Running a company means managing a complex set of processes. Money must be distributed in the proper ways internally, and external stakeholders must be paid quickly. Many companies think their finance processes are automated because they use different tools and software. But when these processes are broken down, it becomes clear that many functions actually depend on significant manual effort and repetitive tasks.
Your company may have an accounting system that monitors expenses and an enterprise resource planning system for procurement. The two systems may streamline some financial processes, but your finance team may still have to rely on manual operations for other processes. For instance, spreadsheets may have to be updated manually, payment requests may require manual processing, and pricing quotes may be sent manually. This is time-consuming and delays processes.
By automating finance processes, you achieve greater visibility, error-free performance, and have complete control over your business’ finances. A workflow management tool can automate accounting, administration, and compliance processes, empowering the finance team to deliver operational efficiencies and drive growth. Your company can reduce operational costs and identify new avenues of growth by dedicating more time to initiatives that drive value and profits. According to Gartner, 80% of finance leaders have already implemented or are considering automation.
Challenges Faced by the Finance Team Due to Manual Workflows
Manual accounting processes take time. Accountants use paper documents and ledgers that need sorting, recording, and processing. Manual filing systems can also cause receipts and invoices to get lost or misplaced. And because each document takes time to process, the accounting team gets overworked. Overworked employees are unhappy and offer substandard performance.
Lack of Visibility and Control
Accountants deal with a lot of documents every day, from bills to bank statements. These documents can be difficult to track if manual processes are used. For example, monitoring and reporting payments may require constant manual tracking and take longer than expected.
It’s Easy to Make Errors
People make mistakes. They can misspell names, input incorrect account numbers, or add wrong dates or pricing information. With a manual system, errors take longer to track and correct. Also, it can be very hard to locate a wrongly filed document.
Long Invoice Approval Process
Oftentimes, invoices require verification by supervisors, department heads, and even CFOs. A manual approval process is very inefficient because it takes very long. And if the finance department doesn’t pay invoices or bills on time, suppliers may stop doing business with the company. With a manual system, it’s easy for documents to get misplaced or sit on a manager’s desk for days or weeks. Manually managing complex or simple documents is difficult and requires a lot of human resources.
One of the biggest challenges of manual accounting is security. Because paper documents are used, it’s very difficult to track and monitor sensitive business information. Documents can get copied, stolen, or altered without anyone knowing. This can result in a security or data privacy breach that can have grave consequences. You may damage your business reputation, lose customers, and face losses and legal issues.
Advantages of Automating Finance Workflows
The backbone of a financially viable organization is sound financial management. Automating financial processes allows organizations to save both time and money. Here are a few reasons why finance process automation is important:
- Improved accuracy: Automated processes are optimized hence more accurate. Because processes are standardized, there are no duplicate or overrated claims. Improved accuracy also enables accurate planning and empowers leaders to create financial strategies with confidence.
- Better control: Workflow automation ensures teams adhere to best practices and standardize their operations. They mitigate errors by taking advantage of policy-based controls. This leads to higher SLA (Service Level Agreement) compliance and increased customer satisfaction.
- Greater visibility: An automated finance system that connects all processes and gathers data from them offers visibility into all the moving parts in your pipelines—invoices, vendor information, contracts, and more. Employees don’t have to use multiple tools or sort through information manually.
- Effective use of resources: When finance processes are automated, your team spends less time trying to figure out how to perform specific processes. More of their time is dedicated to creating reports, crunching numbers, and making sound business decisions.
- Quick approval flows: Thanks to automation, approvals aren’t bottlenecks that slow down finance processes. They are obtained on time in a hassle-free manner. Additionally, you can set rules to ensure transactions aren’t completed without proper approval.
- Easy integration: Automation software for finance can integrate with many popular financial tools, like QuickBooks and Excel. It combines all the tools of a finance department ensuring seamless collaboration.
- Information is easily accessible: Workflow automation breaks down silos and improves communication. It makes it easy to create requests, track information, view data, and generate reports. Processes are more consistent thanks to customized form fills and notifications. Work is streamlined, which means the finance team has fewer routine tasks to deal with.
5 Must-Have Finance Workflows in Every Organization
Process automation can greatly benefit both the employer and the employee. It helps save labor costs, speeds up closures, improves cash management, and makes a company more profitable. Here are 5 finance workflows every organization must automate:
- Accounts Payable: In most organizations, the accounts payable process is filled with inconsistencies. There’s a lack of standardization for payment requests and invoices, which leaves a lot of room for error. Automating accounts payable can significantly reduce the error margin and also streamline invoice generation and approval.
- Accounts Receivable: Process automation software can help companies optimize their invoicing and payment processes. It ensures customers pay for the goods or services they receive and streamlines financial transactions between a company and its customers.
- Invoice and Budget Approvals: Oftentimes, approving expense claims or vendor invoices is a tedious process. It involves a lot of scrutiny and validation of data. Automation shortens the approval process, preventing bottlenecks and delays. For example, Cricket Australia enhanced business efficiency using workflow automation. Before automation, the organization used manual invoicing procedures. It took over 15 minutes to raise a single invoice. Thanks to automation, Cricket Australia now raises multiple invoices every month quickly and easily.
- Tax Accounting: Most accountants prepare tax returns and tax payments manually, which is time-consuming. Manual, repetitive, and time-consuming activities don’t allow accountants to focus on anything else during tax season. Automating these processes improves the speed and accuracy of processing tax claims.
- Fraud Detection: Some companies use manual fraud audit techniques such as discovery sampling. Because the process isn’t automated, most cases of fraud are only discovered after they happen. With the right parameters in place, automation software can help detect fraud and even eradicate it. It can also prevent a recurrence in the future.
Many companies have already implemented–or are planning to implement–process automation for their finance functions. Over 35% of financial services firms have achieved a 2-5% revenue increase because of automation. It drives greater efficiency, compliance, productivity, and gives a business a competitive edge.