BUSINESS GUIDE

8 Financial Processes to Automate

How Automation Can Help You Reduce Costs and

Scale Your Business
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8 Financial Processes to Automate

How Automation Can Help You Reduce Costs and

Scale Your Business

When Institute of Management Accountants and analytical. More than half of those surveyed
(IMA) President Jeff Thomson penned an by IMA said their work had become more
article about the prominent trends that would analytical in the last 18 months, and 92% said the
affect accounting in 2021, “automation will no transactional processing they’re responsible for
longer be debated”1 topped the list. Results would significantly decrease over the next five
from the most recent IMA survey back up that years and they’d need to become more analytical.
prediction. While the majority of businesses are
just beginning to reap the benefits of automating Professionals in this space are optimistic about
financial processes—less than one-quarter2 of how automation across financial processes
those surveyed said their processes were largely can help their organisations, and, true to form,
automated—they do realise its potential and are they’re very realistic about how to get there.
taking steps to prepare. Automation can’t work without a solid, reliable
data infrastructure, so it’s no surprise that more
As more processes are automated, the work than two-thirds of the businesses surveyed have
required in accounting and finance roles is implemented or are currently implementing
shifting, the survey found, as professionals move cloud-based accounting software to build
from being reactive and transactional to proactive that foundation.

1
https://www.forbes.com/sites/jeffthomson/2020/12/18/speeding-towards-transformation-2021-trends-in-finance-and-accounting/?sh=2b5d25a34ab8
2
https://www.imanet.org/-/media/1556f3868820422ea39760b48abd4755.ashx

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Table of Contents

1 2
Overview 8 Financial How ERP
Processes That Addresses These
Should Be Challenges
Automated

Page 2 Page 4 Page 8

 CHAPTER 1

8 Financial Processes That

Should Be Automated

There are key steps businesses can take to start emails or PDFs. Software with machine learning
automating processes and realising the benefits can be programmed to learn from the process
of doing so. Many companies begin by leveraging over time and, for instance, “read” a bank
technologies to automate different parts of the statement and move the data to the right fields in
accounting and financial processes. Financial data the accounts receivable solution.
is core to everything the business does, so it must
be accurate and up to date. Once that’s in place, The benefits of fully automating all processes
what should companies focus on automating? associated with data entry and capture are as
beneficial as they are obvious—more accurate
1. Data Entry data, less time spent verifying and reconciling
Data entry is often one of the first things the data, and more time to look at and analyse
businesses automate. A recent survey from Robert information to drive process improvements and
Half shows that a growing number of companies greater efficiency.
have automated data entry and collection in the
last few years. 2. Accounts Payable (AP)
Automating the accounts payable process is
As companies implement an accounting system, important to make sure the business pays its
it often introduces some automation. There are bills on time and can take advantage of optimal
different levels of technology that can be used payment terms to hold on to cash longer and
to automate data entry, from importing data and receive discounts, when offered. AP automation
enabling rules-based workflows, to robotic process technology matches invoices to supporting
automation (RPA), to more advanced artificial documents, such as purchase orders and
intelligence (AI) technologies. receiving forms, to ease the tedious work of
manually matching documents.
Automation on one level may include the ability
to automatically import and reconcile bank Software can also set rules that automatically
statements, or integration with other business assign the correct general ledger code to each
systems (such as a point-of-sale system) to pull invoice, eliminating the time spent manually
in accounting and financial data. Fully automated coding them and the inconsistencies that
data entry tools can pull data from structured introduces. Additionally, digital workflows can
and unstructured documents without any human alert necessary approvers when actions need to
intervention, using something like optical character be taken to make sure invoices are approved and
recognition (OCR) technology to, for instance, paid in a timely manner.
automatically capture data from paper documents,

