Imagine month-end in the finance team when everything goes to plan and automation takes care of the most repetitive, manual work. No urgent Slack notifications, no stress, just smooth processes. 😅
In most businesses month-end is not like this. Many finance teams are overburdened with the weight of increasing expectations and inefficient workflows, tools and processes. Recent research by Workfellow found an average employee in a finance department does over 1000 copy-pastes a week and spends 50% of their time in repetitive tasks.
In response to this challenge comes finance process automation to the rescue. In this article we'll share the key things finance leaders need to know, including benefits, opportunities and challenges to automation in finance.
What is process automation?
Process automation is the use of technology to automate repetitive or manual tasks in order to increase efficiency and save time. In the finance function process automation leads to streamlined operations, cost savings, and better decision-making.
In simple terms, finance process automation is all about eliminating wasted work in your finance processes, but what's wrong with finance processes in the first place?
Some of the consistently recognized challenges include:
Inefficient processes. Many finance tasks are still performed manually, which leads to huge sunken costs and difficulties to maintain efficient processes.
Too much repetitive work. Finance operations still include many repetitive tasks and processes. Finance teams waste approximately 10% of their time in swivel chair processes logging in and copying information from one system to another.
Slow approvals. Many financial processes depend on manual interventions, such as manager approvals, which leads to challenges with throughput time and meeting deadlines.
Unreliable data and reporting. When much of financial reporting happens still in spreadsheets compiled with data from different source systems.
Benefits of finance process automation
Automation offers numerous benefits to businesses and individuals in managing their financial activities. Here are some of the main reasons why automation is essential in finance:
- Improve speed and efficiency. Automation streamlines and speeds up various finance processes, reducing the time and effort required to complete tasks. This allows businesses to operate more efficiently and allocate resources more effectively.
- Enhance accuracy and detail. Automation reduces the likelihood of human error in financial tasks, such as data entry, calculations, and reporting. This leads to more accurate financial data and better decision-making.
- Reduce costs. By automating repetitive and manual tasks, businesses can reduce labor costs and minimize the need for additional staff. Automation also helps lower the risk of costly errors, further contributing to cost savings.
- Quick to scale. Automated systems can easily handle increased workloads as businesses grow, without the need for additional staff. This enables companies to scale their finance operations more effectively, accommodating growth and expansion.
- Save time. By automating routine financial tasks, businesses can free up their finance teams to focus on more strategic activities, such as financial planning, risk management, and business development. This helps drive innovation and competitive advantage.
What are the key finance processes you can automate?
As a rule of thumb, any finance process that requires manual and repetitive work can be automated. Notable examples include AP, AR, reconciliations, expense approvals, payroll, financial forecasting and reporting.
Here are some of the key finance processes that can be automated:
- Accounts Payable (AP) and accounts receivable (AR): Automation can streamline invoice processing, payment approvals, and vendor management, reducing manual data entry and improving cash flow management. It can also automate customer billing, payment processing, and collections, ensuring timely and accurate transactions.
- Bank Reconciliation: Automated bank reconciliation tools can match transactions recorded in the accounting system with those from bank statements, significantly reducing the time and effort required for this task. This also helps in identifying discrepancies and potential fraud more quickly.
- Expense Management: Automation can help businesses track and manage employee expenses, such as travel, meals, and office supplies. By using expense management software, companies can automate expense report creation, approval workflows, and reimbursement processes.
- Payroll Processing: Automating payroll processing can help businesses calculate employee salaries, deductions, and taxes more accurately and efficiently. This includes tracking work hours, managing time-off requests, and ensuring compliance with local labor laws and tax regulations.
- Financial Reporting: Automated financial reporting tools can generate financial statements, budget reports, and other financial documents with minimal human intervention. This helps businesses save time, improve accuracy, and maintain consistency in their reporting.
- Budgeting and Forecasting: Automation tools can help businesses create budgets, track expenses, and forecast revenues more accurately by using historical data and advanced algorithms. This enables better financial planning and decision-making.
- Compliance and Risk Management: Automating compliance and risk management processes can help businesses monitor and address potential risks, such as fraud and non-compliance with regulations. This includes automating internal audits, tracking regulatory changes, and managing documentation.
