Most of the best practices applied in the field of finance a decade ago might not be useful anymore. Why? Technology continues to evolve exponentially over time, consistently changing the business landscape with its advanced tools and techniques.
In the upcoming years, a company’s finance department will experience significant changes in most of its aspects through automation. By automating crucial financial operations, businesses and organizations can achieve a more productive work environment.
Although traditional practices remain true to their purpose, they’re inefficient and often require considerable work effort to complete a relatively simple task. This can reduce your productivity, cause uncertainties in decision-making, and prevent the progress of your business.
Nevertheless, by applying automation to your operations, you can complete multiple tasks at the same time without sacrificing your productivity and performance. This is all thanks to advancements in machine learning and artificial intelligence.
However, introducing finance automation can be overwhelming, especially for organizations with no essential background in technology. Are you one of them? Then, you’re in the right place. This post will discuss everything you need to know about finance automation. Read on to learn more.
What Is Finance Automation?
Finance automation is the application of technology to streamline financial operations by reducing repetitive, time-consuming, and manual tasks. This will give you more time to focus on more complicated tasks, creating a more efficient and productive work environment.
The automation process involves creating workflows and using advanced technology to prompt pre-established actions. With just a click of a button, you’ll be able to accomplish a series of time-consuming financial functions that take the entire day to complete manually.
What Is A Finance Automation Tool?
A finance automation tool is an all in one business banking application that allows businesses to improve and streamline financial operations effectively. With this software, you’ll be able to execute and accomplish different tasks on one platform. These tasks include the following:
- Conducting financial analysis
- Managing payroll
- Producing and sending invoices
- Collecting outstanding invoices
- Creating financial statements and documents
On top of that, a finance automation tool helps reduce human intervention throughout the process. This lowers the risk of human errors that can cause problems for your business (e.g., loss of existing customers, inaccurate reports, etc.).
What Should You Look For In A Finance Automation Tool?
Finding the right finance automation tool can be overwhelming. There are just too many options to choose from, so what should you do? Below are some considerations when looking for the right finance automation software:
- Digital Solution: The tool should be able to digitize all manual, repetitive, and menial tasks to achieve quicker and more efficient work.
- Easy To Use: A finance automation tool should be a solution, not a problem. If you can’t use the system confidently in one go, consider looking for other options instead. Also, avoid using comprehensive tools (if you don’t need one) because they’re harder to learn and might require more time to understand.
- Essential Features: The right finance automation tool has essential features businesses need. These may include (but not limited to) data analysis and reporting, cash flow tracking, invoice creation, payment collections, fund transfers, forecasting, and more.
- Cloud-Based Solution: Cloud-based solutions are crucial in today’s business environment. It allows you and your employees to work anytime, anywhere.
- Customer Friendly: A good finance automation tool allows you to share financial statements and reports with valuable clients. They should be able to view and understand these documents without encountering any problems.
- Great Reviews: Checking customer reviews is one way to find the right tool that suits your needs. Since there’s no perfect tool ever created, you want to make sure that positive reviews outweigh the negative feedback from their clients.
What Are Some Functions You Need To Automate?
Before you start the automation process, it’s important to understand that you can’t automate every financial function. Some tasks might require consistent human validation, are non-repetitive, and might constantly change over time.
If that’s the case, you’ll need to identify which operations your business must automate. These are tasks that may or may not require human intervention, including the following:
Accounts Receivable (AR)
Accounts receivable is the process of collecting payments from customers with outstanding debts. Automating this process will help you stay on top of your invoices, ensuring on-time payments and promoting positive cash flow.
Automating AR involves the following tasks:
- Sending recurring invoices for customers who order the same goods in a pre-defined timeframe (e.g., ordering a kilo of coffee beans every month or week)
- Sending reminders for customers who are past due
- Processing recurring credit card payments in a pre-defined timeframe (e.g., processing credit payments every month)
Aside from these tasks, you can also consider sending SMS messages automatically when encouraging customers to pay or order online.
Accounts Payable (AP)
As a business owner, it’s your responsibility to pay your outstanding dues on time. Otherwise, you’ll damage the reputation of your business and miss certain privileges suppliers give to on-time payers. This is one reason automating AP is important.
Automating your AP tasks will encourage you to pay your bills in a timely manner. This is especially true when it comes to recurring payments. All you need to do is set the time and amount to pay and let your automation tool do its work.
Payroll
Payroll is one of the most important functions of the finance department. Nevertheless, it can get repetitive and time-consuming. As such, automating this step is highly recommended.
However, keep in mind that automating payroll processes may still require human intervention, particularly when making minor tweaks and adjustments. This is especially true regarding absences, hourly pay rates, leaves, overtime, and undertime.
Data Collection For Taxation
Many businesses find the tax season the most stressful time of the year. It requires data collection and retrieval of various documents, including receipts, reports, bills, and invoices.
Indeed, it’s not easy to retrieve all the necessary documents when tax season arrives, especially if they’re all on physical copies. That’s why it’s important to automate your data collection. Your finance department can accomplish this by scanning all your printed documents and setting up your digital data collection.
By automating your data collection processes, you’ll be able to retrieve the files you need with one click of a button.
Final Words
Finance automation is the process of eliminating repetitive and manual financial operations using advanced solutions. With this, you’ll be able to boost your productivity and improve your work quality. If you need help, seek professional service providers and work with your certified financial officers to achieve a smooth transition of operations.