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 3. Accounts Receivable (AR) 4. Expense Processing and Management
Invoicing is one of the most commonly automated Manual expense management requires keeping,
processes, according to Robert Half. The ability organising, and managing a lot of paper and
to generate invoices, route them to different spreadsheets on both the payable and receivable
stakeholders for required approvals and then ends. It wastes money and employees’ patience
automatically email them to customers is standard as they carefully arrange receipts, mileage logs
in accounting systems, but more progressive and more to send manual expense reports
accounting software provides additional to accounting teams for reimbursement. This
automation. This can include tying in credit inevitably results in a lot of back and forth,
management to set credit limits for customers perhaps because accounting can’t decipher
and manage accounts to recognise early signs of something or because the expense falls outside
financial trouble and respond accordingly. of the defined policy. Companies are looking to
automate expense management to simplify the
Automating all parts of the invoicing process can entire process of submitting, processing and
decrease days sales outstanding (DSO). Even firms reimbursing expenses.
that don’t send out a large volume of invoices
benefit here, reducing DSO by 15 days compared But there are other benefits, including eliminating
to those using manual AR processes. This can paper, gaining visibility into spending trends
lead to more predictable cash flow and prevents to curb areas of high spend (by adjusting your
companies from wasting resources trying to track expense policy), preventing expense fraud and
down delinquent customers. increasing compliance with the policy. Automating
expense management can even ease the process
of preparing and paying federal income taxes by
tracking and calculating deductible expenses.

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 5. Purchase Orders
The purchase order (PO) process bridges
procurement and AP and touches stakeholders
Accounting software that can
in a number of different departments, which automate account reconciliations
can lead to a long string of back-and-forth
communication that can be difficult to track.
makes closing the books simpler
Missing key dates or waiting on approvals for POs and faster, as a member of staff
can result in supply delays that greatly impact needs to only review the flagged
production and profits. Or, an organisation might
miss out on getting a product or service from transactions instead of every
their first choice because they don’t act quickly transaction from that month.
enough. All of it impacts crucial relationships with
vendors that play a central role in helping your in 2018, per Robert Half. An impressive 39%
business deliver its products or services. of organisations under the $500 million
revenue mark have automated the creation of
That’s why automation within and some level of
financial reports.
integration between the finance and procurement
systems is crucial to ensure visibility, accuracy and Automated financial reporting ensures that
efficiency. Automated workflows alert approvers reports are accurate, and the financial data
when a PO is ready for their review, and enable is transparent and credible for any business
them to move it along in a timely manner. When event—from reports to the bank, to satisfying
procurement processes are integrated with the needs and due diligence for investors, all
AP systems, vendors receive timely payment the way through earnings reports—with ease.
because the software automatically matches Not only does this leave more time for financial
invoices with purchase orders and receipts. professionals to analyse the results, but it allows
Employees can spend their time looking for internal and external stakeholders to get this
outliers, patterns and potential problems—like critical information sooner so they can take it into
fraud—since processing POs is less of a concern. account when making decisions.

6. Financial Reporting Building reports for management can take days

Generating financial reports is another process for some organisations, between building a
that many companies automate. Interestingly, spreadsheet to collating everything and making
financial reporting was the most common sure everything lines up correctly. This process is
response when IMA asked which financial even more complex when dealing with different
processes would undergo a significant or currencies and exchange rates, local tax codes
complete change because of technology over and accounting regulations. The ability to have
the next five years. a unified view of financials across the business
in seconds by introducing automation into
Technology has enabled many companies to the financial consolidation process is a
automate the steps required to produce huge advantage.
financial statements.
Leading systems include functionality that
Once that’s done, the platform has everything it allows users to tag intercompany purchase
needs to generate monthly financial statements. orders and sales orders as they are created,
This helps explain why the financial reporting and automatically link them so that accounting
process took an average of just 10 days for doesn’t have to search through all the entries
U.S. businesses in 2019, three days less than

