By automating your financial business processes, you can realise huge efficiency gains, reduce costs, avoid errors, increase employee satisfaction, and combat fraud. In this article, we will explain what financial automation comprises and how you can benefit from automating your financial business processes.
During each industrial revolution, there have been companies that succeeded in adopting the technological breakthroughs of the era timely. Entrepreneurs that failed to harness steam power and mechanise in the First Industrial Revolution couldn’t keep up. Industries that didn’t switch to mass production and electrical power in the Second Industrial Revolution soon became obsolete. Companies that didn’t fully embrace digitalisation in the Third Industrial Revolution have gone the way of the dinosaur and are extinct by now.
The common theme in each of the Industrial Revolutions is the advent of a specific technology that then went on to transform traditional production and business methods fundamentally. In the Fourth Industrial Revolution, we are now witnessing the introduction and acceleration of innovative technologies such as the Internet of Things (IoT), Augmented Reality (VR), Artificial Intelligence (AI), Machine Learning (ML), Robotic Process Automation (RPA), and Natural Language Processing (NLP).
The Fourth Industrial Revolution: automating your financial business processes
To remain successful, companies need to move towards using the innovations unleashed by the Fourth Industrial Revolution in all their business processes. Many companies have already succeeded in integrating these technological innovations in their manufacturing processes and service models. Unfortunately, most financial business processes still appear to be stuck in the digitalisation phase of the Third Industrial Revolution. Companies often continue to rely on traditional systems to support financial operations. As a result, financial procedures are slow and error prone due to repetitive manual tasks and inefficient work processes. Whereas companies can realise huge efficiency gains, reduce costs, avoid errors, increase employee satisfaction, and combat fraud by automating their financial business processes.
Finance Automation: automate your company’s finance processes
Financial automation rates can now be significantly increased in financial business processes thanks to the rise of:
- Artificial intelligence: the development of computer systems that is able to perform tasks normally requires human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages;
- Machine learning: the use and development of computer systems that are able to learn and adapt without following explicit instructions, by using algorithms and statistical models to analyse and draw inferences from patterns in data;
- Deep learning: a type of machine learning based on artificial neural networks in which multiple layers of processing are used to extract progressively higher level features from data. Artificial neural networks are computational models that mimic the way nerve cells work in the human brain.
Artificial Intelligence in finance automation
Finance automation technology integrates AI in Finance, as well as machine learning and deep learning for use in areas such as financial analysis, payroll administration, invoice automation, collections actions, and preparing financial statements. The use of such automated software reduces the need for human intervention in these activities.
With technological solutions such as Optical Character Recognition (OCR) combined with AI, core finance tasks - such as invoicing and expense management – can now be automated. Your finance department will no longer be burdened with mind-numbing, error-prone, repetitive, manual tasks and can focus more on strategic issues, compliance, and dealing with exceptions.
Examples of financial automation technologies that can be applied to financial business processes
Document automation enables the generation and processing of electronic documents. Document generation systems involve logic-based systems that use pre-existing text and/or data segments to compile a new document. Generating standardised invoices or financial statements is an example of this technology. You can also use technologies like machine learning and OCR to auto-extract, validate and enrich documents. This enables the automated processing of most documents (e.g., invoices).
Robotic Process Automation (RPA)
RPA is a popular tool that uses screen-scraping and other technologies to create specialised agents that can automate secretarial tasks. In finance, RPA bots can run repetitive, rule-based, monotone tasks and link different systems so that the businesses can free people from low-skill manual tasks as well as help them to focus on higher value-added activities.
Process mining allows you to analyse your processes and identify the strengths and weaknesses of your processes in order to take action for improvement. With process mining, finance teams can discover whether their invoicing processes take too long or cost more than they should. They can also identify steps in their source-to-pay process that can be automated.
Chatbots and Conversational Agents
A chatbot is a computer programme that allows people to obtain information from machines using text and voice. In finance, conversational agents can be used as virtual assistants for finance teams, or they can help automate communication between finance teams and suppliers and customers.
Rule-based automation helps businesses define and execute requirements for various operations in compliance with the rules. Machine learning, on the other hand, learns from past transactions and customer decisions, identifies decision-making patterns, and uses these patterns to make future choices. Finance teams can benefit from this technology, for example, to run accurate simulations and take precautions for possible adverse scenarios.
