Finance Process Automation Eyed for Enabling Business Growth
Updated: May 7
By: The QuickReach Digital Transformation Team
Besides cost reductions and increased operational efficiency, many organizations are also expected to achieve financial growth through finance process automation.
Studies and reports show that automating finance processes helps companies gain highly effective functions of financial management that also contribute to bottom-line growth since it allows people to be more productive and focus more on their core competencies.
Enterprises that benefit well with a highly effective finance function are those engaged in customer-centric businesses, most especially finance services, including healthcare.
Some key accounting tasks identified ripe for automation are:
-Monthly/quarterly close process
Automation is now a realistic goal for the finance function because of a range of technological advances, according to a research from the McKinsey Global Institute. These technologies include business data; teams’ ability to process large sets of data using now-accessible algorithms and analytic methods; and improvements in connectivity tools and platforms, such as sensors and cloud computing.
The study identified four areas of technology that show the most promise for use in finance:
Automation and robotics to improve processes in finance Data visualization to give end-users access to real-time financial information and improve organizational performance Advanced analytics for finance operations to accelerate decision support Advanced analytics for overall business operations to uncover hidden growth opportunities. PwC, in its recent Finance Effectiveness Benchmark Study, reported 56 percent of finance executives surveyed believe improved technology would make finance processes more effective. And 70 percent of Chief Finance Officers (CFOs) expect digital developments will change the way their finance organization operates.
Provided in the following topics below are insights on how automation streamlines business operations in the finance department.
The increasing demand to reduce the number of delayed payments and improve the compliance rate with controlled user access and credentials leading to reduced fraudulent transactions are the major factors driving the growth of the Accounts Payable (AP) automation market, the ResearchAndMarkets reported.
The AP automation solution offers visibility of the entire AP processes from invoicing to receipt generation, ensuring proper approval, correct allocation, and timely payment and spend management. Moreover, it can be easily integrated with Enterprise Resource Planning (ERP), thereby providing an enhanced ability to adopt changes and increase the efficiency of payment processes.
AP automation also provides dashboards, account selections, compliance policies, routing rules, and approvals to deliver seamless proficiencies for an organization's operation.
The AP automation solution likewise offers 24/7 accessibility and real-time view of the invoice status and on-demand reporting capabilities enable businesses to make data-driven decisions for the growth of a business. Also, the solution empowers various stakeholders in an organization, including Chief Financial Officers (CFOs), managers, accountants, and the AP staff to carry out their tasks effectively, thereby reducing user-related errors in payments.
ResearchAndMarkets forecasted the global AP automation market size is expected to grow from US$1.9 billion in 2019 to US$3.1 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 11 percent during the forecast period.
North America is expected to have the largest market size for AP automation during the forecast period. It is also a steadily growing market in Canada.
In a separate report from ResearchAndMarkets, it cited the growth in digital payments over the past several years is now having a follow-on effect in the handling of invoiced payments, causing treasury to consider improving receivables management as well.
Digitization of receivables management process can help improve the bottom line as it solves the age-old problem of efficiently collecting money from buyers and optimizing cash application, resulting in reduced cost and better cash flow.
Receivables have in the past been considered a specialized operation, not necessarily viewed as generically connected to the other financial management processes, commented on the author of the report. This is beginning to change as more companies are recognizing that effective processing of inbound payments also has a significant impact on working capital effectiveness.
Banks are also getting the message as traditional lockbox services become inadequate to handle the increase of e-payments. Forward-thinking banks and their clients are now taking a closer look at supporting receivables processes with new technology.
Procure-to-pay is a type of convergence of corporate financial systems and processes. Futurist Bernard Marr explained the procurement and purchasing processes for most organizations are filled with paperwork and use different systems and files that are not compatible with one another. He wrote as machines through APIs can be integrated and the unstructured data is processed, the procurement system will eventually become paperless. Robots are ideally suited to tracking price changes among many suppliers.
