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How IA is driving a digital accounting and finance revolution

iStock 1425654728 - Global Banking | Finance

How IA is driving a digital accounting and finance revolution

Concetta Yates Headshot 1 - Global Banking | FinanceBy Concetta Yates, VP Customer Strategy and Industry Solutions, SS&C Blue Prism

Whereas once, the accounting and finance functions were siloed, now they are called on to leverage their expertise across every area of business, from identifying operational inefficiencies, to developing accurate business forecasting models, collecting valuable financial insights, and tracking employee progress.

The dynamic accounting evolution using robotic process automation (RPA) and IA to meet growing regulatory, audit, practice, corporate governance requirements, and transform core operational work is great, but where do you start?

Finance and accounting operations are well-suited to intelligent automation. If you think about the many tasks undertaken in these departments, they often follow a clear set of rules, such as extracting data from invoices and entering it into the financial software.

The first place to go to are places with defined workflows to speed up your throughput. If you have a process spanning multiple applications or interacting with other departments, this is a good candidate for intelligent automation. Also focus on the use of structured data so your team can target processes using well-defined data formats such as invoice form fields so as your automation advances, RPA can work with more unstructured data formats.

When determining which automation to launch first, single-out a high volume and low complexity process that will deliver compelling ROI and quickly prove the value of IA. Some cyclical business operations only happen occasionally such as an unexpected audit. Processes and tasks like this can often be assisted — if not replaced — by intelligent automation.

Typically, ideal automation candidates include:

  • Invoice processing
  • Accounts payable and receivable
  • Financial reporting
  • Payroll administration
  • Purchasing orders

As your intelligent automation practice advances, the scope of automations expands considerably, including processes involving decision-making, utilizing unstructured or semi-structured data, those poorly defined with multiple variations and much more.

However, it’s not all about reducing time on processes, or even improving the bottom line. As your intelligent automation matures, finance professionals can utilize their valuable strategic skills once relieved of their rules-based, procedural tasks. The core functions of the business continue, allowing the company to maintain its trajectory. And still, people are free to help the company make investment decisions, setting the business on a greater path to growth.

Wall Street to main street
While “Big Four” firms* are leading this trend, many small independent chartered accountants,
mid-size accounting firms, and in-house finance teams are still using traditional software packages to manage contract and payment analysis, payroll, or tax record retention, and to oversee employee tax IDs.

While most average main street accounting firms still manage annual tax assessments for self-employed workers and book-keeping services, today, they’re also multi-faceted business champions in all areas, from delivering essential accounting and compliance issues to offering tax planning advice and long-term strategic consultancy.

Equinix, for example, which provides interconnected digital infrastructure for its customers, including 248 data centers located on six continents, used intelligent automation as part of its end-to-end automated source-to-pay (S2P) process. Each year, $3 billion flows through purchase orders handled by this process. Digital workers pass work to one another as purchase requests, from first request and purchase order creation to validation.

Digital workers also close aged orders and help resolve emailed invoice disputes from over 6,000 global requestors. Executing 98% of vendor, employee, and intercompany payments, digital workers have enabled the finance payables team to focus on issue resolution and strategic initiatives instead of manual work.

These changes have improved data accuracy, reduced errors, and help Equinix pay vendors faster. Equinix’s intelligent automation program has reduced operational costs (currently estimated at $7 million) and improved customer satisfaction.

The savings have been invested into strategic initiatives to enhance the business and employee experience, giving around 175,000 hours back to employees so they can focus on improving their skillsets and contributing to the business in new ways.

By adopting IA, it means finance teams are also able to shift focus from chasing paper to providing advisory – and more profitable services – such as financial planning, tax planning, or business strategy. Firms can offer better value or are more cost-effective when it comes to the business planning advice, finance raising, forecasting and management strategies.

Following the money
Another largely untapped area for intelligent automation is fraud detection. While detecting fraud often sits within special financial crime or operation controls units, particularly within the FSI industry, there is still opportunity for accounting firms, in-house teams, or operations-led functions to consider how they can benefit from using IA in this space.

Every year financial fraud costs are impacting the reputation of affected institutions, with costs ultimately passed onto customers. The latest PwC Global Economic Crime and Fraud Survey reveals that – in 2022 – 51% of respondents experienced fraud in the previous two years, the highest level in 20 years of research. Globally, financial fraud is a $42 billion issue for large financial organizations, corporations, and enterprises alike.

With identity theft, employment, and insurance fraud on the rise, forensic accountants use their finance with legal investigative techniques to look within organizations for fraud, or financial irregularities, trace funds and identify assets, or validate losses.

lA is also an additional weapon in the accounting armory following the financial crash of 2008. Sometimes involved in valuing a business, forensic analytical skills are increasingly used in commercial negotiations. With greater demand for accountability and regulatory reform, forensic accounting has become more prevalent as the business environment has become more complex.

An example of this is Prudential plc, headquartered in London and Hong Kong, providing life and health insurance, and asset management to around 19 million customers in Asia and Africa.

The company uses bespoke fraud detection bots created by SS&C Blue Prism to analyze transaction data and detect fraudulent activity, across its 34 life businesses in 23 markets, served by more than 530,000 agents, 170 bank partners and 27,000 bank branches.

The automation can perform the same number of 100% approval check authorizations it would take 40 people to do in a year. Improving security for customers and ensuring Prudential’s 1,000 daily claims – worth around $100,000 – are 100% audit compliant, it has also drastically reduced losses due to fraud.

By using a mix of RPA and IA to automate mundane highly repeatable tasks, Prudential’s finance and customer teams can spend more of their time focused on higher-impact high-value business activities.

Strategic remote accounting
By making data instantly accessible and flexible in real-time for business owners and accountants, cloud-based automations are also impacting hybrid or remote accounting teams.

With secure user authentication and an internet connection, cloud-based accounting teams can better access and view financial data, and monitor transactions, making accounting possible and profitable from anywhere.

With IA performing automations or generating reports for teams, clients, and contractors alike, timely financial analysis and strategic planning is error-free and more focused, leaving financial experts to make greater – and more profitable – use of their expertise across every area of any business.

The accounting function of the future
While accounting principles and processes have changed little in the last 200 years, automation and cloud has transformed it from siloed function to strategic driving force.

Assisted by intelligent automation, artificial intelligence, and real-time data-driven technologies, finance teams who are able to benefit from more efficient workflows will reap greater benefits from streamlined accounting processes and play a role in their organizations.

Companies that adopt these technologies – whether their teams are office based or digital nomads – will be more resilient, agile, productive and enhance their competitive advantage in the market.

*The four largest global accounting firms measured by revenue are Deloitte, Ernst & Young, PricewaterhouseCoopers, and Klynveld Peat Marwick Goerdeler (KPMG).

Global Banking & Finance Review


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