Robotic process automation, or RPA, is one of the most exciting technologies in the business world today. While industrial manufacturing already uses RPA in giant armatures and robotic fabricators to assemble everything from cars to small plastic components, automation has now begun infiltrating the back office, too.
Using software "robots" capable of following specific rules and action sequences, you can automate processes that typically require human workers to perform tedious intervention.
There are many specific areas of a business in which RPA can be useful. Today, two of the most innovative uses for these tools relate to the beating heart of the business: financial processes and accounting practices. What is RPA in finance and accounting? From automatically auditing financial statements to speeding up the rate at which accounts receivable and payable complete tasks, RPA means different things based on the specific use case.
In this article, we'll look at why RPA for accounting has gained so much traction in recent years and how your organization can ensure it is receiving the most value possible from its investment. We'll cover the following topics:
- How RPA Transforms Accounting and Auditing
- Mind Your Gaps in Financial Process Automation
How RPA Transforms Accounting and Auditing
Traditionally, automation has affected multiple workflows within the office. However, many tasks concerning finances have remained manual, either because of a lack of appropriate solutions or out of an organizational uneasiness about placing essential tasks in the hands of robots. Remember that humans still have control over robotic accounting, and the right rule configurations ensure there is someone to double-check any potential exceptions.
With new tools and an increasing commercial awareness of the value of automation, new RPA use cases in finance and accounting have developed over recent years. These uses can translate into cost savings, improved employee morale and better productivity. Let's explore some of the most common uses for RPA in these areas while considering which advantages make RPA a worthwhile investment.
Use Cases for RPA in Finance
The management of a business's finances often requires a diverse set of software systems, since no one package can handle all the necessary tasks. That separation of systems often means that there is a large amount of tedious, repetitive work—work ideally suited for automation through RPA. What are some of the ways that organizations have used RPA in this area recently?
Purchase Order Processing: Staff can spend a large amount of time processing purchase orders and routing them for approval so that the business can acquire critical goods and services. You could configure a software robot with intelligent (or "cognitive") data capture tools to scan POs for critical information, input them into the appropriate system and set up an approval request.
Invoice Processing: Like POs, invoices present a consistent challenge for back-office staff, especially when they may arrive in vastly different formats. A robot can easily handle this process just as it can handle PO processing.
When data varies too much from what's expected, or the robot grades its own confidence on the lower end of the scale, it can flag an invoice for manual user review. Outside of these cases, you can dramatically reduce the number of "touches" each invoice requires.
Basic Accounts Reconciliation: Comparing the balances on critical business accounts can take valuable time out of a clerk's day, requiring them to log back and forth between different systems. Accuracy is essential for supporting future audits. RPA robots can easily handle many of the basic elements of these tasks, only requiring human input when data does not align as expected.
Improved Financial Reporting: Providing the decision-makers in the company with accurate information is vital, and that information flow requires accurate and detailed reporting. With robots handling more of the mundane finance tasks in the office, employees can devote additional time to producing the deep data insights necessary for making smart choices.
While RPA can assist with these tasks, some organizations will find that it isn’t fully suited to the complexity or multi-step process they use. Tools that deliver full-cycle accounts payable automation provide a more tailored approach to these tasks. For modernizing finance departments, a full consideration of all these solutions will reveal the best approach for your organization.
Use Cases for RPA in Auditing
RPA is a vital element in conducting accurate internal audits. Auditing should undergo automation at a slower pace so you can assess its effectiveness and adapt as needed, but its effect can be impressive. With the right tools, you can streamline many of the most time-consuming tasks in auditing while improving data visibility and process outcomes. Let's look at a few of the ways that RPA impacts this area today.
Revenue Audits: Ensuring you have a clear view of cash flow and your numbers are accurate are essential steps for keeping the business on track each day. Robots can handle many of the comparative tasks required within general revenue audits, taking the legwork out of the process while keeping you in control of producing detailed reports.
Advanced Reconciliations: Whether there are questions about a chain of transactions or you simply need to conduct a periodic ledger reconciliation as part of compliance measures, reconciliation tasks can represent time spent staring at Microsoft Excel. Robots can step in to handle all the repetitive tasks that you need to perform with each entry, leading to more productive audit outcomes.
Exception Flagging: The business can lose money or find itself on unsteady footing if staff members don't notice problems until it is too late. Because RPA is heavily rule-based, it is exceptionally well-suited for detecting when violations of specific business parameters occur. The robot can then route the exception to the appropriate authority for resolution.
Risk Assessment: Robots can also assist with ongoing rules-based risk assessment—an essential effort for lessening the strain organizations place on audit professionals. When potential risk violations arise because of specific transactions or changes in the company's financial vitals, the system can produce an alert for attention.
The Advantages of Using RPA
Why do so many businesses find RPA to be such exciting technology? Clearly, there are many tasks within accounting, finance and auditing that you can take partially or wholly out of human hands for faster work. However, there are some risks to automating, regarding both process mistakes and employee morale. When you properly deploy it and thoughtfully construct it, however, RPA has the opposite effect, providing advantages such as:
- The opportunity to "work smarter, not harder." Every employee has expressed their frustration with repetitive tasks such as copying and pasting formulas and results from program to program. RPA boosts productivity and employee job satisfaction.
