A Guide to Finance Automation

Finance automation is all about streamlining and speeding up financial activities. Many businesses, including finance leaders, are adopting automation as they drive for full digital transformation. Within finance, the role of automation brings optimized processes with greater efficiency and accuracy.

Gartner defines automation in finance:
“Finance automation technology integrates machine learning and artificial intelligence for use in financial analysis, payroll administration, invoice automation, collections action, and preparing financial statements. The use of such automated software reduces the need for human intervention in these activities.”

With modern digital technologies, you can complete financial tasks without human involvement. Digital workers take on previously manual tasks to create streamlined workflows with greater accuracy. Human effort on routine tasks is reduced and so are errors, so your people can focus on more important and interesting activities. Automating these mundane tasks means your finance and accounting professionals can become more engaged in higher-value work.

Financial automation software may provide you with full intelligent automation (IA). This includes advanced technologies such as those included in Gartner’s definition. However, some solutions may be simpler, only offering robotic process automation (RPA).

RPA automates tasks in a process as they’re defined within a set of rules. This may feel like a good start to your automation journey. However, choosing finance automation tools with IA will help you do far more, evolving your automation journey and improving your work that much more.

Finance automation definition

Finance automation is the use of technology to automatically complete finance tasks.

Intelligent automation technologies include RPA, artificial intelligence (AI), and intelligent document processing (IDP). By combining these, you get intelligent automation — and one step closer to huge gains in efficiency, accuracy, and cost savings

You can use a combination of intelligent automation (IA) tools to improve your finance department’s functions. These might include RPA, IDP, conversational AI, and machine learning (ML).

Financial automation software integrates with your existing workflows and systems so you can automate functions like invoice processing, payroll, and expense claims.

RPA gives you digital workers to perform your rules-based finance and accounting tasks. And if your software offers full IA, you can automate far more complex jobs.

The benefits of finance automation include:

Increased efficiency

Automation streamlines your financial management systems. Digital workers can complete tasks in a fraction of the time it takes a person. And, unlike when humans are rushed, this speed doesn’t risk the accuracy of your financial processes.

Meanwhile, your staff can free up a huge chunk of their time. They can make better use of their skills and work on more complex tasks. With improved access to data and records, their work and communication can also become more efficient.

Increased accuracy

Finance automation enhances your internal controls. With digital workers handling core processes, accuracy is improved and administrative errors are reduced. For instance, data entry automation means you’re getting exact inputs every time.

You can expect greater data integrity within more consistent processes.

Reduced costs

RPA alone could reduce costs for the financial services sector by 75% according to a study by KPMG.

As well as working quicker, a digital worker is far cheaper than any human employee. And with bots handling basic work, finance teams can be more strategic and growth-focused so your people also become more valuable when you adopt automation.

Automation helps you optimize your credit control processes so you can also lower the risk of bad debts. Automation tools help you identify potential issues sooner and take automated actions to address them.

Improved compliance

As well as reducing risk by removing human error, finance automation can make you more compliant. Digital workers follow a set pattern so they’ll never deviate from your compliance process. And RPA and IA give you accurate and fully maintained audit trails.

With the right financial process automation solutions, there’s almost no limit to what you can do. Here are some of the key finance and accounting processes financial leaders should be looking for to benefit from RPA or IA:

• Invoice automation
• Procure to pay automation
• Back-office automation
• Sales order automation
• Accounts payable automation
• Accounting automation
• Payroll automation
• Document automation
• Order to cash automation
• Journal entries and account reconciliations automation
• Time and expense claims automation

Invoice automation

In the invoicing process, automation can handle many key tasks:

• Pulling data from invoices and sending it to downstream applications
• Validating data taken from invoices
• Three-way matching of invoices with purchase orders (POs) and receipts
• Approving or rejecting invoices based on your rules
• Sending acknowledgments

Vendors can expect to have their invoices paid sooner – and you’ll see reduced error rates, increased efficiency, and quicker turnaround times.

Procure to pay automation

Procure-to-pay (P2P) automation will help you streamline and control the array of tasks P2P processes involve.

P2P automation streamlines the workflows that create and approve purchase requisitions. It will improve PO processing along with vendor and contract management. And it can optimize and purchase invoice approval to make it far more efficient.

