Technological advancements cannot and shouldn’t be ignored at any rate. Every industry, from education to entertainment, banking, and finance, and healthcare, is found trending towards these bizarre innovations. Now, do you know what one of the biggest challenges faced by businesses these days is? To keep tabs on technology, operations, risk, and growth at the same time, this surely leads to severe misconceptions and unwanted complexities. Fortunately, with continuous evolution, we are able to find a sure-shot way out, which is automation. All you need to choose the right set of tools and technologies which can not just support but give a sudden boost to your existing operational efficiency, irrespective of industry size and expertise and resulting in long-term success.
Over the years, the finance industry has experienced an unprecedented disruption, again due to increasing technological evolvement, new business models, and, of course, artificial intelligence. This has led to a severe increase in the concept of AI-powered finance automation. Dealing with this hyper-competitive industry is quite tough, so here is a solution that can work wonders when you want to simply up your game.
I am talking about finance automation. The following post focuses on what finance automation is, how it is beneficial, and what challenges are faced when dealing with finance automation. So without any further delay, let’s begin!
What is Finance Automation
As the name implies, finance automation is a sure-shot method to automate all repetitive tasks, especially the manual ones. By considering finance automation, it is possible to enhance productivity, deliver personalized customer services, and ensure absolute compliance with accurate data insights and analytics.
Now there is no denying that the fact that the finance industry is one of the most overworked departments these days. And to conduct financial operations seamlessly, it is very important to conduct transactions with absolute accuracy and consistency. So, finance automation is about using technology to successfully streamline different financial tasks and give an unseen advantage to all the current team members.
I am sure you will believe me when I say there is an unseen pressure to deliver value while the clock is ticking. Using automation at the core can certainly free up the finance teams, and they can focus simply on core competencies. In simple words, it is said that finance automation is no such buzzword but a seismic shift that has led to the creation of significant value for businesses across the globe.
What finance automation features? Several tasks, such as account reconciliations, general ledger journal entries, preparation of financial statements, and even precise budgeting.
Also, it is a safe bet to say that finance automation has successfully eliminated the need for human intervention, and all the tasks turn out to be error-prone, as well as diverting team members to successfully analyze and generate ideas.
Some of the most interesting examples of finance automation include:
- Invoicing - It is possible to generate as well as send invoices, track payments, and send regular reminders to end customers.
- Expense management - Right from expense report creation to submission and approval, automation can seamlessly take care of all these aspects. They are meant to scan receipts, and the system can automatically categorise a wide range of expenses and integrate seamlessly into financial records.
- Easy payroll - Different payroll systems can successfully automate calculating wages, taking care of all deductions as well as taxes, distributing employee pay slips, leading to payroll procedures faster and less prone to errors.
- Financial reporting - These financial tools have the potential to gather relevant data from various sources, compile financial reports and offer real-time insights without any manual interventions.
- Accounts payable and receivable - The finance software must be able to cope with different purchase orders, payments, and accurate management of incoming and outgoing payments; in addition, it should be able to manage the overall cash flow well.
- Budgeting and forecasting - With an ideal automation software, it is possible to develop more accurate budgets and forecasts. You just need to have lots and lots of historical data and predictive analytics.
- Tax compliance - Be it tax calculations, filings and compliance, everything is taken care of here.
- Reconciliation - Seamless and relevant bank statements, also you can get internal financial records to identify discrepancies quickly and efficiently.
Benefits of Implementing Finance and Accounting Automation Tools
Enhanced productivity
One of the obvious benefits to take into account by implementing finance and accounting is enhanced productivity. Since we are talking about automation, all the repetitive and monotonous tasks can be well taken care of. So you are bound to complete deliveries in a faster and seamless manner. In addition to speeding up your working hours, you get to unlock time to work on more valuable and value-added tasks and drive higher productivity.
Here, you can use optical character recognition (OCR) is already integrated within the accounts, especially the ones which feature a payable workflow. So yes, in one way or another, you will find a sudden boost in terms of productivity and efficiency.
Cost management
The next benefit to take into consideration is cost management. When you try incorporating finance automation, the cost is automatically taken care of in prior. Here, you get a perspective regarding whether you need to lower operational costs or personnel costs, leading to increased profitability. Here you can consider using a close management tool integrated with a quality assurance tool, which can assist well in standardising and reducing the overall amount of time taken to complete daily, weekly or monthly tasks.
Unfortunately, there are times when we make this mistake of buying tools and softwares without thinking about the price or budget. Finance automation can be considered a much-needed speedbreaker.