Finance processes that could benefit considerably from automation include:
O2C is the step-by-step process of receiving customers’ orders to receiving the outstanding balance.
Source-to-Pay (S2P)S2P or purchase-to-pay or procure-to-pay (P2P) is a process that starts with finding, negotiating with, and contracting the suppliers of goods, and culminates in final payment for those goods (including accounts payable / invoice automation).
Payroll AdministrationPayroll administration comprises the activities required to arrange the compensation of employees for hours worked. These can include the control of overall hours served by staff, the rate of pay and the allocation of compensation to staff.
Expense ReimbursementExpense management automation will not only raise consistency and accuracy of financial records, but also help with flexible decision-making and meeting compliance. Furthermore, eliminating manual and tedious work will free up time for finance teams to concentrate on tasks that are more crucial for business growth.
Financial CloseFinancial close is the monthly practice of going through a company’s transactions in the preceding month, closing out temporary accounts, and posting the retained earnings into the company’s records. Accuracy is crucial in this process.
Financial Planning and AnalysisFinancial planning includes the onerous task of the preparation and compilation of financial statements by a variety of departments, which can be at least partially automated.
Accounts ReconciliationAccounts reconciliation is another low-skill task for finance teams. However, any mistakes might cause significant disruption to businesses.
Tax administrationTax administration automation includes eliminating manual work on processes like submitting tax returns and claiming domestic and foreign VAT refunds on expenses.
The benefits of finance automation
Finance teams that rely on manual processes and tools like email and spreadsheets to manage financial data and operations are prone to confusion, data loss and errors. By standardising, automating and integrating these processes, teams can minimise mistakes, improve collaboration and increase overall productivity. The benefits of finance automation are numerous:
Automation in finance can cut data entry and processing costs by up to 80%.
With faster and more efficient processes, businesses can handle more tasks in the same amount of time. Accounts Payable automation can reduce the cycle time to four days, while the manual process takes up to 17 days for most companies, which in turn can help companies obtain discounts by making early payments.
Improved financial data security
Financial automation ensures that financial workflows can proceed error-free and that any errors are quickly detected and corrected.
Fewer manual reports
Financial process automation reduces the errors occurred when performing manual tasks. People make mistakes, which is an inevitable part of being human, so automation can really make a difference here.
Control of finance operations
With financial process automation, you remain in-control of the whole process from A to Z.
Automated, real-time data collection
Real-time is crucial in this day and age, it is beneficial to be able to respond quickly to each new development and take the right action immediately.
Improved data visibility and integrity
Financial automation makes it easier to track the financial workflows and build an audit trail.
More time for strategic work
When processes are organised and manual work is automated, teams can spend more time on interpreting data, providing advice, and making sound business decisions.
Higher employee satisfaction
Employees will no longer have to perform boring repetitive manual tasks and will be able to focus on more interesting and rewarding work with a higher added value.
What are the main challenges for finance automation?
Although the benefits of automating finance processes are numerous, businesses can still face many challenges along the way:
- Finance operations are the backbone of the business; therefore, companies are often reluctant to make changes in their finance business processes.
- Implementing any changes in this area could meet with powerful resistance and distrust from employees with a strong preference for the status quo.
- Regulatory challenges have to be overcome.
- Risk issues have to be taken into consideration.
Fortunately, specialised finance automation companies such as Yokoy offer innovative finance automation tools that can easily be integrated with your existing financial software and IT systems. You won’t have to make any significant changes to your processes and workflows. Therefore, you can increase your level of automation without taking the risk of altering the trusted systems that you currently have in place. In addition, you will not be confronted with huge capital outlays and a burdensome and long drawn-out implementation process. Consequently, you can reap the benefits of automating your finance processes practically immediately.
With AI-based automation of financial back-end processes, you can save more than 90% of the time spent on recording and processing supplier invoices, expense claims, corporate credit cards, and claiming VAT refunds, while actively incorporating fraud prevention.
If you still aren’t convinced, then it might be time to take a closer look at Yokoy’s AI-powered all-in-one intelligent and secure spend management solution. Yokoy offers expense management automation, invoice processing, claiming VAT refunds, and smart company cards all in one user-friendly and state-of-the-art platform.