Finance Automation: Benefits & Expert Tips

Employees estimate that automating workflows could save them up to 240 hours per year. When you consider the amount of data and tedious work that a finance team has to deal with in a day, you can safely assume this number is right or even potentially underestimated. 

To save time, decrease mistakes, and reduce compliance risk, many companies are making use of finance automation, and rightfully so. 

We’re going to uncover all there is to know about finance automation tools and why selecting the best automated accounting software could be the best thing you do for your business this whole year. 

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What is Finance Automation?

Finance automation is the use of software and technology to streamline otherwise manual processes and finance functions. Finance automation tools can be applied to handle: invoicing, payroll, reporting, budgeting, reconciliation, and more. 

With the aid of artificial intelligence (AI), finance automation increases efficiency, reduces mistakes, saves on costs, and increases internal control. While each automation software offers its own capabilities, the gist is that the solutions can accomplish a series of tasks by moving through predefined steps or conditions that then trigger the next action. 

Which Finance Processes Should Be Automated?

As you know, there is no shortage of to-do lists for your finance team. The great thing about finance automation software is that it is applicable for such a wide variety of use cases. 

Let’s take a look at some of the key processes that are well-suited for finance automation:

1. Accounts Receivable and Payable

Money owed by customers or to your vendors should ideally be paid on time. But, keeping track of all of the invoices and payments manually can be error-prone and time-consuming. This is especially true as transaction volume grows. 

Finance automation can take care of recurring invoices, recurring credit card payments, and overdue payment reminders. With the aid of automation, your business can stay atop of its cash flow management more closely and with less effort. 

2. Reporting

Financial reporting is often regulated, and even if it’s not regulated, its utmost accuracy is key to making informed and wise decisions for your business. Pulling and organizing data from disparate sources can cause major delays. 

Rather, with finance automation, all data is automatically centralized and cleaned. Then, the system can generate insightful reports leveraging accurate and up-to-date data so you can rely on a single source of truth. 

3. Analysis

The data you have is only useful if you can put it to use for insights. The best finance automation tools will transform your data into usable information. 

4. Expense Management 

Having to manage employee expenses is a drag. Finance automation software can streamline the process by aiding with expense reporting, approval, and reimbursement through electronic uploads and reviews. 

By integrating with your accounting systems, payment processing is also performed immediately with less delays. As a result, both management and employees are more satisfied. 

5. Account Reconciliation 

Account reconciliation is a primary task for the financial close process. Rather than spending days or months executing this must-have process, there are finance automation solutions that will do it for you. With finance automation, you can complete reconciliations 100x faster with 98% fewer errors. 

How to Set Up Finance Automation?

Although every finance team tends to deal with the same processes, each business’ goals and budgets differ. Check out the following steps for best practices to implement finance automation that will be successful for your unique case:

1. Define Current Processes 

Take stock of what current processes your team spends time on. Particularly prioritize those that are time-consuming, repetitive, high volume, and don’t require too much human thought. 

2. Analyze Existing Setup

Review how you’re currently completing these processes, and make note of any pain points.

3. Choose Automation Software

Research and select automation software that will fulfill your requirements.

4. Create a Strategy 

Plan to implement by setting a timeline, resources required, scope, and milestones.

5. Design Workflows 

Set up workflows within the system by laying out what action you want the software to take at certain points in time. Some of the best finance automation software offer drag-and-drop functionality and even pre-built templates.

6. Test Processes and Expand

Test the automated workflow to ensure all runs smoothly. If so, expand your use cases.

7. Continuously Monitor and Improve 

Be sure to continuously monitor the outcomes. Make any changes as necessary, and don’t forget to focus on continuous process improvement. 

What are the Benefits of Finance Automation?

When you read the benefits of finance automation, it’s no wonder why so many businesses are leveraging this technology. Some of the most salient advantages include:

1. Cost Savings

On average, organizations have reported cost savings of 32% by using intelligent automation. AI-powered automation enables your team to do more with less, resulting in lower costs and less man hours required to achieve tasks.

