Why Accounting Automations Are Crucial for Enhancing Efficiency
By: Shabbir Moosvi, Director and Vanessa Angeles, Senior Accountant
Advancing technologies such as accounting software, cloud computing, and robotic process automations have rendered transformative change in the financial industry, empowering organizations and firms while simultaneously presenting them with new challenges. While the use of such automated tools might challenge finance professionals to develop new expertise and implement new or unfamiliar processes, these automations also equip them to achieve greater efficiency and effectiveness at reduced cost, ultimately allowing them to expand their role and develop new approaches for providing value. The introduction of automations also provides an opportunity for an entity’s management to revisit their current procedures in place for financial and accounting transactions flow and to devise updated procedures based on the new technology. Manual accounting processes are rapidly facing obsolescence, and those with an eye to the future must leverage automation if they wish to keep pace with the demands, and opportunities, that technology continues to generate.
So, where and how can automated tools be implemented to improve efficiency, reduce risk, and provide an advantage as technology continues to develop?
The potential of accounting automations is enormous, and sources show that nearly 75% of accounting processes can be completely automated. However, in spite of the new frontiers promised by accounting automation, many in the industry have lagged behind. In fact, a 2020 report from the IMA found that almost 76% of professionals still rely on predominantly manual accounting processes, which are increasingly time consuming, costly, and prone to substantial risk. Such reluctance to adopt automation has a measurable impact on business, and firms that have not yet implemented these tools are being outpaced in terms of efficiency and their ability to take on new clients.
These shortcomings have been brought into stark relief in recent years and in the wake of the COVID-19 pandemic, which has forced organizations and firms across the board to increase their reliance on technology and their capacity for remote work. There is now a pronounced need for accountants to be able to access and engage with large amounts of data remotely, making automations, artificial intelligence, cloud computing platforms, and accounting software vital assets due to their utility for streamlining accounting tasks, especially in hybrid and remote environments.
But many of these trends were already well in motion before the pandemic, driven by the evolving needs of clients. The IMA’s 2020 report also found that finance professionals are feeling greater pressure to focus on delivering strategic insights as opposed to performing transactional processing or generating reports. However, if those in the finance and accounting fields remain bogged down by manual processes, they will have little leftover bandwidth to provide the deep analysis and expert recommendations that their clients are looking for. Similarly, smaller firms that have less manpower can level the playing field dramatically by investing in automation technology that supports their staff to compete with the industry giants. Small businesses may also find that they have greater agility relative to the big firms in adopting automation strategically and in response to market needs.
All of this means that there is massive opportunity for early adopters of automated tools to set themselves ahead of their competitors by reducing cost and increasing efficiency. With such unavoidable need to enhance technological capacity, demand for accounting software has skyrocketed, and it is projected that the global market for accounting software will reach a value of $11.8 billion by as early as 2026.
As a small business with 40 years of experience providing financial services to federal agencies, we have found tremendous success in leveraging various automated approaches that limit expense, save time, and provide greater accuracy to our clients. Here are just a few approaches we have taken to assist our clients with overcoming the challenges of automated processes to add value and solve financial needs.
Evaluation Phase:
To get the maximum benefit that automation can offer, it is imperative to select automations that are the best fit for your organization. Start by evaluating your current policies and procedures and closely examining what is occurring on the job to determine if processes are in sync and compliant with any rules or regulations. Before a process can be automated, it is critical that all weaknesses in the current processes are resolved and all gaps are sufficiently addressed. By taking the time to map out each process and address any potential gaps, you can improve efficiency and effectiveness and reveal opportunities for optimization.
Automation is very frequently a perfect fit for actions that are repetitive and require little judgement, and it can provide immense value for moving structured data from one location to another, criteria-based decision making, exporting data and data visualization, sending standardized responses, and front-end to back-end data entry.
Data Storage:
When deciding on an automated approach, data storage is a key consideration. If there is any data still being collected outside a data system, keep this in mind when determining the best solution for data storage. There are many different solutions available, including databases, data pools, data lakes, and data warehouses. Each data storage solution offers different advantages that are suited for different needs, so before making the migration, explore which options work best for you and help you best achieve your organization’s objectives.
Because there is a growing need for accounting data to properly inform decision making, it is crucial for high-quality and accurate data to be easily accessible for analysis by decision makers. Data housing solutions that are created to receive data input from source systems for easy access are therefore invaluable, especially in remote contexts. Rather than requiring hours of manual data entry, mass volumes of data can be uploaded, consolidated, and organized instantaneously, giving accountants significantly more time and freedom to apply their sought-after analytical skills to provide sharper, more proactive insights.
Furthermore, data housing solutions help overcome human error to ensure that data is accurate and free from mistakes, meaning that decision makers are able to take confidence in the data at their disposal.
Robotic Process Automation (RPA), Artificial Intelligence (AI), and Macros:
Accounting comes with a myriad of challenges, and businesses can sometimes struggle to close on time and expediently without risking error. Furthermore, data can often be disorganized, missing, or contaminated by typos and other inaccuracies, making it unduly difficult for accountants to interpret and resolve discrepancies. Thus, financial close often puts intense strain on accounting teams, especially when working remotely and across different locations and time zones. But by utilizing the right automated solution, the task can be streamlined, expedited, and executed with significantly reduced errors. Using automated solutions for financial activities and other important tasks alleviates the strain on teams and allows them to respond to issues more promptly, improving performance and providing enhanced value.
Analytical Reports:
Most software is designed to generate output based on data input, and another benefit of well-designed, robust automation is the capability for producing detailed analytical reports for an entity’s management. These reports can be generated with a single click and are highly advantageous for assisting management in understanding the root causes of issues and discrepancies. When final results fall short of expectations, these reports provide management the granular insights they need to identify and resolve issues decisively.
Ask the Experts:
While accounting automations are clearly powerful resources, they are still relatively new and may require a skillset that many seasoned accountants are unfamiliar with. This means that engaging automated tools can be a strenuous and disruptive process, especially on a largescale, because not only does this mean changing engrained business processes, but it also requires that accountants take the time to obtain a new range of knowledge. However, by partnering with experts who are well-equipped to take maximum advantage of automated capabilities, agencies and firms alike are able to benefit from automated technology.
By soliciting expert consultants to create, implement, run, and troubleshoot automated approaches that have been tailored to a client’s financial needs, a broad range of accounting processes can be streamlined. This means that organizations are able to get the full benefit of automations without having to overcome gaps in technical knowledge. Even if you don’t know what solution is best for a given process, a case study can be built to help you determine the solutions that will work best for your organization.
These are just some of the numerous ways that automations can augment the work of accountants, and these technologies are already reshaping the trajectory of the financial industry. As progress marches on and the effects of the pandemic continue to exert their influence, it is clear that both large and small businesses will be called upon to adopt new technologies and innovate new approaches to respond to the dynamic needs of their clients. Equipped with accounting automations, finance professionals will be prepared to take on the future of accounting in stride.