Finance Departments are Accelerating Their Automation Journey
Despite advances in technology and the adoption of cloud accounting software over the last decade, finance teams are still spending 84% of the workday on manual tasks.
This resistance towards full automation is due to the perception that the status quo is good enough—magnified by the perceived risk of business disruption from incorporating new systems and additional team training.
However, modern finance teams are finding that the best way to increase efficiency and produce fast and high-quality information is to apply new tools to automate everyday tasks such as payroll, accounts payable, receipt scanning, invoice processing, expense management, and group consolidation. An increase in technology adoption is not only an operational benefit but it allows stakeholders to be more agile when responding to market changes while acting on timely management information.
Instead of being siloed and only fulfilling statutory requirements, today’s CFOs are leveraging automation wherever possible so that the finance function can evolve into the strategic heart of the organization.
Payroll is a critical finance task. However, it is easy to get wrong by failing to submit up-to-date employee information and not providing accurate tax codes. There is also added pressure due to increased time sensitivity and precise and tight deadlines each month. Employees are one of the most important assets within any business, so it’s essential to keep them happy by paying them accurately and on time.
Additionally, payroll systems usually are not connected, meaning finance teams have to manually key in or export data to core accounting software and banking providers.
Many payroll processes can now be automated by using solutions that connect accounting software and banking providers to provide an all-in-one workflow. This saves time and reduces the chance of human error by overcoming the need to move data into different systems, either manually or by exporting and importing CSV files. A particular benefit is not recreating payroll journals, which is a notoriously complex task.
Similarly to payroll, accounts payable is a critical and regular task for finance teams. Ordinarily completed once a week or fortnight, it takes up significant time to collect all invoices, enter payment details onto bank websites, and attain the necessary approvals for payment.
Vendors that leverage automation to facilitate multiple approvals and pull payment data from accounting software to a banking and payments interface help to remove the friction associated with payment runs so that they can be completed seamlessly.
Plus, many accounts payable vendors reconcile payments automatically—saving time that can be used on higher-value tasks.
A further benefit is better supplier relationships. Automation reduces the likelihood of suppliers being paid late and effortlessly allows them to transact for late received invoices that are due for payment.
Purchase Orders (POs)
POs play a key role in financial control, with many companies insisting on their spend being above a particular threshold.
The creation and approval of POs are commonly a pain point for companies. There can be a disconnect between budget owners and suppliers—resulting in invoices being raised with incorrect or fully utilized PO numbers.
Using an automated PO tool streamlines processes so that they can be created on the fly or from within forecasts. Additionally, they can auto-match invoices to PO numbers when received, eliminating the risk of being assigned incorrectly and delaying payment to critical suppliers.
A number of core accounting software providers don’t include functionality to consolidate at a group level. Finance professionals can get around this by exporting figures for individual companies into spreadsheets and manually making adjustments to consolidate group companies.
Alongside the risk of entering data incorrectly and a potential delay to the month-end close, this approach requires sound judgment to consider which exchange rates to use while making adjustments based on the accounting standards under which the parent company is prepared. For example, this may include recognizing unreleased foreign currency gains/losses in the balance sheet, profit & loss, or revenue recognition treatment.
Using core accounting software that has consolidation features, or a third-party consolidation package, will ensure consistent treatment across all group companies and save finance employees from the hassle of exporting and manipulating account data.
Receipt scanning tools have been around for a few years now but have not been universally adopted by enterprise and high-growth companies.
Adopting software that uses OCR technology to extract receipt and purchase invoice data allows bookkeeping transactions to be imported into the core accounting software effortlessly while assigning it to the correct account category.
Recent developments in the market have resulted in many providers being able to extract line data, with the relevant VAT rates for multiple items on the same receipts being assigned.
These tools shift the focus of junior team members away from manually entering data to mastering how this technology works, alongside reviewing the output for accuracy.
Managing employee expenses has historically been a chore for finance teams due to having to chase colleagues for their reports at month-end, alongside needing sign-off from managers for approval.
Additionally, the quality of submitted reports is often disjointed, with receipts missing and spend being taken to the wrong accounting category, which creates issues relating to the correct VAT treatment.
Embracing an automated expense management solution will result in more accurate expense reports, allowing easy uploading of supporting receipts, OCR data extraction, and easy imports into core accounting software. Expense management tools also require approvals from managers and don’t let employees submit reports until a specific set of criteria has been fulfilled.
Finance Teams are Embracing Automation as a Value-Add Service
Automation will benefit the broader business by allowing the finance team to produce up-to-date reports, provide financial and operational insights into company performance to grow sales, optimize KPIs, and fine-tune acquisition channels.
Automation will also increase staff productivity, reducing the necessity and associated cost of hiring additional team members. Finance teams that are fortunate enough to work at automation-first companies are likely to stick around for the long term to progress in their careers and undertake more fulfilling strategic work.