Improved quality
Of course, another advantage offered by finance automation is improved quality. Finance and banking are one such field where quality services cannot be compromised at any rate. Automation can definitely minimise the risk of human errors and enhance the overall quality of outputs done in a repetitive manner to predefined standards.
If you are willing to minimise manual data entry errors, the only way to do so is by leveraging system lookup and data validation through a point solution tool.
Time for taking strategic initiatives
The next benefit to pick is that you get ample of time to make strategic initiatives. Since we are talking about finance-related tasks, they are supposed to be conducted with accurate precision, including data entry and taking care of all kinds of complex and complicated calculations.
Other than core members of your team, with finance automation, it is possible to free up different resources so that you can strictly focus on tasks which require creative thought procedures, problem-solving, and client service. Once you have succeeded in increasing automation at the transactional level, you can simply reduce keystrokes and different lookups. This definitely allows you to spend more and more time on conducting value-added tasks instead of coping up with a monotonous life by putting your head down on data entry.
Highly scalable
The next benefit offered by financial automation is that it turns out to be extremely scalable. In case of increased workload, there is no need to increase staff. These tools have the ability to grow with you and upgrade as well as successfully integrate with additional apps, and that too with less to fewer disruption.
The ultimate key to success is to look out for a technology stack which is highly flexible and scalable and works pretty in accordance with your ongoing business. So in simple words, financial automation can be considered as a supportive robust ledger system which ensures to offer absolute support for your business with its growth and increasing complexity.
Accurate insights
The next benefit to take into account is gaining an accurate amount of insights. Usually, budgeting and forecasting is a tools to consider in case if you want to stay on track. What else can it offer? Well, you get to gain ample insights into near-future performance within real time.
This enables the organisation to successfully pivot, collaborate, and adjust resources like no other. Finance automation also assists in taking care of products and services which show unexpected success or decline. You will come across a wide range of budgeting and forecasting tools that aren’t too costly and offer simple integrations with your current ledger.
Risk mitigation
The next benefit offered by finance automation is instant mitigation of risks, especially the unexpected ones. Moreover, it successfully follows different standard processes and security protocols which are created considering risk profile and governance needs. Just make sure all tools are properly vetted, be it in terms of security or a compliance perspective.
Investment
The next benefit offered by finance automation is about investment. See, technological investments aren’t cost-effective, but if you keep looking at long-term benefits, there is pretty much to see. Cloud-based technology can definitely assist in saving an adequate amount of money by simply virtualising your hardware.
In other words, it is possible to decrease as well as eliminate the costs of servers, data centres, and networking resources, and all this is possible by simply relocating to the cloud.
Reduce errors
This is a much-needed benefit, considering that finance automation means you are most likely to reduce errors. Data entry is prone to insane human errors, and this leads to dire consequences in finances.
Until now, it was like no mistake is noticeable unless the journal entries are thrown off. Let’s say if AP forgets a bill or ends up buried on someone’s desk for approval.
These simple human errors don’t happen when you digitise processes. You see, robots never tend to pay. You need to conduct a reliable and tested workflow, and for that, all the tasks need to be handled on a consistent basis. Automated financial processes are at work, even when you aren’t.
Empower team members
Last but certainly not least, finance automation does empower teams. Every employee is a valuable asset who needs to put off with unwanted tedious work. Finance automation enables the team to successfully think strategically and turn raw data into actionable insights.
The tech enables leaders to make prompt and well-considered decisions.
- Understand business strategy
- Offer effective solutions
- Build stronger business relationships
- Ensure reporting, accounting, and controllership are under supervision
Challenges in the Finance Processes
Now, no industry vertical only features pros and doesn’t have any challenges. However, with finance, the good thing is that there are just a few challenges that can be taken care of with the help of technological advances. So yes, in a way, conducting a successful finance automation process is a doable job.
Inefficient procedures
One of the biggest challenges faced here includes inefficient procedures; usually, this happens due to the severe use of outdated systems. Usually, outdated systems turn out to be the sole reason for facing increasing complexity regarding various financial procedures. Manual processes do take a toll in terms of productivity by eating up most of the working hours for your financial team.
In addition, the team is supposed to spend lots and lots of time on verifying and matching financial data, especially when they are forced to work with inefficient manual procedures.
On and all, financial reporting is an extremely tedious job where you need to keep reviewing and validating again and again. Slogging off the entire day will definitely push you under undue stress and unwanted frustrations. This overall can foster business growth.