Back-office automation

Many organizational costs are sunk in back-office tasks. EY estimates between 20% and 60% of baseline FTE costs could be saved with back-office automation.

With automation, you’ll get through repetitive tasks far more quickly. Your financial processes will also be more cost-effective and accurate. Many back-office tasks, such as manual data entry and invoicing, have straightforward processes. This means they can often benefit from RPA without needing AI or machine learning.

Sales order automation (SOA)

SOA can relieve your sales staff of many tasks. These might include list building, call logging, lead matching, and scheduling. This frees up your sales staff to focus on higher-value work.

SOA will help speed up your buyers’ journeys and it allows your staff to enter the process where needed when they’re needed. Digital workers handle the rest.

Accounts payable automation (AP automation)

AP automation has transformed how businesses manage their invoices. It tends to cover three key areas handled by the accounts payable department:

• Invoice receipt
  • Paper invoices can be easily converted to digital. Information from digital invoices is automatically extracted and sent where needed.
• Matching and workflow
  • Invoices are matched to goods receipts and purchase orders (POs) – or they can be sent for review.
• Audit and archive

Automation creates audit trails for all actions. Invoices are archived securely.

Payroll automation

Payroll is an ‘RPA-Ready' area of business. How and how much everyone is paid when they’re paid and the deductions for things such as pensions, student loans, and taxes are all governed by clear rules. But this information takes hours for a human to check – dull and error-prone work. Any mistakes are rarely found until well after they’re made.

Automation means the same tasks take a fraction of the time, are more accurate, and incur less cost.

Document automation

Document automation lets you create different documents at scale. Data and text are pulled from various sources and used to fill in relevant areas of templated documents. The documents could be simply text-based or include things like graphs, images, and tables.

This is hugely helpful for those who need to create many complex and data-driven financial documents. You’ll save precious time, and your documents will always be properly formatted, compliant, and accurate.

Order to cash automation (O2C automation)

IBM found that improving the flow of your order to cash (O2C) process can increase your company’s performance by up to 83%. And your business’s end-to-end cycle time could improve by up to 60% with O2C automation.

O2C automation means your incoming Pos will be converted to sales orders automatically. The details are then imported into your ERP system. It also means documents go where they’re needed immediately, with no long email chains, and order data is easily accessible at any time. You can also automatically generate invoices for your customers with no risk of human error creeping in.

With O2C automation you can speed up lead times, enhance your cash flow, and improve productivity. Orders are processed faster; you’ll get quicker access to your earnings for reinvestment and your accounts receivable is accelerated.

Journal entry and account reconciliations automation

You can automate your processes for journal entries and account reconciliation. Automation can:

• Gather data from various systems and enter it into your general ledger
• Pull data from bank statements to match your general ledger
• Flag any discrepancies between the bank statement and your general ledger

This will make your processes far more efficient and you’ll be able to complete month-end closing on time every time and with no stress.

Time and expense claims automation

You can improve employee satisfaction while also helping ensure your people stick to company policies by automating claims processes.

Here automation can help with:

• Fraud detection
• Monitoring for new expenses
• Sending time and expense claims data to downstream applications
• Validating receipts against your expenses rules and policies
• Sending acknowledgments

The technologies used depend on the scale of automation adopted. Some financial process automation software is fully RPA-based. Other finance automation solutions offer you full intelligent automation.

Typically, IA technologies include:

• RPA
• Business process management (BPM)
• Artificial intelligence (AI)
• Machine learning (ML)
• Natural language processing (NLP)
• Computer vision
• Fuzzy logic
• Automatic process discovery
• Intelligent document processing (IDP)
• Optical character recognition (OCR)

For some finance functions, you may only need RPA. But to get the most out of automation and ensure every area is covered, you’ll want a full IA solution. Your financial automation software should suit the particular needs of your business.

• Automation can revolutionize your finance and accounting functions.
• Financial automation uses technologies such as RPA, AI, and machine learning to automate finance processes.
• There are many benefits of using automation in accounting and finance. These include improved efficiency and accuracy, cost savings, and freed-up employee time.
• Areas for automation include procuring to pay, accounts payable, payroll, and order to cash.

Want to enhance your financial process management? Why not find out how to get started with automation in finance and accounting in our ebook?