Automation is not a new term for anyone that works in finance. Over the last decade, technology has driven a new breed of finance teams who recognise that software is an integral and essential part of an efficient workflow.
Our recent research on AP automation trends revealed that 54% of finance teams worldwide are in a partially-automated state, and this percentage is climbing each year.
With reported challenges around lack of AP automation still prevalent (long processing times for invoices and too much manual data entry) it is no wonder AP teams are looking for alternative ways of working.
More broadly across finance, we know from our latest finance processes research that 60% of teams consider their processes to be modern and up to date, with 43% regularly reviewing them throughout the year.
So why are finance teams switching to automation? Here are three reasons why:
1. Automation saves employee’s time and reduces costs
The reality is that most jobs come with a degree of administrative tasks that are often time-consuming and manual. But these tasks shouldn’t take up most of the working week, and detract the employee from doing what they are hired to do.
Software can automate manual processes, and frees up time for employees to focus on more important tasks.
For example, our AP automation trends research revealed that over two thirds (68%) of respondents manually key invoices into the ERP/accounting software. What’s more 56% of respondents spend over 10 hours per week processing invoices and administering supplier payments.
AP automation software removes any manual tasks by digitising the whole process. From invoice capture, to coding, and approval – the AP process is automated, efficient, and much quicker.
The time-saving is clear, but the cost-saving comes on top with less time wasted on manual invoice admin and more time available to spend on important tasks that benefit the wider finance function.
2. Automated processes improve data accuracy
Any manual keying process comes with a high risk of errors and inaccuracy, fact.
A data error in a spreadsheet can have a terrible impact – as was the case with the Edinburgh hospital in 2020. In this instance, ‘human error’ on a spreadsheet caused a delay in the £150m hospital opening because the wrong specification of airflow in critical care rooms had been copied on the environmental matrix spreadsheet. This error had not been picked up by any of the contractors.
Using technology to remove the manual data processing means there is little chance for human errors to occur.
AI and OCR scan text on documents such as invoices or expense reports and automatically import this information into ERP/Accounting software. When data is transferred and stored digitally, any errors or anomalies are flagged and so can be identified immediately.
3. Digital data is more secure
For decades, paper documents have been kept in filing cabinets throughout offices – accessible to anyone and taking up valuable space. Going paperless means that any sensitive information and data is stored electronically and securely.
Automated finance software has the additional safety net of holding your data securely and privately. Data security and fraud continues to be an issue, with fraudsters inventing new ways to steal information.
Internally, your Accounts Payable and Accounts Receivable (AP/AR) departments handles some of your company’s most sensitive information. As cloud technology continues to be proven safe, Automation has become the most effective guard against internal fraud, as well as external, particularly when it comes to strengthening controls and access, for example here are 3 controls which automation technology can put in place:
- Allowing only approved staff to pay invoices
- Preventing unauthorized invoice modifying
- Restricts the ability to modify user permissions
Digital data will also provide an audit trail so when it comes to tax and compliance reporting, accuracy can be vastly improved, whilst time spent can be vastly reduced.
In summary, original research conducted by IFOL is consistent with that of many leading organisations globally, which suggests that automating financial processes can save time, reduce costs, improve data accuracy and make sensitive data more secure.
For more information on finance process automation, join our live panel discussion and hear from industry experts for advice and best practice.