Neil Kinson, Chief of Staff at Redwood Software
Finance departments, in common with most other business units, are under increasing pressure to do more with less, and are now required to find more agile ways of working in order to maximise their efficiency.
Many of the most complex and high-pressured activities within an organisation are typically financial. Finance relies heavily on a large number of time-consuming, often repetitive tasks, however, that for manual staff can serve as a distraction from more high-level work. The financial close process, for example, can often comprise between 50 and 70 processes, and hundreds of sub-processes, each of which needs to be managed across different departments and geographies, while maintaining multiple levels of controls and approvals. What’s more, the pressure to deliver a 100 percent accurate close can often lead to a fraught atmosphere, with finance teams regularly required to work overtime.
Repeatable and regular processes, particularly those of a highly structured, rules-based nature such as these, are prime candidates for automation. Whether it is recording and reconciling entries and accounts, or fully automating expense reports, employing automation technology will enable wider benefits across the business. In the case of the financial close, automation will not only remove the repetitive human burden, but can also move the process from an annual forecast to a continuous close that provides fresh data rather than figures that are months, or even years, out of date.
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A report by Deloitte sums up the benefits of automation in the finance department by saying: “Improvement efforts should prioritise historically manual processes that consume considerable time and effort. Such processes lend themselves to automation, and typically offer significant rewards in terms of efficiency and internal control.”
Reaping the benefits
With so many of its processes both repetitive and predictable in terms of input and output, finance fits perfectly with automation. Its benefits do not just lend themselves to relieving the level of manual effort, either. Error management, for example, can result in a significant loss of time. All of the time spent on manually reconciling errors could be much better spent on more strategic, valuable data analysis instead.
By way of illustration, consider the need to integrate a complex SAP system with an organisation’s other proprietary platforms and human processes. Should an IDoc file contain incorrect information, reporting systems would fail which, in turn, would require a person to intervene, identify the error and fix it, before resubmitting it, all of which would cause them to fall behind scheduled delivery deadlines. With automated processes, the error would be recognised by the system, which would then automatically rectify and submit it. Alternatively, if it were not possible to automatically correct the error, it would immediately be flagged as requiring attention, instead of remaining unaddressed until the report failed to run.
In short, automation means that an incorrectly entered or missing PO or invoice number need no longer cause delays in reporting. In addition, rather than relying on manual processes, it offers improved audit compliance, and enables disparate systems to be connected when once they might have been unable to communicate directly with each other.
It’s important to note, however, that automation isn’t a case of simply replicating all of an organisation’s processes with robots, but rather a continual process in which every step is evaluated before responsibility is passed on.
Faster, more competitive
Embracing automation technology will deliver more accurate data, and significantly reduce the amount of time it takes to complete finance processes. In turn, this will lead to faster, more accurate decision-making capabilities across the wider business, thereby giving it a more competitive edge.
What’s more, as automation is adopted beyond just the finance team, so there will be a requirement for employees that possess the analytical skills sets and technical, or forensic, knowledge needed to underpin technology and capitalise on its benefits. By increasing the level of such high-value human activity, the value of automating back-office processes will only continue to grow.
Many finance organisations have invested heavily inmoving many processes to lower cost centres. This can prove counter-productive, however, with many of these processes still being performed by people who continue to carry out manually repetitive, rules-based tasks.
Businesses no longer need to maintain entire teams of people in order to carry out repetitive processes. However, rather than replacing talent, the introduction of automation technology should be seen as a way of re-imagining and automating repetitive tasks. Human error will be removed, data will be more consistent, and finance teams in particular will be freed up to focus on more important, higher value work.