Automating key finance processes can significantly improve efficiency, accuracy, and cost-effectiveness for businesses. By leveraging automation tools and technologies, companies can free up their finance teams to focus on more strategic tasks, ultimately leading to better financial performance and growth.
Finance process automation tools to consider
There are numerous software solutions available that enable finance process automation, helping businesses streamline their operations and improve efficiency. Here are six popular software solutions:
- Spendesk: Spendesk is an expense management software solution that helps businesses control and track employee spending. It offers features such as virtual and physical payment cards, real-time spending insights, and customizable spending policies. The platform simplifies expense approval workflows, receipt management, and expense reporting, streamlining the overall expense management process.
- Snowfox.ai: Snowfox.ai is an AI-powered financial forecasting and budgeting software that assists businesses in creating data-driven financial plans. By analyzing historical data and using machine learning algorithms, it provides accurate revenue and expense forecasts, helping organizations make informed financial decisions and improve their budgeting processes.
- Basware: Basware is a comprehensive procure-to-pay and e-invoicing software solution that streamlines procurement, accounts payable, and financial processes. It offers features such as supplier management, e-procurement, invoice automation, and payment processing. The platform helps businesses enhance visibility into their financial operations, enabling better decision-making and cost savings.
- SolveXia: SolveXia is a business process automation and data analytics software that automates repetitive, manual tasks in finance and other departments. It offers features such as data transformation, workflow automation, and reporting, helping businesses improve the efficiency and accuracy of their processes while reducing operational costs.
- Aico.ai: Aico.ai is an intelligent finance automation software that focuses on streamlining month-end close, reconciliations, and financial reporting processes. By leveraging artificial intelligence and machine learning, the platform automates repetitive tasks, improves data accuracy, and provides real-time financial insights to help businesses accelerate their financial close and enhance decision-making.
- Frevvo: Frevvo is a workflow automation software that simplifies the creation and management of dynamic forms and approval workflows. It offers features such as drag-and-drop form builders, customizable templates, and integration with various systems, including finance and ERP applications. Frevvo helps businesses automate processes, reduce manual work, and improve overall efficiency across various departments, including finance.
Map your automation opportunities with process intelligence
Increasingly leading finance teams are using process intelligence software to identify and map their key process automation opportunities. While process mining has been popular within manufacturing and retail segments, software solutions like Finance Process Intelligence from Workfellow now specifically cater to the needs of finance teams and operations.
Typically enterprise business customers uncover ~20% savings within 30 days of plug-and-play installation of Workfellow. Read case-study how one medium-sized business process outsourcing (BPO) firm uncovered over € 2 million ($2.17 million) in process waste.
Other Research and Content
Finance Process Automation Q&A
Automation is needed in finance to improve efficiency, accuracy, and cost-effectiveness. By automating repetitive, manual tasks, financial institutions can streamline their operations, reduce human error, and allow employees to focus on more strategic, value-added activities. This ultimately leads to better decision-making, increased productivity, and enhanced competitiveness in a rapidly evolving market landscape.
Process automation in the finance function refers to the implementation of software and technology to automate routine, manual tasks within the financial domain. This can include processes such as data entry, account reconciliation, invoice processing, and financial reporting. By automating these tasks, financial institutions can minimize errors, save time, and optimize resource allocation, leading to better overall performance and strategic insights.
Robotic Process Automation (RPA) can help finance by automating repetitive tasks, increasing accuracy, and reducing operational costs. RPA uses software robots to mimic human actions, executing tasks across multiple systems and applications. This enables finance teams to reallocate their time and resources to more strategic and analytical tasks, enhancing decision-making capabilities and enabling more agile responses to market fluctuations and regulatory changes.
An example of RPA in finance is the automation of accounts payable processes. RPA can be used to extract invoice data, match it with purchase orders, and validate the information before processing payments. By doing so, RPA significantly reduces manual effort, speeds up payment processing, minimizes errors, and improves supplier relationships. Additionally, the implementation of RPA in this context allows finance teams to gain better visibility into cash flow and working capital management.