How much automation can finance processes achieve?-Magazine

Published On : 06/10/2017

Dr. Marlene Wolfgruber, product manager at ABBYY explains how data-driven and robotic software solutions can help accelerate enterprises’ journey to digital transformation, streamline business processes and free up staff in the finance department

Dr. Marlene Wolfgruber

Companies are increasingly becoming digital enterprises. With large volumes of information, data is everywhere and companies need to effectively manage, store and access this data wherever and whenever it might be, in order to operate efficiently and boost productivity. It is having this quick and easy access to information, paired with a high degree of process automation that allows organisations to innovate and keep pace with the competition.

Even as organisations start to realise the power of embracing a digital transformation, many are still struggling to implement the relevant automation processes. With the UK sitting one step behind France and Germany, businesses cannot afford to fall further behind on the productivity step ladder.

The finance department is a key component of any organisation. Yet manual, laborious processes are causing a slow-down and dramatic recline in productivity. The benefits of solutions and technologies for finance process automation (FPA) are obvious and have been discussed in theory for quite some time. Yet few enterprises have tackled this challenge and introduced full end-to-end business process automation in areas such as procure to pay and order-to-cash. Enterprise Resource Planning (ERP) systems stop short when it comes to automating the data transfer and entry procedure, which initiates the onward process. Therefore, the task of entering invoices and orders into financial systems remains a more manual, error-strewn data entry. Additional items such as travel expense management, are also left to manual processes.

So how much automation is achievable for financial processes? Let’s take a look at the classic accounts payable (AP) process as an example.

Automating 80+ per cent of AP operations by intelligent capture and robotic software solutions

Manual AP processes are a huge drain on time and money for organisations. The process is long and cumbersome with invoices being sent to multiple touch-points throughout the enterprise. At best this is a smooth, but time-consuming task. At its worst, these manual processes can see time-sensitive invoices sitting on desks for several days, weeks or even months as they come up against several stalling issues, including discrepancies and delays. Worse still, it’s not uncommon for invoices to be lost or misplaced, which only causes further delay and could result in a duplicate payment being made to the supplier.

Manual AP processes are not only a burden on time and resources but they can often be highly chaotic.

AP automation starts with digital transformation. As paper invoices come into the enterprise they need to be digitised before they are ready for automated processing along with electronically received documents, ideally on the same platform. Intelligent capture solutions extract invoice data automatically using smart capture technology that recognises relevant invoice elements and understand which elements to extract. The validation process also occurs automatically by referencing it against enterprise data and compliance rule-sets, before highly accurate data is delivered to the ERP system where further processes – ranging from invoice approval to compliant archiving – are triggered. In cases where human intervention is required (e.g. for validation of high invoices sums) robotic process automation can further eliminate manual steps by providing guided exception workflows and consequently help to increase productivity of finance processes.

Already a vast majority of AP processing steps can take place with little or no human intervention. Based on smart system training and machine learning algorithms, the potential for AP automation unfolds to enable straight-forward processing, allow faster access to data, and free up employees from repetitive, time-consuming and error-prone tasks.

Goals of Finance Process Automation 

Organisations have different volumes of documents and varying types of data. Available resources and environments should also be factored into goal-setting when moving to automated processes in the finance department. Some of the typical goals include:

Maximum data quality – Automating the receipt, scanning, extraction and validation of invoice data reduces data entry errors by 95 per cent. It can validate invoices with corporate data including employee directories. This technology should eliminate duplicate invoices, perform purchase order and line item matching, and validate contract rates. High-quality data drives the efficiency and effectiveness of the downstream process.

Mobile-enabled automation – Digital transformation comes paired with a strong shift to mobile. Especially for internal processes, such as handing in receipts for travel expenses, more and more documents are coming into the AP department as photos taken with mobile devices. Implementing automation software solutions should include the possibility to process data from mobile channels. For maximum investment and security, automation solutions should have the capabilities to scale and evolve for roll-out into other finance processing automation areas and enterprise business processes. 

Transparency throughout the processing lifecycle – The steps documents take throughout their processing lifecycle should be easy to track and be completely transparent. Monitoring tools for process analysis, troubleshooting and accurate reporting enable effective tracking of invoices and orders to help to identify and resolve bottlenecks as well as deliver key performance indicators (KPIs) that inform relevant stakeholders in the organisation.

Optimisation of payment process – Late payment penalties which add to administrative overheads should be completely avoidable. Dynamic discounting (trade financing) is one way that businesses can save more.

Scalability for multi-location organisations and finance processing automation outsourcers – Processing large volumes of financial documents from multiple locations on a single platform not only reduces the risk of losing documents, but it also lowers shipping costs and helps to avoid unnecessary delays. Centralising finance process management can also boost standardisation across large, multi-location enterprises which enable outsourcing of classic order fulfilment and invoicing to internal shared services centres (SSCs) or external business process outsourcers (BPOs). Scalability of capture-driven solutions allows outsourcers to easily set up new customers and workflows whilst smart monitoring and reporting functionality enables transparent billing and validation of internal or external service level agreements.

Achieving enterprise-wide automation

Automating finance processes brings an array of benefits to the business. With data-capture driven solutions leveraging robotic technologies and machine learning algorithms, an automation rate of up to 80 per cent* can be achieved for invoice operations. Ultimately finance processing automation reduces costs, strengthens internal controls, enables the optimisation of cash flow and has a positive effect on supplier and customer satisfaction. As a result, finance staff can spend more time on important tasks that bring value to the business.

*Automation rate is variable and dependent on overall environment, quality of input and PO matching availability

“Original publication in Finance Digest Issue 1 https://www.financedigest.com/finance-digest-print-magazine/”

Uma Rajagopal

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.