The most efficient business practices of five or 10 years ago probably can’t still lay claim to that title today—and why should they? As business technology continues to develop by leaps and bounds, companies should strive to actively embrace the new tools and applications cropping up continually.
Just as we no longer rely on many of the manual and paper-based processes that predated computerization, continuing to use error-prone methods in your financial dealings can be costly for a business. Cutting-edge finance automation developments are the wave of the future, and many organizations—especially large multinationals—are already all-in on automation in accounting and finance.
In this guide, we’ll explore what automation means, the state of the current technology and how any business can benefit from these advances. In detail, we’ll be examining these topics:
- What Is Financial Automation?
- What Accounting Tasks Can a Business Automate?
- Why Automate Financial Processes?
What Is Financial Automation?
Before we can thoroughly examine the advantages of financial process automation for a business, it is important that we first establish a clear definition while also exploring some of the technologies most often used in these applications. This is a growing field that is already quite vast, after all—so let’s begin with a simple definition.
Defining Financial Automation
In short, automation in finance refers to any effort that, using technology, reduces or eliminates the need for manual human input and oversight in any processes regarding spending or receiving money. By reducing the amount of human interaction present in specific processes, automation aims to reduce errors and increase speed.
The goal of automation is simple: equip businesses with the speed, consistency and critical insights necessary to succeed in a marketplace that only continues to grow more competitive.
Technologies Used for Automation
Financial process automation isn’t just one type of tool or piece of software you can buy off the shelf. It encompasses a range of different devices, some interrelated and some standing on their own. As you begin to delve into this world of advanced innovation, what are the most common automation solutions you’ll encounter?
Robotic process automation, or RPA, encompasses a unique class of software “robots” that help business users automate common workflows. These aren’t the robots of science fiction but more like customizable programs that follow specific rules about carrying out their tasks. RPA bots can extract important information from documents or emails to paste into another program, for example. RPA bots are a maturing and popular application in finance processes.
Document automation refers to processes, such as those achieved within Kofax AP Essentials™, related to the automatic extraction of information from paperwork before input into your business systems. This process can also refer to the automatic creation of documents, such as when someone scans new invoices into the company’s systems. Document automation tools can free up hours of valuable office time otherwise spent on mundane tasks.
Process mining is all about using smart tools to analyze your actual business processes—such as your full-cycle accounts payable workflow—to generate data that can provide insights. Process mining could reveal that invoices create a serious bottleneck for your business, causing costly delays and cascading issues. Process mining can provide invaluable feedback for practically every major workflow in business finance.
Machine learning (ML) refers to algorithmic processes capable of “learning” from past results or rules-based analyses. Although not a true form of artificial intelligence, machine learning is a powerful technology that can help businesses make predictions, analyze possible decisions using past events and more. ML algorithms also underpin many other forms of finance automation software too.
Agile and modern businesses demand automation solutions that align with their industries and provide real-world improvements and a better bottom line. Let’s continue our exploration by looking into what tasks it is possible to automate, fully or partially, using some of the technologies described above and tools by Kofax.
What Accounting Tasks Can a Business Automate?
Once a business has the right tools to begin automating financial processes, what is it actually possible to achieve? Although the following list is by no means comprehensive, it represents some of the most important and high-value targets for automation. Consider what tasks are ripe for automation before we look at the most apparent reasons to do so.
Source to Pay
Also called procure-to-pay, P2P is the process that begins when your business identifies a supplier for a necessary purchase and ends when you remit payment. Many steps in the S2P process are ripe for improvement through the deployment of RPA bots or ML-powered technology. An automated S2P process will ensure the appropriate information goes to the right places for intelligent decisions.
AP, the processes surrounding collecting and approving supplier invoices for payment, is exceptionally ripe for automation. The “simple” act of scanning invoices into your system and extracting important data, such as the related purchase order number or item quantities, could take hours when done manually. With better document automation, teams can quickly and accurately populate their AP systems with accurate data.
Financial Planning & Analysis
What if your teams could quickly run financial reports that made the forecasting process simpler? What if a few smart tools could give you deep business insights into big data? Automation makes it possible, with process mining and ML applications capably producing detailed results. With so much financial data generated on just a daily basis, these tools have quickly become essential.
Other AP processes, such as the three-way match between POs, receiving reports and invoices, are also easy to automate. Doing so makes it easy for a business to avoid costly errors such as double or late payments. Similar automation is essential for reconciling the other accounts on your books. Automation not only makes it easier to avoid errors, it makes it harder to commit fraud by eliminating common opportunities for embezzlement.
Order to Cash
Order to cash covers the sequence of steps between a customer’s order and their payment to your business and is also a good automation candidate. Chatbots can automate the buying process, guiding customers toward good product choices. At the same time, back-end automation ensures the business has a process that responds to orders rapidly without the need for a human touch.
How can your business automate processes related to tracking money owed to you by clients? Processing order forms can be challenging, especially when they aren’t standard formats such as PDF. Intelligent automation for documents, based on cognitive capture powered by machine learning, can determine where the relevant info is on any given page. It can then automatically classify and record the data for finance teams.
Manual reviews of employee timesheets are tedious and prone to mistakes. Automating parts of payroll can help you streamline error detection (such as timesheet mismatches) and auditing. Automation prevents time theft and reduces conflicts with employees while also making it simpler to pay staff on time. Approving timecards can take a fraction of the time.
Why Automate Your Financial Processes?
Automation can be a door leading to immense improvements and even potentially positive bottom-line impacts for your business. Most importantly, it can help you address major pain points in the AP process, such as bottlenecks in approvals. Automation does require an investment of time and resources, however.
For established businesses, it could also mean a significant change in the way some of your teams work on a day-to-day basis. Although you should always conduct a careful cost-benefit analysis, many businesses recognize that there are key benefits to automating.
Overall, there are four primary reasons to invest time and money into automating business finance.
A computer program never has a bad day or suffers from distractions while at work. An automated process will play out the same way every time according to the rules that your business sets. The consistency of automation means that work always gets done simultaneously, on time and according to even the strictest standards.
Time Is Precious
The adage “time is money” is literal in the world of business. Is it a worthwhile investment to keep staff occupied with rote tasks such as typing in purchase orders and manually matching invoices? With automation, you free up valuable labor for other, more critical work.
Reduce Common Errors
From simple typos to critical misunderstandings, automation all but eliminates most of the common errors found in finance departments. While no system is perfect, a well-implemented automation deployment can mean a dramatically reduced error rate.
Cut Down on Fraud
Whether it’s an unscrupulous supplier looking to make more money or an employee bent on embezzlement, automation removes and reduces opportunities for fraud. With verifiable digital “paper trails” and robust automation rules, your business becomes more secure.
Final Thoughts on Finance Automation
With the appropriate planning and careful selection of the proper tools, finance automation can lead to many positive outcomes for any business. Reducing fraud and preventing unnecessary expenditures alone are two excellent reasons to consider automating your processes. Taking the first steps is only growing easier as more options hit the market, too.
Through Kofax AP Essentials and other finance automation platform solutions purpose-built to work at scale for any business, accessible automation is within easy reach today. To learn more about the tools that your business can use to successfully implement a finance automation process or request a customized quote on Kofax software tools, take the first steps today.