2. Enhanced Productivity

Rather than your team having to spend hours manually conducting data-heavy tasks, finance automation can free their time. With more time, they are able to increase productivity and focus on high-level and value-add tasks like providing greater insights for the business for better decision making..

3. Reduced Mistakes

Whether you have novices or veterans as part of your finance team, errors are inevitable. That’s just human nature. But, with finance automation, you can eliminate human error risk. 

4. Greater Compliance 

Finance automation ensures that regulatory standards are maintained with up-to-date and accurate data accessibility. Additionally, with top-grade security measures, businesses can remain confident that their data is not at risk of being breached. 

5. Better Visibility 

Management and stakeholders can oversee processes with greater visibility and internal control given the use of finance automation software. 

What are the Challenges of Finance Automation?

While finance automation has a lot to offer, it does not come without its key considerations that must be made before implementing a new technology. 

By being aware of and properly addressing these risks, finance leaders can ensure the successful implementation and ongoing use of finance automation. 

1. Compliance

While it’s true that a major upside of finance automation software is increased compliance, there is a caveat, and it’s a big one. Your automation tools will only be as good and as right as your data is. 

If there are inaccuracies in your existing data, it would behoove your team to go through and remedy these instances before connecting your new chosen automation tool to your existing legacy systems. 

2. Security

Every finance automation software is built differently. It’s up to your team to perform due diligence and ensure that the safety measures enacted are strong enough. 

For example, the best finance automation software will leverage security practices such as encryption, two-factor authentication, automatic updates, and data backups, to name a few. 

3. Skills Training

There could be some reluctance on behalf of your team when deploying a new software, especially if there are concerns that the technology will replace their roles. It’s really important to showcase how the technology is there to assist with their jobs, as opposed to taking over their jobs. 

Additionally, depending on the chosen software, the amount of training required will vary. You can certainly find solutions that are very intuitive for users of all technical levels to understand. 

How Does Finance Automation Work?

Finance automation software reduces the need for manual efforts. It does so by:

• Integrating with your existing tech stack: to combine, share, and communicate data 
• Performing data analysis: to transform raw data into valuable insights 
• Automating processes: by following rules and workflows set forth by the organization 
• Sharing alerts and notifications: to keep processes moving forward and reduce delays 
• Generating reports: to share valuable information with relevant stakeholders accordingly 

The most advanced finance automation software applies machine learning to the mix. With machine learning, the tool itself can learn over time from ingested data and be able to make informed decisions without the need for any human intervention. 

Additionally, AI and machine learning combine forces to deliver predictive analysis, or the use of historical trends and data to forecast the future. 

What are Finance Automation Best Practices?

Making any change within your business, either big or small, can cause some hesitation naturally. On your finance automation implementation journey, here are some best practices to remember to set your business and team up for success:

• Set Goals: Thoroughly define and assess business goals. By knowing what you wish to accomplish, you will be able to find the fitting solution, as well as monitor success over time with key metrics. 

• Perform Research: The time is now to start performing research to find the best technology for your business. Choosing the “right solution” can look like assessing vendor reputation, understanding the amount of support provided, reviewing your budget, and finding a solution that is scalable, able to integrate, and easy-to-use. 

• Start Slowly: Don’t rush automating every process at once. Prioritize the high-ticket and most repetitive processes first. Then, everything else can follow and fall into place. 

• Clear Communication: Clear communication and change management is what your team members deserve. Plus, when everyone is on board and on the same page, the solution will be more likely to be used properly and without reluctance. 

Wrap Up 

With each passing day, finance automation is becoming more and more of a must-have technology, rather than a nice-to-have option. Finance automation allows your business to save time and money, reduce mistakes, adhere to compliance, standardize processes, and even increase employee satisfaction! 

Ready to explore some of the best finance automation tools on the market? We’ve got you covered!