The benefits of automation in financial management
Automation has had an impact on every industry, from aerospace to manufacturing, on a worldwide scale. However, even if automation is becoming more and more common, when a company starts using it, it’s not usually done across the board.
When it comes to implementing new technology to improve and streamline their daily tasks, the office of finance has fallen behind other business units. But organisations have noticed a rise in the use of automation in the accounting and finance divisions recently.
The spreadsheets and manual processing techniques that F&A professionals have relied on since the 1980s have been replaced by automation during the past few decades. The outcomes of this change are self-evident.
The office of finance has started exploring to utilise automation in place of spreadsheets and manual processes for the following four convincing reasons.
The finance department is typically one of the first departments to suffer when costs need to be reduced. These cost-cutting strategies force accounting teams to adopt a “do more with less” mentality rather than providing them with the resources and personnel necessary to properly complete the books. This frequently results in already overworked teams working weekends and late nights.
Sometimes cost-cutting is unavoidable, but the solution is to make sure your current team isn’t overworked and that their time is being used more effectively. The number of accounts that need to be reconciled has decreased by up to 90% for finance and accounting organisations that used automation through software such as Sage Intacct. An automated system now allows an accountant who once spent their entire day managing their close task list or reconciling accounts to handle those tasks. Along with automation, time spent by accountants would be better spent on more valuable tasks like forecasting and data analytics.
Additionally, overworking your team lowers employee morale, which increases attrition and results in the loss of critical internal knowledge about how the closing process is carried out. Fortunately, companies who have implemented automated finance software often see a 10% decrease in staff turnover.
These outcomes demonstrate how a tested, long-lasting, and flexible solution can be used to quickly future-proof your office of finance.
2. Tougher regulations and enforcement
No matter what sector you work in, it’s extremely probable that more regulations are being implemented every year, either by external or internal sources.
Additionally, regulatory agencies from all over the world have started to enforce the law more strictly. For instance, the FCA issued 50% more final notices between 2017 and 2018 compared to the prior year, and the length of time it takes for cases to resolve grew by 49%.
Both of these trends are probably going to get worse as time goes on, and the finance team will need to become more compliant at the same time. But using manual methods makes it challenging to keep up with the growing regulation. For some firms, manually looking through a database and comparing your work with the most recent regulatory guidelines are the only ways to stay on top of newly implemented legislation. This strategy is not only ineffective, but there is a considerable likelihood that it may overlook a rule and result in a false assertion.
Organisations invest a significant amount of money on internal and external auditing initiatives to combat this. However, gathering the evidence to back up those audits takes time. However, organisations discovered that the time required to support internal audit operations was decreased by up to 60% after introducing software like Sage Intacct. Your transaction modifications, supporting data, and more are tracked in a thorough audit trail and closely related to each transaction when Sage Intacct is in place.
3. Company Growth
The amount of corporate consolidations through mergers and acquisitions appears to set a new record every year. A third of the companies polled in a recent IMAA study claimed that the integration of financial systems and reporting is the biggest barrier during acquisitions. This is because 70% of M&A fail.
This challenge is mostly caused by the difficulties of scaling spreadsheets and manual procedures. Spreadsheets were initially created to balance the budget of a typical four-person family, whether through M&A or organic development. When used with a developing firm, this instrument quickly devolves into a jumble of figures that makes delving into the specifics of the company’s finances very impossible. As a result, mistakes are made and situations like mis-statements or write-offs become very probable.
Before or even during their M&A activity, businesses are automating their finance and accounting departments to get around this. Additionally, organisations saw an up to 10% decrease in write-offs with automated software assistance, as well as simple access to supporting paperwork to comprehend and correct any problems.
4. The Demand for Clarity
The functions of the office of finance and the CFO were evolving even before the current crisis started to have an impact on regular corporate operations. Despite being viewed as “number crunchers” in the past, accountants nowadays are relied upon for insightful analysis that can shape business strategy based on the financial data they provide.
Unfortunately, it has been quite challenging for many accountants to find the time to offer this perspective. The typical office of finance was already time-constrained before this new expectation occurred due to the amount of manual processing that must be done in order to complete the closing procedure. And at the conclusion of the closing procedure, any analysis, if it can be done at all, is finished.
Organisations have been looking for a solution to increase the productivity of their staff in order to respond to the shifting demands. The time spent planning and finishing close activities was reduced by up to 30% in organisations that had used accounting software that helped them automate, giving the finance team plenty of time to evolve from “number crunchers” to a driving force within the business.
All of these trends, requirements, and objectives for the office of finance will only get stronger over time. And as they do, more businesses will start automating their financial departments.
By automating all of your financial procedures, you can:
– Gain better visibility into potential process improvement opportunities
– Reduce in the amount of time spent finishing and observing close tasks
– Less time to get ready for a close
– Decreased write-offs
– Risk reduction
– Identify workflow bottlenecks
If you would like to see how Itas Solutions can help you and your organisation reap the benefits of IT and the latest cloud solutions for your business accounting needs with powerful cloud accounting software such as Sage’s Intacct, we will only be too happy to show you the benefits and how we can help.
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Itas Solutions began in 1995 with just one client and today serves over 200 businesses around the UK and we are always on call to help our clients.
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You can reach out to us at [email protected], give us a call at +44 (0) 1824 780 000, or send an email to learn more about how Itas can assist your company with finance automation, Sage implementation, and improved purchasing control.