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 to find the matching pairs during reconciliation. predictive capabilities by sort of supercharging
Software also removes revenue and expenses spreadsheets, allowing users to pull and push
associated with intercompany transactions from data directly from the underlying database.
consolidated financials during the close process. They can then analyse the information in more
ways and automatically create visualisations that
7. Budgeting and Forecasting include embedded and interactive financials to
As an organisation grows and matures, budgeting communicate the data.
and forecasting can become increasingly
complex and challenging. A financial planning 8. Sales Tax
and budgeting system that’s integrated with the Sales tax is complex. Keeping track of customers
accounting system provides a major assist by that are exempt from sales tax (like government
pulling all financial and operational information agencies and nonprofits, as well as those buying
required for forecasting and budgeting from certain types of products and products that
that core financial solution. There’s no need to will be resold) is also crucial for building strong
import and export data or enter it manually, and customer relationships. Customers don’t look too
all stakeholders are working with the same source kindly upon being charged sales tax when they
of accurate data, which updates in real time. are actually exempt. The burden for calculating
Users can also switch out a few numbers to see proper sales tax and accounting for it falls on
the impact of those changes without creating the business, and this is typically done through
multiple versions of the budget. While it may collecting and tracking tax exemption certificates.
not be possible to fully automate the budgeting Completed manually, this is obviously a time-
and forecasting process, eliminating parts of it consuming and error-prone process.
reduces the time and energy accounting or FP&A
teams spend on it. This highlights why eliminating manual tax
calculations by using an accounting system
With such a system in place, stakeholders can with built-in tax logic is crucial. Such an engine
easily track and stick to budgets, and numbers determines taxability and the amount to collect
are easily accessible for forecasting purposes. for every sales transaction. A robust platform will
Prebuilt reports and dashboards make it easy to update automatically to reflect changes to tax
consume the data—to compare numbers, spot laws and provide the flexibility to accommodate
trends and use the data to make decisions. A sales tax holidays or products.
planning and budgeting application enhances

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 CHAPTER 2

How ERP Addresses These Challenges

ERP software automates business processes ERP systems also offer value in joining together
by collecting all information from across an business processes end-to-end, allowing the
organisation in a central database and using technology to mirror, guide and improve the ways
that data repository to automate workflows. ERP your business gets things done.
systems not only provide the platform for process
automation; they help the business establish For example, an order-to-cash process for a
and maintain rules that ensure compliance with products company, in its simplest iteration,
legal and regulatory mandates. The accounting touches the systems for inventory management,
modules connected to ERP systems, for example, order management, accounts receivable and
establish strong financial controls and ensure that possibly credit management. An ERP platform
the business adheres to all applicable regulatory hands off the process from one department to
and accounting standards. another to complete the transaction, while also
tracking that data so it can be used for financial
Most businesses start by automating processes reporting, forecasting, budgeting, analysis
associated with core financials and gradually and more.
move on to other aspects of their organisation.
For instance, they might move to an accounting ERP systems extend far beyond accounting
solution that can automate AP and AR by and can scale to address the growing needs of
extracting information from invoices, organising a business.
them by due date, and automatically sending out
reminders for bills to customers. That automation
should make closing the books much easier, Leading ERP platforms like NetSuite
meaning financial statements are ready within a
week of a quarter end. offer modules for inventory and
The organisation might add an expense
order management, procurement,
management system that allows employees to warehousing and fulfilment,
upload receipts and submit reports online, then
set custom rules for approvals so each report
production management, financial
is routed to the right manager. It’s best to get planning and analysis and more.
all these applications from the same vendor to
avoid costly and unreliable integrations. A unified
ERP platform with modules that can support
various business functions and needs is the best
approach for most organisations.

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 As more businesses implement ERP to serve as
the foundation for end-to-end automation, most
are looking to the cloud. Spending on cloud-based “We wanted technology to grow
enterprise software continues to grow at a healthy with us, allowing us to automate
clip, and that trend is sure to continue in coming
years. The most robust cloud-based platforms
things and learn new processes.
like NetSuite include many of the technologies Like our snacks, NetSuite was
needed to automate financial processes, and most
a natural pick-me-up for our
importantly, provide a single source of real-time,
accurate information to ensure automation brings business.” Munchbox
the intended business benefits.

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