Guide to finance automation: process and benefits

What is finance automation?

Finance automation is a way for financial departments or firms to use technology to automate repetitive, tedious tasks. Automation tools like artificial intelligence (AI) and robotic process automation (RPA) can help financial companies streamline processes, giving staff more time to focus on strategic business initiatives.

While these solutions can minimize tedious busywork, it’s also important to balance automation with human oversight to make sure systems are working as expected.

Key benefits of finance automation

For busy financial professionals, automation software can be truly transformative. Here are some benefits and reasons why:

Eliminates manual tasks

By automating tasks that don’t require strategic thinking (e.g., payroll processing or data entry), professionals can spend more time focusing on more impactful client work. This gives companies using automation a competitive edge.

Improves accuracy and compliance

Errors can be costly and time consuming. Automation software can reduce how often errors occur by scanning important documents for mistakes often overlooked by humans. The same holds true for compliance concerns: regulations can change frequently, so having an automated process for compliance checks is a great way to ensure teams are adhering to the latest policies.

Enhances operational efficiency

Because automation technology drastically reduces the time and effort needed to complete tasks, financial teams can get work done faster with processes streamlined by software.

Saves time and money

Increases in operational efficiency comes with time and cost savings. Faster, more effective processes give teams the power to get more done and bring greater value to their organizations.

Provides real-time financial insights

By automating data extraction, validation, and report generation, financial organizations can benefit from accurate real-time insights that enhance future decision-making.

Improves cash flow management

Teams can track cash flow as part of their automated reporting to better manage this important metric. Having an accurate way to gather real-time cash flow information means financial organizations can make informed choices that lead to optimal financial outcomes.

Offers better data analysis

Automation can pull vast quantities of data from multiple systems for quick, error-free analysis, helping your team get better insights faster.

Related read: ​​Automation: putting accounting on the right path

Key areas that benefit from finance automation

Finance workflow automation can be applied to a wide range of use cases for financial companies. Here are a few key areas where automation is often the most beneficial:

Bookkeeping

Using automation for bookkeeping can enhance accounting efficiency and improve the accuracy of financial records. It reduces the risk of human error, relieves the burden of tedious data entry, and streamlines reconciliation processes when corrections need to be made.

Accounts payable

Automating accounts payable (AP) streamlines the process of verifying invoices against purchase orders and simplifies approvals. Automating this area of financial operations is a great way to prevent late payments and build positive vendor relationships.

Payroll

Ensuring employees are paid correctly and on time is essential, but it can become more difficult to manage payroll processes as teams expand. Finance automation tools can help by reconciling time-keeping data across systems, calculating deductions, and auditing employee schedules for timely and accurate payroll processing.

Tax compliance

Calculations, filings, and reports related to taxes are often complex and time sensitive for financial organizations. Automation tools can save time and effort by pulling data from multiple sources, applying tax regulations, and creating the necessary reports. This helps businesses minimize errors and related penalties.

Reporting and analytics

Automation can significantly improve financial reporting and analysis by extracting insights from data across multiple systems. Automating data extraction, validation, and report generation provides teams with accurate, real-time insights to enhance decision-making.

Implementing finance automation

Implementing new technologies can feel overwhelming, especially at first. By taking it one step at a time, financial organizations can successfully implement automation and benefit from its use.

Step 1: Determine financial automation needs.

Addressing financial issues on a case-by-case basis will only lead to temporary solutions. It’s best for organizations to strategically assess their insights, data, and teams to think comprehensively about where automation can have the greatest impact.

Step 2: Evaluate current resources

Assess current software and tools to determine suitability for finance process automation. Using low-code or no-code automation software can speed up implementation without the need for extensive IT support.

Step 3: Invest in a high-quality solution

Once organizations determine what their needs for automation are, it’s time to conduct research and find the best possible software solution. Look for tools with strong security and user-friendly features that can effectively address multiple issues for the organization, such as boosting efficiency, improving client satisfaction, and offering actionable insights.

Step 4: Implement automation

Use the chosen solution to configure automation for each task and process based on their respective triggers. Thoroughly test an automated financial process before using it across the organization.

Step 5: Communication and training

Financial organizations should clearly communicate their plan to implement automation with all affected teams and explain the benefits of the new software. Make sure to conduct training sessions that demonstrate how the solution will help financial professionals work more efficiently and effectively.

Challenges and strategies to overcome them

While automation comes with many benefits, organizations may run into issues when implementing new solutions. Here are a few common challenges financial organizations face, along with strategies for dealing with them:

Data quality and integration

One key challenge is ensuring data quality and seamless integration across systems. Financial data tends to be scattered across multiple sources, such as ERP systems and spreadsheets. Without the right configurations, automation tools might end up misinterpreting which data is supposed to be worked with, leading to errors and confusion.

To solve this challenge, organizations can establish clear frameworks for how data should be stored and invest in tools for data cleaning and data integration. Establishing a centralized data repository can also make it easier for automation tools to pull the right data at the right time.

Compatibility with legacy systems

Many organizations continue to depend on legacy systems for their financial operations. It can be difficult — sometimes impossible — to integrate these outdated systems with modern automation tools.

This is one of the many reasons why financial organizations should consider transitioning away from legacy systems and adopting newer technologies. Implementing cloud-based applications and other modern solutions is a great way to improve integration and automation capabilities.

Staff adoption

Introducing new software inevitably changes existing workflows, processes, and organizational culture. This can sometimes be a challenge for staff. Those who aren’t accustomed to relying on automation software may even have concerns about job security.

Organizations must prioritize clear communication, employee training, and stakeholder involvement throughout the process of adopting automation tools. By demonstrating the benefits of new technology, such as reduced manual effort and increased productivity, companies can alleviate staff concerns and encourage widespread adoption.

Compliance concerns

For financial organizations, compliance is always a top concern. Professionals must constantly stay abreast of compliance and regulatory requirements, including accounting standards, tax regulations, and data privacy policies. Some believe it’s too difficult to ensure that automation tools meet these requirements at all times.

Companies can overcome this challenge by choosing finance automation tools that are compliant with the financial industry and backed by legal expertise. With the right solution, finance teams can rely on automation to bolster compliance without needing to make excessive adjustments to the system.

Security

Financial data is highly sensitive. It’s crucial to protect this information from cyber threats like breaches, fraud, and unauthorized access. In some cases, automating financial processes can introduce new security risks, but only when organizations aren’t investing in optimal automation solutions.

The ideal automation software will maintain the highest standard of data security at every step of an automated workflow. Financial teams should never have to question the strength of their organization’s data security measures.

Related read: Simple, secure solutions in a complex banking world

Harness the benefits of finance automation for your organization

Finance automation can transform the way professionals work. The technology introduces a host of benefits, including increased efficiency, reduced errors, and real-time insights that can give organizations a competitive edge. Make sure you’re investing in secure and compliant automation solutions designed that help your organization overcome challenges and reach its true potential.