From reconciliation to reporting, here are 5 of the best areas to apply accounting automation to your finance department for more efficiency.
The workload of a company’s finance and accounting department is immensely process- and data-heavy, and its team members often deal with fast-approaching deadlines and strict time constraints.
For many finance and accounting teams, the consistent onslaught of report processing, reconciliation, analysis, data and document management, month- and year-end closings, and other key responsibilities can cause stress, pressure, and oftentimes errors or omissions.
Failing to keep up with the analysis, reporting and management of accurate financial and accounting data can have dire consequences for any business, from issues with payroll and benefits, to reporting an unreliable depiction of the company’s financial health, to failing to meet key legal and compliance regulations.
A survey from The Association of Accountants and Finance Professionals in Business (IMA) found that the four finance and accounting processes that require the most time and effort include balance sheet account reconciliations (44%), variance analysis (39%), bank and credit card reconciliations (36%), and journal entry creation (28%). Inventory reconciliations (26%), cost allocations (21%), revenue recognition (16%), and labor reconciliations (12%), followed close behind.
And these are only some of the responsibilities of a finance department.
To free up time for accounting teams to focus on the most strategic work on their plates, here are some ways that your company can benefit from deploying automation to your financial processes and systems.
Financial report processing
Maintaining an accurate, real-time picture of financial health is critical to your business. At most organizations, creating financial reports involves running multiple large Excel files simultaneously, organizing them into Word docs, PDFs, or other file types—all of which creates unnecessary and frustrating tasks that can result in stalls, bottlenecks and long execution times.
By automating these processes, businesses can reduce time-to-completion by 50% or more by combining data from different files and systems, and consolidating them into clear, organized and accurate reports and presentations. This sidesteps the tedious and often error-prone work caused by completing it manually, and speeds up workflows for the entire department.
Invoice process automation
A company may use any number of third-party vendors to keep their operations profitable, from just a few, to hundreds or thousands. Processing invoices for products and services in an accurate and timely fashion is a key responsibility of the finance and accounting department, and is absolutely vital to maintaining strong relationships with your vendors.
The invoice process, however, typically involves a ton of data, multiple internal and external stakeholders, requires various communication touchpoints, and gets slowed down even further by discrepancy resolution.
Invoice automation enables your team to parse out information intake from relevant fields using OCR and other technologies, and properly organize it within your systems. From there, your team can automate communication touchpoints, including initial approval and multiple reminders, until the final sign-off is gathered. Then the data can be pushed to your payment system to complete the transaction.
Automation offers complete control over your process, and greater visibility for stakeholders, resulting in meaningful time savings and cost efficiencies.
Managing data integrity
Both internal and external factors outside the control of your finance and accounting team can cause your business to operate on old numbers and outdated policies and information.
With the consistent influx of internal data across multiple systems, changing vendor and supplier prices and policies, as well as various compliance regulations, tracking down updated and accurate data can be an impossible chore.
When data, files and forms are automated, and your people and systems are communicating in a meaningful and trackable way, manual errors are eliminated, and your team can ensure you’re working from the most up-to-date information.
Balancing workloads and decreasing bottlenecks
For finance and accounting teams, certain times of the year bring heavier workloads than others. Closing out the books at the end of each month, quarter and year can place a much heavier burden on your team and cause them to feel overworked and overwhelmed as deadlines draw near.
According to the IMA report, some of the greatest hurdles in the closing process include getting information from other departments (29%), limited staff resources (22%), limitations of current software systems (19%), and the time spent correcting data errors (9%)
Using automation, these teams can decrease bottlenecks and spread out the work normally concentrated at certain times of the year. Automated touchpoints and reminders can minimize lack of communication with other departments and free up staff resources from manual work. This empowers them to oversee and QA the process and optimize their resources, while minimizing errors from data extraction and document creation.
Automate foreign currency conversion
For companies with global offices, suppliers and vendors operating in multiple geographies, it’s an ever-changing task to manage transactions in international currencies, varying tax rates, and tariffs specific to certain countries, etc.
By deploying an automation tool in your finance and accounting department, your team can reconcile credit and debit transactions that occur in currencies other than USD, identify the exchange rate, and track these transactions for future reporting needs.