Chennai-based Netmeds, one of the largest online pharmacies, reportedly uses artificial intelligence (AI) to forecast demand and procurement requirements by pincode and tie this up to the warehouse that services the respective pincode. Forecasts are made depending on historical sales data, the type of the product, season, marketing efforts, etc. Based on these forecasts, demands are generated to suppliers, based on the storage capacity of the warehouses, supplier ratings based on their previous fulfillment rates, time taken to fulfill demands, etc.
Through automation, new suppliers can be screened by checking their credit scores or tax information, query portals to get needed information and set them up in the operations system even without human intervention.
Online pharmacy Netmeds uses Robotic Process Automation (RPA) in various operations systems including onboarding of suppliers and interacting with their systems.
Netmeds Director & CTO Advait Suhas Pandit said they use machine learning and fuzzy logic to map their catalog to supplier catalogs.
"Over a period of time, on an average, we have been able to match 80 percent of a supplier’s catalog via our algorithms, which helps slash integration time tremendously," Pandit said. "Our algorithms have also been able to detect new pack sizes, patterns in the way suppliers name products in their catalog, which helps in on-going synchronization between supplier systems and ours.”
A digitalized auditing leverages on digital files for documentation instead of paper-based files. High efficiency and security are among its main benefits since the digital auditing process eliminates redundant activities that auditors perform even as it allows a digital trail of when and by whom each file was accessed.
Based on a case study RPA can streamline audit evidence collection, and potentially preparation activities, by taking standardized data and combining it from different sources into one audit work paper; as a result, RPA can execute audit tests that have been preprogrammed in other software applications, such as Excel or CaseWare IDEA (Moffitt et al.). In this manner, RPA can help auditors achieve near end-to-end audit process automation.
Another area of focus is the standardization of audit-relevant data. For RPA to be scalable and usable across many environments, data should contain consistent labels and be formatted identically. For example, different organizations might represent the last names of employees using different labels, such as “Employee Last Name,” “last name,” or “Payee last name,” causing hurdles in automation. By using a standard label (e.g., “Last_Name”), the format of this field can be standardized as text with a maximum length of 100 characters (see Audit Data Standards, AICPA Assurance Services Executive Committee Emerging Assurance Technologies Task Force, August 2013). Prototypes of the RPA solution can then be developed and tested to evaluate its success.
Monthly/Quarterly Close Process
A machine-backed monthly/quarterly close process allows finance teams to gain ample time to be more strategic since they won't only save time in consolidating and reconciling data but would get accurate figures in which business decisions will be based.
US-based professional services provider Deloitte noted that solution providers have been noticing the market need for innovations and offer solutions to improve the efficiency and
compliance of the financial close process as well as improvements in management reporting and analysis and external financial reporting and disclosure.
"Leveraging integrated technology solutions for financial close management improves governance, collaboration, and workflow around complex, labor-intensive activities," Deloitte observed. And besides digitized financial process & close management, RPA enables automated account reconciliation (operational & financial), manual journal voucher control, Intercompany (IC) accounting (transfers & eliminations) and disclosure management, analytics (including external benchmark data and big data analytics), among others. Gartner predicts these solutions as being the norm through 2019.
The use of AI with expense management like auditing travel expenses can reduce or even eliminate fraud by auditing the authenticity of the expense submitted by employees.
For instance, an expense report software automates the entire expense management process, from submitting a claim to analyzing business expenses. The ability to automatically import expenses from personal and company credit cards and accounts streamlines the expense report process and ensures no expenditures are overlooked.
Many organizations are recognizing the importance of applying AI in expense management as a recent study revealed that the travel and expense management software market is projected to grow at a CAGR of 10.99 percent during the period 2019-2023.
Revamping Finance Processes with QuickReach
An intelligent business process automation suite like QuickReach can help you improve overall productivity and efficiency and integrate paperless workflows into legacy systems, be not only in finance departments, but also in HR, office admin, and IT as well. QuickReach's built-in templates and easy-to-configure drag-and-drop visual interface allow you to deploy your first digital process in a matter of minutes!