Why finance process automation is a game changer for modern businesses

The finance and Accounting (F&A) function deals with a constant stream of numbers and information crucial for business. The urgency and importance of various finance processes can leave the most seasoned professionals exhausted. This is so because any errors and delays in financial processes might put an organization in trouble. This is where organizations can adopt a digital enablement strategy to counter legacy systems. Modern organizations are embracing digital enablement platforms and are implementing robotic process automation (RPA) in their finance and accounting processes to deal with many such challenges.

A digital enablement platform is a software designed to assist people with performing digital tasks and improve their productivity in the digital workplace.

As a function with a heavy emphasis on accuracy and urgency, finance can use utilize automation to carry out many of its repetitive financial activities such as payroll administration, order and billing management, financial reporting, etc. Automation uses artificial intelligence or digital E-workers to interact with structured and unstructured data that financial executives deal with.

The following statistics prove the significance of finance automation – 

• According to EY, finance automation can cut the cost of data entry by about 70%.  
• Ardent Partners reports that it can reduce the accounts payable cycle time by up to 4 days.  
• It can lead to 76% savings in F&A.  

Automation can help an organization in transitioning from manual processes to automated one thereby reducing costs and improving its performance. It also enhances data integrity and provides 360-degree visibility to stakeholders. Because of all of these advantages, over 70% of the companies are gearing up to adopt finance automation.

Let us explore the major finance processes that benefit from RPA implementation – 

Procure to Pay (P2P)
Order to Cash (O2C)
Record to Report (R2R)
Planning, budgeting, forecasting, and analysis
Cash management
Fixed asset project accounting
Tax management

This process involves selecting suppliers and eventually paying them for their services. Automation can come in handy in this process as it has several repetitive and complex sub-steps. It can help in –

• Collecting invoices and payment-related information from various sources like emails, banks, ERP, etc. Doing this task manually leads to a wastage of both time and money. Automation helps organizations save both.
• Automation of accounts payable can help generate purchase orders quickly, process invoices accurately, and cut the overall P2P cycle–time.
• It can help manage the vendor master to accelerate the creation of vendor records.
• It can keep a check on organizational spending by measuring the efficiency of procurement management.

Other P2P activities that can benefit from automation include – 

• Managing requisitions,  
• Receiving goods and services,  
• Processing receipts,  
• Managing inventory and returns  
• Validating data and checking invoice discrepancies,  
• Bank statement reconciliation, daily bank statement updates. 

This process involves getting orders from customers and receiving payments from them after the order delivery. When RPA is applied to O2C, it can enable automation of various activities such as – 

• Managing customer requisitions, conducting credit checks, and validating customer leads,  
• Creating purchase orders, order fulfillment and invoicing,
• Analysis of the receivables, report generation, and cash management.
• RPA bots can automatically monitor all receivables and create provisions for any dues.
• RPA bots can notify customers of outstanding dues.

Automation can bring significant accuracy to the O2C process. For instance, accounts receivable deals with the money that is owed to the company by its clients, but not yet received. In order to conduct the analysis of aging and bad debt, finance analysts have to get data from the order forms. Much of these forms are submitted as images. Automation can utilize deep learning to convert these images into readable data.

Automation can improve the order entry cycle, freeing up finance personnel to spend time on other more productive tasks. It reduces lead time and enhances customer satisfaction. Eventually, it leads to an increase in revenue by making the process more efficient.

This process enables the collection and analysis of financial information for analysis, reporting, and audit purposes. Automation can efficiently handle various sub-steps of R2R such as –

• Managing cash and profit centers,
• Accounting journal entries and payroll accounting,  
• Time reporting,  
• Travel and expense processing,  
• Reconciliations and data collection from subsidiaries, 
• Closing of financial ledgers and calendars,  
• Preparing consolidated financials,  
• Report collection and aggregation,  
• Periodic disclosures, and compliance reporting to external authorities. 

The true potential of R2R lies in correct and timely analysis to avoid errors and improve competence. Automation can help achieve the same. For example, through payroll administration, companies compensate their employees by calculating the different aspects of their compensation such as work hours, etc. Here, a manual error can result in the wrong compensation paid out to the employees. RPA for finance can eliminate this issue by automatically auditing and flagging any time-sheet entry mistakes. It can also calculate tax deductions and compare data across different timekeeping systems used by the organization.

Automation creates an error-free and time-saving framework for financial planning, budget, forecasting, and analysis. With its evolved capabilities for collecting, processing, and analyzing data, RPA can aid financial systems in creating long-term financial plans. It can –

• Assist in automating the budgeting process by making precise estimations for revenue, expenses, and cash flow on a monthly or annual basis.  
• Churn historical financial data to forecast financial outcomes. This helps the company make effective strategies. 

Many companies readily deploy finance automation to automate different activities such as – 

• Revenue budget preparation and P&L budget submission,  
• Revenue and P&L re-forecasting, 
• Post–close reporting and analysis, etc.  

RPA can also automate a plethora of cash management processes such as – 

• Managing cash equivalents, 
• Reconciling cash positions and forecasting cash flows,  
• Overseeing fund transfers, 
• Producing cash management accounting transactions and reports. 

Automation enables finance executives to systematically handle a range of fixed asset project accounting activities such as –

• Creating project codes,  
• Recording transactions,  
• Monitoring the expenses,  
• Closing projects and measuring the returns on completed ones. 

Automation tools can help organizations to carry out the below-mentioned tasks with little human intervention – 

• Preparing tax returns and calculating deferred taxes,  
• Monitor compliance requirements,  
• Address tax-related inquiries.

As per a Deloitte survey, roughly 53% of the surveyed finance professionals mentioned that their organizations were considering using RPA in finance as a top priority. Finance process automation provides higher visibility to stakeholders while enhancing the accuracy of the financial processes. With its transformational nature, financial automation can make a non-linear impact on business productivity and profitability. As one of the most crucial business functions, it is a must for finance to harness the power of intelligent automation or digital enablement platform.