By: Siddharth Wadehra, Head of Research
Automation is creeping its way into almost all aspects of business today. Understandably, with the accuracy required for key tasks like accounts reconciliation, journal entries, and preparing financial statements, the finance department is almost always among the first departments where companies look to benefit from automation. In fact, a recent McKinsey study suggests that automation in business processes could help 60% of the occupations save 30% of their time. Some of these processes include approving paperwork and processing documentation which are among the tasks performed by executives in the finance department. Another study by the market research firm IDC indicates that organizations lose up to as much as 20-30% of the revenue every year due to inefficient processes.
Understandably, the finance department in any organization is complex machinery. With executives working tirelessly processing paperwork, approving budgets, and maintaining capital expenditures, the margin for error is minimal. However, with so many processes that the finance department has, how do you exactly make the decision of choosing which one to automate first? While your department might already have a bucket list of the desirable financial processes which they would like to be automated, this article hopes to give you a snapshot of some of the low hanging fruits which you could kickstart your financial process automation with and see credible results in almost no time.
Surprisingly, for a large number of companies, a majority of finance processes are still completed using spreadsheets and emails. A survey revealed that more than half of the executives used spreadsheets for financial processes such as budgeting and only about 6% of them are satisfied. While spreadsheets and emails are amazing tools themselves, it must be noted that they have different purposes. Using them for finance processes could be error-prone, time-consuming, and often unproductive. Ideally, while you might like your automation suite to take care of all your internal finance processes, realistically that would probably be phased out over a longer period of time. With this, we have compiled below five processes in your finance department that you should look to automate.
1. Budget Approvals
More often than not, budgets would undeniably need to be approved by multiple stakeholders across various teams and at different levels. Since this is a person-dependent process, it is possible for approvals to be delayed for various reasons: either the executive responsible is traveling or unavailable or quite simply too busy to sign off the approval documentation.
This might be a perfect use-case for automation to remove the bottleneck and the delay in the budget processing. By having rule-based triggers and decision-making logic, the system could make decisions on whether certain pre-set parameters are satisfied. This would allow a seamless flow until the approval request is routed to the responsible executive, sending them a notification that could be approved with a tap of a button on their mobile device without having to dig into the inbox for email threads or update lengthy paperwork.
2. Vendor/Supplier Purchase Orders (PO)
One of the most critical processes in the finance department which should be automated is the vendor/supplier management process. A huge chunk of these processes involves PO generation, settlement, a dispute among others.
In our experience, automation makes a huge difference in the finance department’s vendor and supplier management processes. The automation platform would provide you with the ability to take care of your POs seamlessly. You can generate POs from any location, even if you are traveling. The ability to manage the PO, to know the exact status, to initiate any communication, and to speed up the entire process from both sides could be easily enabled by automation. Ideally, the automation platform would have reporting capabilities that would help the finance executives stay on top of managing all their vendors and suppliers.
Generating or viewing reports on the fly would provide you with insights to track, monitor, and analyze the vendors and their performances without having to dig deeper. Undoubtedly, the vendor and/or supplier management process is among the most important processes which the finance department could look to automate immediately.
3. Expense Management
Expense management is an extremely complicated process; the task of managing often is the responsibility of the finance department. This could involve employee incurred expenses during business trips or organizational expenditure on asset purchases. Understandably, a number of stakeholders are involved across various functions with varying levels of budget approvals based on their hierarchy in the system. This makes the task difficult and time-consuming for the analyst in the finance department. Consider an employee who is traveling on business and raises a request with an estimated cost. A simple form on the automation platform to capture all the necessary details coupled with logic in the system which approves permitted expenses up to a certain threshold would undoubtedly save a lot of manual effort.
Automation could have a key role in the expense management process for the finance department. Certain pre-set rules according to the spending policy could automatically trigger approvals or alerts to managers for their discretion on the approval. More importantly, the reporting module of your automation platform would help analyze spending patterns and identify areas that might need to be re-looked at.
4. Managing Expenditures (Investments, capital, etc.)
Beyond just maintaining daily operations workflow, the finance department has a key role to play in facilitating approvals related to the strategic direction the company intends to take on in the future. It could possibly be investing in a new business proposition, exploring a partnership or a merger, or incorporating new technology that would help them stay competitive in the marketplace. In each of the above cases, speed is absolutely vital to sustaining a competitive edge. Larger companies usually do not have central decision-making authority and with various stakeholders and departments involved; things could get complicated. Automation in finance process management would take care of this by seamlessly connecting all stakeholders and fast-tracking the process with the level of intelligence built into it.
By optimizing and streamlining various aspects of the expenditure process, management would allow the organization to focus on activities that would be critical to take the company into the future.
5. Invoice Processing
A huge chunk of the automation effort in the finance department would probably be focused on removing the cumbersome paper trails piling up on the desk and replace it with automated notifications and insights from reports which would be available at the tap of a click. Invoice processing is probably the most monotonous and repetitive task in finance. Invoice processing does not only involve accurately and timely processing of invoices, but also aspects like accounts reconciliation, journal entries, recurring payment, periodic billing take a significant amount of time and effort. By setting up reports indicating the key-metrics you need to consider would provide you with insights to make an educated decision.
Automating the workflow would allow the finance department creating and analyzing financial documents to that of strategizing and advisory.
Moving Beyond Spreadsheets in Finance - The QuickReach Way
Spreadsheets and emails are not built for finance processes. They often arm the associates with incomplete and inaccurate information and substantial man-hours are lost in performing non-value-adding tasks. An automation system which has all of the features listed above will not just help eliminate these pitfalls but also speed up processes and direct the department towards growth.
There are innumerable studies that point out the importance of automation in finance processes. An Ernst and Young study suggests that 65% of surveyed respondents believed that automating finance processes would be a significant priority in the near future. Process automation platforms like QuickReach empower you with all that you need to navigate the complex world of finance processes.
Reach out to one of our customer success team members here or get started on your free trial to explore the potential benefits which QuickReach could bring to your existing finance processes.
Related Articles: