at all times. This is where automation can significantly add value. Both in terms of freeing up time for more investigation and ensuring the company finances do not suffer due to untrustworthy suppliers or payments made to vendors in error. Here are some of the key processes that companies all sizes and industries must automate to ensure the health of their account payable function:
- Purchase order processing
- Supplier verification and setup
- Invoice data extraction
- Supplier statement processing
- Classification & Reconciliation
- Payment processing
Automation examples within Accounts Receivable
One of the main areas of focus within finance is unquestionably the Receivables. All related processes ensure funds are received by the deadlines, and are reflected in the accounting systems correctly. In addition, where receipts are delayed, processes ensure they are flagged, investigated, and resolved timely. This is to ensure no cashflow disruptions, late supplier payments or risk of damaging your client relationships.
To ensure increased productivity of your accounts receivable team, and that the operations are void of human error, the following processes should be prioritised for automation. They have the highest return on investment and ensure that the overall process runs smoothly, error-free and quickly. Also, they are directly linked to a healthy balance sheet and an effective cash collection with are both business-critical.
- Automated Generation of Invoices
- Billing processes & Automated invoicing
- Invoice data extraction
- Account reconciliation
- Sending of invoices to customers
- Customer data management & communication
- Customer verification and setup
- Automated Payment processing
Automation examples within Compliance
Compliance has notoriously been the business function that often takes the most time, is linked to the highest financial and, potentially, reputational risk for the company. Yet, it is defined by many highly manual, and repetitive processes which means that both the potential and need for automation are fascinating.
One of the most painstaking compliance processes that most large enterprises have to deal with annually is the external audit and all the multi-faceted requirements that come as part of it. Even just within audit, there are many and varied use cases that can reduce the time and cost of an audit significantly. One example is an automated reconciliation between systems the output of which can be shared with auditors for investigation of discrepancies. Another one is auto-populating auditor’s working papers with the information for all samples requested. Of course, these are just a couple of examples in an area so rich with automation opportunities.
However, besides audit, there are many other processes within compliance that meet the criteria for high-automatable processes. Some of them are as follows:
- Extraction of data for compliance reports
- Auto-reconciliation between systems and accounts
- Data aggregation for tax liability
- Automated Tax return preparation & auto-filing
- Automated conversion of data to tax basis
- Completion of tax return workbooks
Automation examples within Month-end Reporting
I doubt any finance team member would disagree that month-end closing procedures can be a time-pressured and highly stressful process to get through. Performed every single month, all processes involved are highly automatable and are proven to save not only a lot of material mistakes for businesses but also risk, time, and stress.
One of the key processes to note here is the generation of the month-end reports. This can be easily automated by automatically extracting all relevant information from all company systems, emails, and other reports, and automatically directing all the information to an Excel sheet or any other relevant working file, ready for the required month-end reports to be generated.
However, it is important to mention a few other important and highly repeatable processes. These can further ease the month-end reporting process and significantly improve its efficiency. Some of these processes are the following:
- Automated data extraction from relevant systems
- Automated report generation & auto-send for review
- Month-end Auto-Reconciliation of the cash accounts
- Automated performance of month-end closing calculations
That's all well and good but how to automate all these processes
We’ve been talking about automation for over 10 years now and the reality is that now there are a lot of technologies and solutions out there that can solve all the challenges mentioned above. The only question really is how, to what extent, and for what cost. Here are a few technologies that can help with the automation of your finance & accounting processes:
1. No-code solutions
With the hype of automation over the last few years, in particular, a lot of companies were founded to sell the idea of easy automation for all simple tasks and basic workflows. Such solutions have become very popular in automating simple workflows, such as automated sending of data from one app to another, or e-signing of documents.
These solutions can be super handy and easy to get started with if your tasks are simple and the apps you want to automate between are on the list of these companies’ integrated systems. With this, of course, comes the natural flaw of these solutions in that they quickly become short at solving some challenges. Examples of that is where a custom-built system is involved or the workflow is complex or specific to your business and internal systems.
2. Use Case specific automation solutions
Depending on the use case, there are now a plethora of companies that have specialised in solving a particular use case, again with no coding required on the customer side as well. For example, there are now plenty of options to choose from if you wish to automate your payment processing or your expense management, or your customer communication management. That’s great as these solutions often come with a lot of features and integrations which make them quite advanced in their particular use case.
But can and should a large enterprise have separate software that solves one particular use case at a time? I’ll let you think about it because the answer would vary depending on the company size, complexity, maturity, and internal policies 🙂
3. Extract, Transform, Load (ETL) technologies
A rather powerful and industry and use case agnostic technology that has emerged not so recently actually is what is called ETL, or extract, transform, load software, such as Data IQ and Alteryx, among others. These tools definitely don’t come with the “plug in and go” proposition of most no-code solutions providers mentioned above. As such, good technical know-how is required to get the most out of the power of these technologies. However, once mastered, they have the capabilities to extract and transform data in all required formats, systems, and outputs. Also, across difference use cases and business requirements.
4. Robotic Process Automation
The opportunities and need for automation are significant and ever more important to prioritise now than ever. With so many processes to prioritise for automation and so many options on the market, we hope this post was helpful. However, if there’s anything you feel we’ve missed out, let us know in the comments and we’ll make sure to incorporate.
