RPA in Accounting and Finance
As the era of digitalization and automation in finance & accounting continues to progress, many organizations are looking for ways to automate their back office tasks. RPA (Robotic process automation) is one of the most popular ways for these companies to achieve this goal.
The use of intelligent automation has become more and more popular in finance, accounting, and technology. With the help of RPA, we can not only improve our customer service but also cut down costs. With the advancement in artificial intelligence (AI) technology along with cloud computing, AI becomes ten times more powerful than ever before.
The advantage of employing RPA in finance and accounting can be viewed from two sides: human limitations and the ease of use. It is very clear that almost any machine will have difficulty handling certain cases and RPA is no exception: tedious work, processing large amounts of data, capturing the context of a scenario, filling in forms etc., are only a few examples. This said, the extent to which RPA can be used in these fields is amazing as it has been demonstrated time and time again following its use in several tech giants such as Google.
Benefits and Challenges
RPA (Robotic Process Automation) is the automation of tasks that are repetitive and high-volume, such as financial transactions.
The implementation of RPA technology into your business is feasible only when-
There are significant time and money savings to be had. It's crucial to crunch some numbers and evaluate the ROI before you start.
The quality of operations is high and the processes are rule-based and standardized. Otherwise, you will only get chaos when you automate processes.
Finance departments are well-suited to automation because of their repetitive, rule-based processes and the lack of exceptions.
Finance, with its accounting and procurement departments, meets both criteria. Accounting and procurement are famous for repetitive tasks like data entry, reporting, cross-checking, and record keeping--which are the perfect food for RPA bots. On the other hand, most processes are more or less structured and rule-based as there are almost no exceptions or human decision-making involved.
Robotic process automation is a relatively easy solution to implementing automation into your organization, since robots don't require integration with information systems to function. As a result, you will see a return on investment almost immediately once RPA is implemented.
Benefits of Implementing RPA
Increased operational metrics, SLA and quality controls
You can leverage several key performance indicators, including Days Payable Outstanding, Days Sales Outstanding and Days Inventory.
No Errors and Better Compliance
Software robots can perform complex, repeatable tasks without human intervention and with no mistakes.
By eliminating routine tasks, your team will have more time to strategize and focus on the activities that drive value.
RPA is a cost-saving technology that has been used by many organizations to reduce the costs of their operations. It's a process automation tool that allows for the automation of routine tasks within business processes, resulting in increased efficiency and improved operational effectiveness.
The benefits of RPA include cost reduction, increased efficiency, improved operational effectiveness and higher productivity.
RPA will streamline core financial processes, reducing risks associated with data safety and regulation.
However, you'll have to be prepared for some roadblocks. One of them is the fact that much accounting documentation is still paper-based or non-standardized, such as vendor invoices or expense statements. Another one is about getting past legacy ERP systems that can throw a monkey wrench into any digitization project.
Challenges related to building RPA solutions can be overcome by using a platform that offers both data extraction and system integration features. Let's look at some popular use cases in finance and accounting-
Sales-related accounts receivable is a good place to start automation, since it does not rely on external documents and can be measured by Days Sales Outstanding.
The human element is crucial in maintaining the efficiency and effectiveness of enterprise resource planning (ERP) systems. For example, an accountant may forget to send an invoice. The result is not only a cash gap: if it's done frequently and without regard to other processes that rely on timely payments, it jeopardizes the order to cash process and impacts liquidity.
Adopting RPA bots as your digital workforce will enable them to automatically generate and send invoices. By automating this task, you will get a consistent cash flow without any interruptions or deficiencies.
RPA can eliminate cash gaps and provide input information to accountants, saving them the time and effort of arranging multiple systems. RPA also offers other potential benefits, such as eliminating manual processes that are error-prone. The following list highlights accounts receivable tasks that can benefit from intelligent automation:
- Customer data setup and management
- Extracting customer information from different sources
- Sales quotation and entry generation
- Invoice generation and distribution
- Cash application
- Customer credit monitoring
- Dispute resolution
- Follow-ups, reminders, and dunning
- Credit risk management
Robotic process automation (RPA) can help you reduce the Days Payable Outstanding (DPO). RPA programs are designed to automate routine tasks related to customer service, marketing and sales. Companies that use RPA often have lower DPOs as a result of fewer errors and faster responses.
Problems with accounts payable usually occur while processing invoices. The vendor may not be able to provide a standard invoice form, and therefore it must be cross-checked with purchasing orders and approved before being sent to accounting. OCR technology can streamline this process end-to-end even if the incoming documents are paper-based since it allows users to read and search for keywords.
Software robots can help invoices be directed to the team member responsible for their approval, set up reminders and flag mismatches.
Examples of what RPA may accomplish in accounts payable are provided below.-
- Vendor verification and setup
- Purchase order entry
- Data extraction from purchase orders and invoices
- Vendor invoice processing
- Cross-checking invoices with purchase orders
- Preparing and/or performing payments
- Payment validation and reconciliation
- Expense compliance audit
- Monitoring duplicates
- Responding to vendor inquiries
Bots help to avoid payment delays and inaccuracies by taking on data entry, timesheet validation, and deduction calculations.
RPA can help you with-
- Verifying data across multiple information systems
- Employee data extraction
- Generating, approving and tracking timesheets
Although the main part of this business process takes place in tax compliance software, finance departments still perform interim calculations that take time. RPA robots can automate these tasks by taking on the following tasks:
- Gathering data for tax liability
- Creating tax basis
- Preparing reports
- Updating tax return workbooks
- Submitting reports to tax authorities
In the same way that treasury management systems are generally not as sophisticated as those for other parts of the company, initial data input is often performed manually. Bots can extract data, change its format so that treasury systems can process it, and more:
- Extracting and formatting data
- Updating treasury systems
- Sending out reports
- General ledger updates
The best way to monitor financial performance is by tracking profit and loss for each day. However, manually performing this task can be tedious and time-consuming. With RPA, you can automate this process and generate immaculate reports in real time. Such intelligent automation will make your business processes more transparent, ensuring accuracy in forecasting.
There are many reporting processes that RPA can help automate, including:
- Trial balance and balance sheets
- Income statements
- Variance analysis
- Financial close processes
- Regulatory/management reports
Robotic process automation (RPA) tools can help with many aspects of planning and forecasting, including loading balance forecasting and creating variance reports based on historical data.
The Tax function is subject to routine processes that are still performed manually. This has created a challenge for many organizations in gathering and reconciling tax-related data.
Finance departments with high volumes of manual processes can benefit from using intelligent automation with RPA. This enables people to perform more complex tasks, which drive value for the business.
Join CIGNEX and Automation Anywhere for a 60 minute webinar, where we showcase and share insights on how you accelerate the financial close, Reduce costs, Strengthen governance and controls and can realize the other benefits by automating finance processes.