Business Automation for Finance
Constant vigilance and business automation are the two key tools that solve almost all problems for CFOs.
In a world where businesses face unprecedented financial challenges and expense fraud statistics are touching the ceiling, ‘constant vigilance is the best job description for Chief Financial Officers or CFOs. They work day in and day out to create, implement and ensure compliance with expense policies while managing capital structures, planning investment strategies, and developing risk management strategies.
CFOs have a lot on their plate, to begin with, and for those who still have not modernised their finance process, the pressure piles on. By inducting business automation into expense management processes, CFOs can save significant time and effort for themselves and their team and then invest these limited resources into activities they cannot automate.
What is Business Automation?
Business automation refers to the practice of using technology to perform recurring and repetitive tasks. It allows employees to focus on jobs that require human intervention. Business automation is of three types.
1. Business process automation or BPA- It is used to automate multiple elements of workflows and streamline processes to achieve higher output quality.
2. Robotic process automation or RPA- It is used to automate individual tasks in processes like transcribing a document or summarising a data set. It tackles automation at an elementary level.
3. AI-powered automation- While BPA and RPA work with humans to execute tasks, AI-powered automation is a form of unattended automation that replaces human manual labour and decision-making qualities for a particular process.
Gone are the days when business automation required heaps of time, effort and expertise; today, any business can automate its process with the availability of various cloud-based automation solutions.
And why wouldn’t they? Studies have shown that business automation is instrumental in increasing workplace productivity. Research by McKinsey claimed that automation of processes could increase productivity by up to 1.4% annually.
How Can CFOs Benefit From Business Automation?
Being a CFO is a high-pressure job. As a CFO, you have to ensure that you are closing books accurately and on time. You also have to chase after evolving industry accounting standards and practices. Finally, you have to ensure that your team upholds the implementation of these practices and standards.
Additionally, CFOs must perform various forecasts and analyses to ensure that the company’s expense strategy is risk-resistant. They have to be the stimulant that enhances the financial performance of the company and triggers growth.
Automation can help CFOs overcome many everyday challenges that slow down the overall performance of the finance team. Automating processes in the reimbursement and approval functions of the company can increase efficiency and boost employee satisfaction.
Let’s look at some of the most significant benefits of finance and expense management automation.
1. Increased productivity
Accounting requires a lot of repetitive work, but it is vital for upholding the financial health of a business. Auditing, expense reconciliation, bookkeeping etc. are all practices that require massive attention to detail when done manually.
CFOs are responsible for delivering final financial reports and documents to the various stakeholders. Manual accounting processes are vulnerable to inefficiencies, resulting in delayed delivery of crucial reports. Automation can help CFOs detect these inefficiencies and bottlenecks and minimise them.
2. Reduced operating expenses
While business automation accelerates processes and minimises manual work, it helps reduce the need for an exhaustive workforce you would otherwise need to manage, analyse and account for various expenses. According to a study by KPMG, RPA can reduce the costs of financial service firms by up to 75%. This pattern remains ubiquitous across all sectors and industries.
A smaller workforce would eventually mean reduced administrative costs. Automation also frees the existing team to focus on crucial tasks that require expertise, helping them put in more hours to revenue-producing functions.
Read on to learn more about operating expenses and their types.
3. Reduced risks
Outdated spreadsheets and excel systems are not only time-consuming but are also prone to the risk of corruption or loss.
Predictive analyses have become vital in the business world. CFOs do these financial analyses to empower the decision-makers with the knowledge to take critical decisions. When performing analyses and forecasts, there is also a risk of inaccurate information and data contamination that can eventually lead to wrong decisions for the business.
With business automation, you can standardise data processing and get consistent, auditable and accurate reports. When you automate processes, you get results based on accurate data that has not been contaminated due to human error. Your dependence on corruptible end-user tools also decreases.
