In a familiar scenario, with month-end closing on the horizon, an excel sheet surfacing on the computer screen, and the steady tap of keyword stokes make financial analysts think why my organization didn’t automate.
As per the IMA report,” Around two-thirds of financial analysts said the heavy reliance on spreadsheets increases both the time spent on financial reporting as well as the risk of inaccurate results.“
Considering the risks and problems associated with spreadsheets, including changing accounting standards, time requirements, input errors, and spreadsheet cell linking, the high reliance on spreadsheets is alarming. Typically, the accounting comprises of four key processes-
- Account payable/receivable
- Journal Entry
- Account Reconciliation
- Financial Closure
On average, It takes almost seven days to complete the financial closure process. Being a manual, rule-based, and time-consuming process, RPA in accounting can genuinely transform how financial analysts handle accounting.
Let’s dig into this blog and learn more about the accounting process RPA can automate and its impact on financial reporting.
Accounting Process Automation With RPA
As most accounting processes are time-consuming and repetitive and require high precision and accuracy, RPA bots come in handy in accelerating efficiency and cutting operational costs.
RPA chatbots are capable of automating the below accounting process-
- Account Payable(AP)
Account payable is one of the most crucial business processes that handle getting, processing, and paying out the money companies owe for goods and services. Financial accountants have to complete repetitive tasks such as receiving the bill, scrutinizing the statements for details like vendor name, authorization, purchase order verification, extracting data, processing on-time invoices for the payment, etc. In order to have an efficient account payable process, RPA bots can streamline the whole process by eliminating most of the paperwork involved in accounting, invoice processing, and extracting data. In addition, using RPA chatbots with in-built OCR and AI reduces the time involved in the data extraction and enhances day-to-day operation.
- Account Receivable (AR)
Account receivable encompasses everything from credit application to invoice, follow-up, and debt collection. The traditional approach to account receivable involves –
- Extracting data from an excel spreadsheet for invoice generation
- Matching invoices with the accurate details
- Routing invoices for approvals
- Processing payments
On the other hand, the manual follow-up and collection process involves credit evaluation error, invoices operational cost, and high credit risk. Automating the account receivable process with the RPA chatbot can simplify the invoice delivery, update the status in real-time and notify the customer instantly without any manual intervention. In addition, RPA in account receivables enable financial institutions to scale up and down without headcount and training challenges and improves invoice processing accuracy and delivery.
- Account Reconciliation
The account reconciliation process has multiple steps, such as.
- Scrutinizing the validity of issued checks
- Updating transaction records
- Comparing customer and vendor invoices
- Identifying unrecorded transactions in invoices, loan deposits, etc
Moreover, the account reconciliation process relies heavily on invoices, pdfs, and accounting records. As per a report, the account reconciliation process takes 44% of the time to maintain the balance sheet. Using a predefined rule-based chatbot enables the financial accountant to streamline the entire reconciliation process by quickly extracting data, matching & comparing invoices, and providing real-time visibility to the reconciliation process. Furthermore, RPA in the accounting reconciliation process removes the risk of the old paper-based world, a manual check of spreadsheet information, and creating post-check records updates.
- Data Entry Automation
Banking institutions rely heavily on documents and data extraction from multiple legacy systems. For example, before generating the final invoice and transaction report, financial accountants have to go through reading text files, excel sheets to derive data from the account payable and receivable process. In addition, manually matching reconciliation reports, transactions details, supporting documents, and uploading gathered information in the central legacy system require high precision and accuracy.
Financial process automation automatically verifies and inputs the data in real-time and efficiently transfers, exchanges, and records transaction data in the ERP system. By outsourcing the data entry to RPA bots significantly reduces financial workload.
- Financial Closure
Producing a final report outlining the company’s financial status requires substantial manual effort. Challenges that financial accountants face are-
- Manual Data Entry
- Data manipulation process
- Segregating multiple format data
- Missing receipts, journal entries, and transactions mismatch
- Real-time information access
To beat these challenges and optimize the financial closure process RPA bot comes in handy. RPA bots can quickly and efficiently
- Import spreadsheet from multiple resources to central legacy systems
- Run automated checklist to identify and highlight account issues
- Track progress, timeline, approval, and potential error
- Compare financial data using reconciliation details
How Should Companies Automate Accounting?
RPA in accounting can be leveraged by following three approaches. These are-RPA in accounting can be leveraged by following three approaches.
Rule-based RPA bot can handle repetitive and time-consuming tasks at ease, but what if your financial organization wants more than that. Having Conversational RPA is an end-to-end automation solution that provides faster resolutions with AI and machine learning technologies.
By leveraging omnichannel support, Conversational RPA provides AI-assisted decision-making assistance, understands human context, and provides instant resolution. No more missed opportunities and erroneous data entry; Conversational RPA automatically generates reports and updates.
Customized Automation Solutions
RPA is the most flexible solution to automate any process. And Financial organizations looking to automate their business processes must have an in-house look at bot maintenance costs. A customized solution like RPA as a Service (RPAaaS) enables customers to avoid confusing prices ahead in RPA adoption. RPA pricing model precisely eliminates the air of uncertainty and confusion and enables financial organizations to adopt RPA in accounting with no additional costs and holes in their pocket.
Before deploying RPA in the financial process, organizations thoroughly test new solutions and vendors. An end-to-end automation partner leads your organization by assessing your readiness, building a business case, designing an operating model, managing business change, and developing a roadmap to scale RPA by starting small.
Benefits of Implementing RPA in Accounting
With RPA in accounting, financial organizations have a lot to leverage by using AI technologies. Implementing RPA in accounting helps in-
Avoid Financial Fraud
Fraudsters stay one step ahead of technology when it comes to financial transactions. To be ahead of the fraudster curve, organizations need to invest in the next generation of fraud risk management. As per a report,” Automation is the future of fraud risk management.” Using AI capabilities such as Machine Learning(ML) systems can easily distinguish between suspicious and legitimate transactions. Furthermore, Machine Learning(ML) technologies can analyze big data quickly and continuously learn with each interaction and process and react to new fraudulent suspicions faster.
Enhanced Information Quality
Financial organizations suffer from poor data quality because of the enormous amount of data. Providing on-time resolution and routing the data to the right place is challenging for financial accountants. RPA in the financial business process eliminates the error rate, enhances accuracy, and provides smarter interaction. With real-time data access, accountants instantly provide resolution and share information independently and limit manual intervention across the organization.
Promote Audit Efficiency
Auditing financial data is one of the critical functions in the accounting process. However, manually collecting data from disparate sources is time-consuming and labor-intensive. With RPA in the economic accounting space, fast-track the auditing process by accurately collecting all the information required from the multiple legacy systems and making decisions independently. In addition, as technology advances, economic value is expected to increase, providing proactive insights and root cause analysis.
Adopt RPA to Scale Big
The age of Robotic Process Automation is here, and when it comes to integrating technology into your financial process, RPA adoption is the need of the hour for financial organizations. Long burdened by manual and repetitive tasks, RPA can turn the grunt work over to digital bots who don’t mind long working hours and repetitive tasks. Hence, with the bot in space, employees can better use their intelligence where the human touch is needed.
With the Conversational RPA, AI, and Automation capabilities, AutomationEdge is on a mission to build a delightful workplace experience for employees and customers with Conversational AI, RPA, and IT solutions. Request a demo here or visit www.automationedge.com to learn how these technologies can help you ace the digital transformation game.