By Clayton Weir, co-founder and head of product and strategy, FISPAN
The good news: Robots are not quite ready to take over our jobs in finance and accounting. But they are increasingly changing how we work and collaborate. This technology can allow teams to accomplish more tasks in a safer, more compliant way.
As automation becomes increasingly common in the financial services industry, accountants must learn how to best leverage new tools and services to help their organizations become more tech-savvy and efficient.
The state of accounting automation
A recent report from management consulting firm Robert Half found that accounting and finance organizations in North America have expanded their use of automation across all business processes tracked during the past year. Respondents also ranked automation as one of the top three technologies they expect to disrupt the workplace over the next five years.
While disruptive technologies certainly come with their share of challenges, they can also radically alter industries for the better. Automation is already increasing overall efficiency and productivity for accountants by relieving them of monotonous manual tasks. The automation of basic processes, including invoicing, data collection and entry, documentation management and records reconciliation, is swiftly becoming commonplace in the accounting world. This type of lift is especially important given that 40% of finance leaders feel their teams are understaffed.
More complex tasks such as financial report generation are also being automated. The same Robert Half study found 39% of companies with less than $500 million in revenue, and 44% of those with $500 million or more in revenue, have used automated financial report generation this year, compared to 16% and 12%, respectively, in 2018. Not surprisingly, the time it takes to generate financial reports has significantly decreased for most companies since 2018.
Some of the key technologies in accounting automation include:
- Robotic process automation (RPA), which automates repetitive, manual tasks like calculations.
- Artificial intelligence (AI), which can mimic human decision-making for tasks like risk assessment and fraud detection.
- Natural language processing (NLP), a subset of AI that helps computers understand and interpret human languages for tasks like invoice management.
- Machine learning (ML), another subset of AI that uses known data to identify patterns and make decisions on new data for tasks like reconciliation and compliance.
The human element
Despite incredible advancements in automation, some processes are still better left to humans. Financial planning and decision-making rely on human strategic-thinking skills. So although some aspects of accountants’ jobs may be winding down, the automation of certain processes allows them to concentrate on more meaningful tasks that add value to the company. Meanwhile, automation serves the role of improving productivity and reducing human error.
Using automation to your advantage
There are many benefits to automating accounting functions, but financial leaders often find the prospect of implementation daunting. Keep these tips in mind as you navigate the automation process:
- Integrate your bank and ERP systems. Many financial institutions provide direct connectivity with ERP and accounting systems. Integrating these systems allows you to manage all of your primary business processes via your own platform in a centralized location. Similarly, many cloud-based bookkeeping systems like Xero connect directly to your bank account. Smart bookkeeping ensures transactions are designated to the correct account, eliminating exhaustive manual work for operations, auditing and reporting teams.
- Lean on your bank, accounting ERP and TMS vendors. Whether directly or through their partner networks, your current banking vendors might have access to useful automation functionalities. These companies are often looking for eager beta testers for forthcoming tools. It never hurts to ask or take a peek through their app stores and partner ecosystems; the Quickbooks online app store alone has 75 partner apps listed under the keyword “automation.”
- Automate internal audits. Some vendors such as MindBridge AI provide internal audit platforms driven entirely by AI. MindBridge claims its platform can be configured in just 10 minutes and analyze data down to the subledger level.
- Use integrated receivables platforms. Some banks and fintechs now leverage AI to develop complicated receivables platforms that can automatically match inbound payments to outstanding items in your system and apply cash. The fintech HighRadius, for instance, claims 95% of its payments are posted without manual interventions.
- Link payment tools. Payment processing platforms can be linked to your accounting software through direct connections or third-party integrations, automating cash applications for merchant processing. Stripe and Paypal are two of the most common platforms used by accountants, but each comes with its quirks. If you want to input Stripe data into Xero or Quickbooks Online, you’ll need a third-party add-on tool like Silver Siphon or BankFeeds. And with Paypal, you’ll need to create a separate feed for each type of currency accepted.
- Automate Reconciliations. Many companies are already creating rules to automate tasks such as payroll and invoicing. But automation rules can be used for so much more; in fact, rules can actually be applied to any and all of the tips outlined above. For example, you can set up a rule that automatically allocates specific transactions, like software subscriptions or utility bills, to their corresponding accounts. Beyond rules, some companies are leveraging solutions such as BlackLine that help automate not only bank reconciliations but also the entire period end close.
Accounting automation is already disrupting the finance industry in major ways, and its use is expected to grow increasingly widespread. While this may shake up daily life for accountants, automation will ultimately make their jobs easier and increase the value of their roles. With more time to dedicate to strategic initiatives, accountants can become a guiding force for their organizations.
About Clayton Weir
Clayton Weir is the co-founder and chief strategy officer at FISPAN, leading product strategy, partnerships with ERPs and marketing. He previously founded the BC Tech HyperGrowth Accelerator and FinTech Industry Cluster. Clayton sits on the NACHA API Standardization Group, taught entrepreneurship at the University of British Columbia and is a board chairman and finance committee chairman of Canada’s largest independent car sharing organization. He holds an MBA from the University of British Columbia and is a chartered financial analyst (CFA).
Global Banking & Finance Review
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