Finance and accounting teams know that improving process efficiency is essential for keeping up with increasing workflows. And, they have likely witnessed how Artificial Intelligence (AI), machine learning, Robotic Process Automation (RPA), chat bots and other forms of automation have led to dramatic productivity gains in other areas of their firm’s operations.
Despite a recognition of the potential gains, a myriad of misconceptions about automation persist, preventing your team from implementing the latest automation technology to expand the resource and capacity of their accounting and finance functions.
In this article, we identify — and bust — some of the most common myths about adopting accounting technology tools that support automation. We explain how owner managed, entrepreneurial businesses through to large, multinational groups can leverage a universe of cost-effective automation tools not only to increase productivity, but also to improve accuracy and make a direct, positive impact on the bottom line.
MYTH 1: Adopting automation is slow, cumbersome and expensive
Not all that long ago, automating accounting processes generally required building your own comprehensive software systems and applications — a painstaking task that was cost prohibitive for all but the best-resourced companies.
But today’s technology marketplace offers the potential for a wide array of relatively inexpensive tools and apps that can integrate or ‘bolt on’ to either legacy or cloud accounting systems.
As an example, optical character recognition (OCR) applications convert text in an image into editable and searchable data, and can be used to automate the process of identifying, extracting, coding and routing supplier invoices. For a finance manager, utilising automation to improve efficiencies is mostly a matter of determining which application makes the most sense for your objectives and then configuring it to fit your workflow.
Question: Are you confident your existing finance and accounting technology stack is fully optimised and fit for purpose?
MYTH 2: The primary objective of automation is to reduce headcount
While automation can in some instances reduce staff costs, perhaps the most compelling reason to automate parts of your finance and accounting function is to improve the consistency and efficiency of your output.
When humans execute a process, there is generally a trade-off between accuracy and speed, since double-checking results takes time. Automation can eliminate human error altogether, improving accuracy while increasing speed. That combination may be especially valuable for fast-growing organisations that need to scale up their accounting and finance controls to support expansion in their core business operations.
By allowing cloud accounting technology to pick up time consuming manual tasks – such as data entry or scanning invoices – you’ll free up your teams time to work on more value add tasks that can support the business.
Question: Would your business benefit from a process and time mapping exercise to identify pinch points in the production of management and financial information?
MYTH 3: Automation is an all-or-nothing proposition
Finance and accounting teams don’t have to make the binary choice between upgrading everything all at once or forgoing the benefits of automation altogether. Instead, you can upgrade your business processes selectively, or over time, and prioritise those that best support your specific objectives. Automating even a small number of steps in a high-impact process can result in significant efficiency gains, but the right processes to upgrade first will depend on your team’s current priorities, as well as your specific pain points.
For example, a large back-office finance function focused on reducing costs might prioritise tasks that entail significant numbers of man-hours, while a smaller function that struggles with accuracy may want to upgrade processes used to generate its most important financial reports.
Question: Have you conducted an analysis of cloud accounting technology available, set against the context of your specific business requirements?
MYTH 4: Automation technology eliminates the human element
Although technology can take over most of the repetitive work to execute a process, you of course still need input from your accounting and finance team. The key is to ensure their focus is shifted to higher-value tasks that technology can’t pick up, such as process-monitoring, addressing exceptions or perhaps looking for additional ways to improve efficiency.
Some employees may require training to make the best use of a finance transformation – an area that you might ask your advisors for support with. After all, what’s the use in producing accurate management information without insight and commentary that adds value? As with any organisational change, a thoughtful change-management plan can help ensure a successful transition to automation. Your plan should include clear communication about the reasons for the change, what will happen when and how employees will be affected.
Question: From a training perspective, have you considered utilising the experience of your existing advisors in the areas of financial and accounting technology to support your finance team to make full use of new systems and processes?
MYTH 5: Everything that can be automated, should be
Almost all manual process can be automated to some degree, but sound decisions about what to upgrade will require a careful comparison of the relative costs and benefits. For example, if your invoices often are missing supplier codes, the manual effort required to address all the flags raised by your OCR tool might partially or completely offset any potential time savings.
However, keep in mind that automating a single high-impact task — even one with many exceptions — could result in efficiencies in multiple dependent steps of the process, adding up to a total benefit that far outweighs the cost. That is why your cost/benefit analyses should take into account all the effects of automating a given step, including any that occur to downstream processes.
Question: Conducting a thorough cost/benefit analysis can be a time consuming exercise. Why not leverage the skillset and knowledge of your advisors who can bring experience of technology implementations to bear?
MYTH 6: Automation is futuristic and complicated
Terms like AI and machine learning may seem like buzzwords that don’t apply to your business. Automation tools, no matter what they’re referred to, are designed to give you more control — not less — over your accounting and finance functions by allowing you to selectively delegate certain tasks. You decide what and how much to automate, from basic data entry and maintenance to reorganising complex report generation.
As a result, automation allows you to make major advances in the speed and efficiency of your accounting output, without requiring changes to your business processes. For example, automating steps that represent transfers of data between discrete applications may enable legacy applications to share data, creating an integrated system out of your existing software tools.
Question: Does your finance and accounting function rely on outdated or bespoke systems? Are you comfortable you’re aware of the technology tools that can link, or in some cases replace, your legacy systems?
MYTH 7: Automation is only relevant to large corporates or finance functions with big budgets
Because you can cost-effectively automate just one step or several, even businesses with limited budgets can strategically leverage automation to gain efficiencies.
Although the best way to approach automation may differ for each business, a sound high-level plan should include the following steps:
- Understand and document your current business processes, step-by-step and click-by-click
- Model the flow of data through your current technology systems
- Identify and select the right automation tool(s)
- Implement an organisational change management plan that includes employee re-training and communication
Question: When did you last leverage the expertise of your advisors to support the development of an implementation plan?
Our team help businesses to ‘Rethink’ the finance and accounting technology landscape.
Our objective is to ensure you can confidently identify the right tools and processes to optimise your accounting and finance operations.
Contact us today to talk about any of these elements.