4. Reduced expense frauds
Often when businesses incur certain operational expenses, they have their employees bear it initially. Employees then file these expenses as expense reports to get reimbursement. Sadly, some malignant employees use manual expense reporting processes to file for duplicate or non-existent expenditures to pocket extra cash from the business.
Automated expense management systems can minimise expense fraud by increasing transparency in employee spending activities and automatically recording payments in real time.
Read our CFO’s guide to identifying and detecting expense fraud.
5. Policy compliance
It is crucial to ensure that your employees’ spending practices comply with the company’s expense policy. This helps CFOs ascertain that the spendings are within the allocated budgets and deters employees from indulging in overspending and malpractices.
However, for large businesses, it becomes almost impossible for the finance department to manually check every receipt, ticket and bill for policy compliance. CFOs must consider automation to enable policy compliance checks after every report filing.
6. Increase in employee morale
Expense filing is an arduous task which requires employees to collect, save and retrieve bills, receipts etc., for reimbursement. If this isn’t confusing enough, sometimes approval of expenses goes through several stages and takes a long time, meaning that employees bear the brunt of business costs longer than they would like.
Business automation in expense reimbursement speeds up the approval processes and allows the finance department to dispense repayments more quickly. This is vital for increasing employee morale. You can also use business automation to streamline your payroll processes. This ensures timely payment of salaries and contributes to employee satisfaction and trust in the business.
7. Increases scalability of data management
As a business grows, its need for data management increases. Managing the rapid inflow of new data into the company can overwhelm teams that use manual accounting methods.
Business automation makes data management more scalable. Automated finance solutions can retrieve data from multiple sources, centralise and present it in a format that is easier to comprehend and manage.
Which Finance Processes Can Benefit from Business Automation?
Managing payroll can be an arduous task, especially when businesses have a large number of employees. Business automation can help you reconcile payroll data, calculate deductions and transfer salaries in a much simpler way than manual payroll management.
Accounts payable form a significant part of a company’s expenses. It is hence imperative that the finance team cross-checks all the invoices and expected receipts. The expense verification process can get complicated and confusing for enterprises with various vendors and accounts payable across multiple functions.
Automation solutions can be programmed to check for anomalies and discrepancies in the accounts payable invoices and alert the stakeholders before payments are made. It can also help you ensure that payments are not missed and help you maintain good relationships with your recurring vendors.
Cash flow problems can arise when too many accounts receivable are delayed. Automating this part of income management can help you with invoicing and credit management and enhance cash flow management.
Expense reconciliation ensures that sets of financial records from two sources are balanced. It is an integral part of reducing expense fraud in a company. Automating account reconciliation processes can help eliminate miscalculations and oversights that enable malignant employees to commit fraud.
Happay is an end-to-end expense management platform that helps CFOs with expense reconciliation, policy and tax compliance, and enabled data-driven decision making. Schedule a demo with the Happay team to know more about the platform.
How to Use Business Automation for Financial Processes?
Transitioning from manual to automated processes can be a significant change and, at first, seem challenging. Let’s discuss a few steps CFOs must take to induct automation in financial operations.
1. Create a roadmap for process automation- Study your financial processes and identify the areas that will benefit the most from automation.
2. Create final workflow- Keeping automation in mind, develop the final workflows for the financial processes you have chosen to automate. Remove unnecessary steps and bottlenecks that do not directly affect or slow down the outcome.
3. Test-run your processes with the automated solution- To ensure that problems don’t arise post-deployment, test-run your workflows with the automated solution of your choice. Work with your finance and IT support team to remove any issues before deploying the software.
Business Automation in Finance- FAQ
Q- What is finance automation?
Finance automation is the process of streamlining and automating financial and accounting workflows through technology.
Q- Can automation replace accountants?
No, automation will not replace accountants. Instead, it will help accountants by freeing them up for high-value tasks by eliminating repetitive manual processes.
Q- Which finance processes can you automate?
The finance professionals can automate core finance processes like invoicing, accounts payable, accounts receivable, bookkeeping, tax and policy compliance, payroll, expense management, etc.