Highest-Value Financial Tasks to Automate
For businesses to move faster and innovate, it’s essential for workers to increase efficiency and have the opportunity to improve work processes. By automating certain financial tasks, employees can free up more of their time to focus on more impactful work that can help their team and organization.
No matter the type of industry, every company’s finance department does much of the same thing. Usually, they are responsible for managing cash flow, ensuring that financial reports are correct, and executing other basic financial functions so the business runs smoothly.
With the amount of technology at our fingertips, financial teams should be automating many of their tasks. If you’re still copying data from one Excel sheet to another, you might as well be doing your work by candlelight.
You spent a good deal of time hiring the right people to head up your finance team, and with the right tools, they can put their expertise and insight towards improving your company’s financial health.
With good finance technology, what used to be a multi-day process can occur instantaneously, and up to the minute financial data can be used to make business decisions on-the-go. This has also led to a significant increase in the accuracy and efficiency of bookkeeping.
Benefits of Automation
Automation tools can save time on manual tasks like variance analysis and account reconciliations. Another benefit of these tools is the reduction of errors that might occur. Employees, no matter how good, are prone to mistakes. One study suggests that over 80% of spreadsheet documents contain errors.
In addition, automating financial tasks ensures greater consistency. Team members, despite best practices, will still have their own way of doing things. Even a standard process like double-entry bookkeeping may show discrepancies between employees. Things like varying journal entry comments, support, or even spreadsheet formatting can cause confusion and errors.
Being able to collect real-time data allows people on your team to identify any problems or inconsistencies early on, which allows them to tackle the problem before there is a potential loss.
Automating standard finance tasks also decreases the chances of fraud being committed. Although you trust your employees, the foundation of a good internal control environment is removing the ability to commit fraud wherever possible. Your company’s finances are simply more secure when using the right automation tools.
1. Accounts Receivable
Invoicing and accounts receivable are at the heart of revenue recognition for all businesses. If these are done improperly, your company might not survive very long.
Many traditional processes for delivering and tracking invoices take up a great deal of time. And since invoicing can involve multiple departments, from sales to customer service to finance, there is a greater likelihood for a mistake to be made along the way.
Delays in payment are an all too common problem, especially for small businesses. According to a report from 2016, small businesses in the U.S. had approximately $825 billion dollars in unpaid invoices and the average wait time for receiving payment was 72 days.
With dedicated accounting software, you can automatically generate and send invoices, reconcile invoices against delivery records and sales, and reminders can be sent out to customers about payment without you having to do it yourself.
Any keen CFO or Controller will be monitoring AR turnover closely to ensure they maximize the business’s cash flow as much as possible. By standardizing and automating AR, businesses are able to reduce AR turnover and shift their focus to vendor management.
2. Accounts Payable
Another high-value financial task that absolutely should be automated is making sure your bills are paid on time. Of course, it is also one of the more time-consuming tasks.
Since invoicing has to go through a series of steps before payment can be made, this also increases the chances of a delay in payment. The information on each invoice must be checked. The invoice must be sent out for approval to the appropriate department. The payment must then be processed and the transaction recorded, all of which can now be streamlined by using automation.
Technology can now standardize the accounts payable process by doing things like scanning invoices so the information is captured securely and sending prompts out to departments to complete their part in the invoicing process so things can move along more swiftly.
Being able to pay your bills expeditiously keeps you in good standing with your suppliers and makes the whole process much easier. You’ll also be able to save money by exploiting early payment discounts, spending less on staffing, and spending less on check processing.
Conversely, by automating accounts payable you can maximize the time before making vendor payments and adjust the payments to be more in line with your accounts receivable. This allows for much better cash flow management that can be adjusted depending on your businesses needs.
3. Tax Compliance
Perhaps one of the most important things automation can do for your company is to calculate your tax liabilities.
In the past, many businesses had to seek out professional firms to help with the tax process. Doing it this way requires a lot of time, and the effort to understand different tax codes is significant. Tax workpapers are large and often complex with various formatting depending on the service provider.
Automation has done wonders in untangling the web of tax code law. Now the tax requirements for every transaction can be calculated using automation software.
Online platforms can also help you determine your tax obligations when your company commits to a transaction within international jurisdictions.
By automating tax calculations and reporting, it can help your compliance department to better identify potential exposure in certain transactions, depending on your industry. Because data is real time, models can be run to identify ways to increase tax efficiency on a single transaction or across the entire organization.
4. Managing Expenses
Trying to keep track of all company expenditures has always been one of the biggest headaches for any financial team.
There are a number of steps involved in expense management that make it extremely time-consuming. Employees must gather their receipts, fill out expense reports, have them approved by managers, and then finally the financial team must reconcile everything and process reimbursement.
Things are further complicated when expenses are recoverable from clients or other businesses.
There is not a single employee or department that doesn’t find managing expenses annoying. A process as tedious as this one is perfect for automation. Expenses can now be reimbursed more quickly by using these tools to match invoices to expense claims.
Dashboards are also a great tool for managing expenses. Members of your financial team can log on and view a dashboard that combines an accurate list of all updated business expenses during any time of the month.