Fraud and duplication
The next major concern which needs to be given attention to is fraud and duplication. Financial fraud are pretty common but does require an adequate amount of attention. Not to mention, these frauds can have severe consequences and make your business completely doomed. However, all you need to be is extremely careful and take all the required preventive measures.
Fraudulent billing or duplicate invoicing or questionable manual accounts payable systems are common yet crucial concerns of the finance industry. In addition, the excessive use of manual finance systems are highly prone to information tampering and overlooking and duplication.
In addition, implementing a solid approval procedure definitely prevents finance personnel from tampering with data, for example, submitting duplicate invoices or giving wrong approvals.
Delayed approval
The next one is a delay in terms of approval. You see, manual approval procedures usually lack a lot, especially in terms of transparency and clarity. Now, in what sense, you must be wondering, this happens in terms of roles and responsibilities. Unfortunately, there are times when the team is completely unsure about who should approve all the finance requests, and this leads to consecutive undue delay.
This is why it has been said that manual procedures lead to slower and complicated payment processing. As a result, with delays in purchase orders and invoice payments, business operations are affected to a large extent as well as this surely leads to a higher amount of dissatisfaction. Moreover, these effects are slowly and surely ruining the company’s reputation and causing a dip in stock prices.
Of course, this is not it; there are several other issues, such as having an inevitable lack of visibility or oversight. This usually happens because of severe reliance on paper invoices and other documents. Unfortunately, it is very difficult for accountants to figure out when invoices were issued or when and where payments were made, and it involves lots and lots of admin work. Also, there are numerous financial personnel who are completely clueless about the spending patterns of the business, productivity levels, and what is the efficiency of financial operations.
By implementing finance automation, all these challenges can be well taken care of.
Top Technologies used in Finance automation.
Robotic Process Automation
Now, I am sure you must have come across the term bots? RPA basically is all about making the right use of these bots. Tech which is highly used to automate routine operations as well as workflows. Robotic process automation is highly preferred in the finance industry to automate tasks featuring account reconciliation, report production, and data entry. The bots can be successfully programmed to learn or catch up after watching the screen recording of a person and mimic the same steps.
RPA has a track record of working wonders with repetitive, rule-based processes, and do you know what the best part here is, you need a minimal amount of expertise and structured data.
Artificial Intelligence and Machine Learning
AI and ML, one of the most powerful combos found in the technology landscape. Yes, financial automation uses AI and ML to successfully analyse massive amounts of data, watch out for relevant trends, generate accurate forecasts, as well as provide relevant suggestions when in need.
Where is the technology exactly being used? Well, I would say we're not from investment analysis to credit scoring, risk assessment, and fraud detection. Combining AI, ML, and RPA can help you in setting an irresistible trend where algorithms can be make accurate decisions without the need for human intervention, just by referring to past data and identify trends.
Cloud Computing
The next interesting technology which makes finance automation worth taking into account is cloud computing. These techs offer a scalable remote collaboration and quick access to all finance data and apps, and it doesn’t matter whether you are in the same location or not. In addition to all this, cloud computing can ensure increased data backup, disaster recovery, and security features and functionalities.
Blockchain
The next one in line is Blockchain. Now I am sure you must be very well-versed with the fact that Blockchain is a decentralised and distributed ledger technology, but do you know that it is one of the leading tech being used in the financial automation arena, assisting in a wide range of tasks, including secure transactions, smart contracts, identity verification, and supply chain financing.
Data Integration and Management
The next technology used in finance process automation includes data integration and management. Why is this needed? Well, these systems heavily rely on robust data integration and management systems. The data is being collected from a wide range of sources, including different bank accounts, payment processors, and financial software.
By doing so, you are able to ensure data accuracy and offer a comprehensive view regarding all available financial information.
Final words
So that’s all for now! Finance automation is a huge strategic initiative and can lead to a rise in a significant number of advancements. The key is to invest lots and lots of time so that your business can reach its full potential. The future of the finance industry is pretty rosy, and by incorporating finance automation, it is possible to make strategic decisions.
So now you have two choices left - embrace workflow or be left in the dust. I hope you did find the following post worth taking into account. In case you have any kind of doubts or queries, feel free to mention them in the comment section below. Lastly, it is advisable to hire a reputable and reliable development company that has a knack for delivering the best possible outcomes for your finance business. Good luck, and I am sure you will successfully overcome the above-mentioned challenges and adopt technology-driven process management techniques to improve accuracy, efficiency and productivity in the long run.
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