- Accuracy is essential—errors can both create delays and cost money. When properly configured, RPA ensures accuracy in procedures at every step. Reducing human error rates creates savings for the business and keeps vital processes moving swiftly.
- Deploying RPA now provides the business with a framework to further grow its automation footprint in the future as technologies mature and develop. An investment today could pay unexpected dividends as new opportunities for automation arise.
Mind Your Gaps in Financial Process Automation
"Mind the gap." Originally a warning by London subway station attendants, this famous phrase is now a mantra for automation implementation.
Even companies that have successfully deployed automation may have gaps in their implementation. These gaps represent missed opportunities, and when you fill them in, they can help your teams to recognize even more exciting improvements.
The most common scenarios for digital procedure overhauls in business today include automating the complete cycle of processes such as procure to pay, record to report and order to cash. In most cases, nearly all of these processes are suitable for automation. Improvements of 50% to 90% are possible—but that still leaves plenty of room for human error and tedious manual processes.
Automation gaps often exist when certain activities must take place across different computer systems. A common example is the need to retype information from one application into another. Other examples include manually updating financial information in ledgers and relying on clunky spreadsheets for data. With smart RPA deployment, it's possible to mind these gaps.
Let's look at a few of the most common areas in which additional RPA can be an excellent match for accounting and finance.
Automation Gaps in Procure to Pay
Supplier onboarding: Onboarding new suppliers is an essential step in acquiring critical goods, but it is often still a manual process left in the hands of clerks. You could just as easily configure a robot that handles supplier vetting, including handling tax data, pulling credit reports and more.
Portal queries: Many businesses use digital portals for supplier management, but these systems are often in a software silo away from the main company systems. Why force an employee to manually copy and paste data back into your main software? Leverage RPA to link your portals together and create more defined workflows.
Price comparisons: Your business may only buy certain products when they are available at the best prices. When those prices fluctuate across suppliers, use a robot to track this data and flag suppliers who have the best deal at pre-set time intervals.
Market intelligence: Once you choose them, suppliers don't always continue to conform to your standards over the long term. Manually assessing these credentials can be extremely time-consuming and easy to delay. Set up a robot to perform this job instead and enjoy regular reports.
Contract terms: Do you have vendors with specific contract data that you must validate on every invoice? This essential compliance step can be tedious—automate it instead.
Gaps in Quote-to-Cash Automation
Supplier pricing comparisons: Providing an accurate quote for your customers is essential for their satisfaction, but fetching accurate prices can be difficult. Instead of stressing over this time-sensitive process, set up a robot to gather the data for you.
Order exception processing: Robots can automatically handle price checks for orders that have stipulations on price holds.
Delivery reconciliations: Validating orders placed against shipments received is crucial for avoiding duplication errors. Software robots can validate POs against shipment receipts and flag exceptions.
Master data maintenance and customer onboarding: Simplify the vetting and onboarding of new customers with robots, just as you would for suppliers in procure-to-pay.
Record-to-Report Automation Gaps
Financial close support: Closing subledgers, creating financial reports and delivering mandatory filings to regulators can all require highly tedious processes, such as copying data to and from Excel and computer systems. RPA can lift the burden of this process.
Watch software robots automate copying, pasting and validating data between an Excel spreadsheet and SAP in this 3-minute demo:
Data extraction for accounting close: Every department or business division records its own transaction journals. Reconciling these journals can be a challenge, let alone consolidating them. Use a robot configured to work within your ERP to handle this task.
Data management: How can you accurately aggregate all the data that your business produces about its finances and performance? Trying to stay on top of this information can be a Herculean struggle. Robots lighten the load on your staff while equipping the C-suite with the data they need for decision-making.
Adequately addressing these gaps requires more than identifying that they exist: Invest in advanced software tools that can provide the framework necessary for filling in automation gaps. With Kofax RPA™, any business can find support to successfully deploy smarter, faster automation.
When you combine it with additional process overhauls, such as striving to automate accounts payable, Kofax RPA is your direct link to a reduced error rate, increased productivity per employee and measurable improvements. With little- and no-code solutions, this RPA platform provides you with everything that you need to mind the gap.
Robotic process automation has advanced significantly since its original introduction to the business world. Today, it has an integral role to play within a broader strategy of automation. When you properly configure and deploy them, RPA and related tools can translate into significant time and cost savings for your business.
Do not think of automation as "set it and forget it" technology. Instead, you will want to continuously analyze the results that you achieve while considering how to improve even further. By "minding the gaps" in your automation with the use of advanced tools such as Kofax RPA, you can nurture a better means of doing business.
However, RPA is still only one piece of the puzzle. As the digital landscape shifts and grows more complex, more advanced tools – and a unified strategy – become necessary. Otherwise, businesses become stuck with patchwork solutions that don’t integrate together as well as they should. A unified approach based on the concepts of intelligent automation not only leverages RPA when it can provide value, but also brings in other critical tools, including AI, machine learning, OCR, and more.
IA offers the clearest path towards a true digital transformation for businesses. As a leader in this space, Kofax occupies the perfect position to support businesses driving transformative efforts with investments in automation. Learn more about our intelligent automation platform and these opportunities today.