Future of Finance Automation in Detail

According to the Build Array, companies can lose 20-30% of their annual revenue due to inefficiencies in manual financial processes such as invoicing, reconciliation, and reporting. Therefore, nearly 48% of companies are already working on automating manual tasks. Plus, 88% of finance teams are speeding up their AI and automation finance usage to avoid any hindrance in their overall productivity.

Today’s guide highlights the objectives of finance automation, the role of AI in finance automation, technologies used in automation finance, the financial processes suitable for automation, how finance automation works, its benefits, challenges you face in automation, and best practices to attain successful finance automation.

Goals of Finance Automation

A study by The Wall Street Journal shows that almost two-thirds of large companies plan to automate a few or even most of their finance tasks within the next three years. Not only this, but the goal of automation finance is to help your business experience:

• 24% less time spent on collecting data
• 35% cost savings
• 66% fewer transactional errors

According to Hackett, all the above-mentioned benefits help ensure the smooth conduct of routine financial processes, including invoicing, expense management, and data entry.

Automation lets your team focus on more important work instead of getting stuck with repetitive tasks like invoicing or data entry. PwC reports that by using finance automation, companies could save up to 40% of their time on routine financial tasks.

Role of AI in finance automation

Artificial Intelligence plays a vital role in finance automation. It helps your business analyse data, predict trends, and prevent fraud. Gartner predicts that by 2025, 80% of companies will be strategising to increase their AI investments to make their business operations more agile, dynamic, progressive, and more competent.

Want to know more? Learn how finance automation can transform your business and free up your team's time!

While we focus on the futuristic landscape of finance, we will examine the major technologies contributing to the growth of finance automation. 

Key Technologies Used in Automation Finance

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The technologies help your business streamline finance processes, making it more efficient, accurate, and ready to handle complex data challenges. Here are a few significant technologies that contribute to the seamless working of finance automation:

1. Robotic Process Automation (RPA)

RPA is a business process automation that uses process-oriented technology. This process automation uses software bots to handle voluminous and repetitive tasks. These bots can easily automate tasks, encompassing copying-pasting data, extracting and processing structured data from documents, processing invoices, downloading attachments, making transactions using digital wallets or digital technologies, or even managing emails for you. RPA eliminates manual tasks and processes, working like a virtual assistant to save time and energy for high-priority tasks.

2. Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML are one step forward when discussing RPA, as it significantly shifts from process-driven to data-driven automation. While RPA focuses on process-driven technologies and mimics human action, AI and ML work on data-driven tools that mimic human thought. 

Data and context guide AI and Ml and allow them to use unstructured/flexible inputs, implement their own logic, and handle more dynamic processes, significantly expanding the range of processes that can be automated. 

Further, Natural language processing (NLP) enables computers or laptops to understand, generate, and manipulate human language, which comes under AI. Even AI envelops generative AI (GenAI) that can help you produce different content types, including:

• Text
• Audio
• Images
• Code
• Videos and Music

Examples of AI and ML potential encompasses the following:

• Anomaly detection
• Image and voice recognition
• Predictive modelling
• Tailored recommendations generation
• Pattern recognition and the extraction or combination of structured and unstructured data from documents

Unlike RPA, which follows fixed rules, AI can spot patterns, predict future trends, or detect fraud. The more data AI and ML work with, the better they will get at giving personalised advice or making predictions.

3. Cloud Computing

Finance automation is incomplete without cloud computing, which significantly offers cost-effective, scalable, and flexible solutions and provides robust infrastructure and services for your organisation. Cloud technology lets your business access automation tools and securely store your financial data online.

We've categorised cloud computing into six sections that highlight the benefits it offers to your organisation:

3.1 Cost-effectiveness

• Cloud-based ERP systems allow your company to eliminate the need for expensive physical hardware and maintenance.
• You pay only for what you use, reducing upfront investment and operational costs.

3.2 Scalability

• Your business can quickly scale resources up or down based on demand.
• Cloud providers offer a wide range of service tiers, allowing you to expand without needing new infrastructure.

3.3 Flexibility

• Cloud solutions can be accessed from anywhere, giving businesses the flexibility to work remotely.
• Cloud services offer compatibility with various platforms and can integrate with other tools effortlessly.
  

3.4 Robust Infrastructure

• Cloud providers offer robust infrastructure capable of handling large amounts of data and complex operations.
• Providers maintain and update hardware, ensuring high availability and performance.

‍3.5 Seamless Services

• Cloud computing provides many services, such as data storage, security, analytics, and machine learning.
• You customise various services to meet specific business needs, offering solutions across industries.‍

3.6 Security

• You'll have a secure, always-accessible storage locker for all your finance requirements.

4. Optical Character Recognition (OCR)

OCR technology in finance automation helps turn paper-based processes into digital ones. When you extract data from your documents and convert it into automated or digital formats, OCR enables you to eliminate manual data entry by speeding up and streamlining efficient data transfers throughout your business workflow. While OCR is a great tool, it works best when combined with other applications and automation tools, including RPA, which can further improve your efficiency.

Alaan helps automate the expense filing process using OCR (Optical Character Recognition) technology. With this, employees can easily capture bills, invoices, receipts, and bills in a single click, eliminating the need for manual data entry.

Automatically, the software captures critical information such as amount, date, location, and VAT details, enhancing accuracy and speeding up your expense filing process.

5. Cybersecurity Technologies

Cybersecurity technologies are important for mitigating cyber threats, protecting sensitive financial data, and ensuring the integrity of digital transactions. 

Two advanced encryption techniques used in cybersecurity are:

• Multi-factor authentication
• Intrusion detection systems safeguard financial systems and networks from unauthorised access and malicious activities. 

Moreover, AI and ML algorithms identify suspicious behaviour, analyse network traffic, and proactively acknowledge emerging risks or threats in real-time. When you incorporate robust cybersecurity measures, your organisation can implant trust and confidence among its customers, stakeholders, and regulators to ensure the security and flexibility of digital financial services.

Financial Processes Suitable for Automation

Financial processes like accounts payable, receivable, payroll, and expense management are ideal for automation because they involve repetitive tasks. Automating these processes increases efficiency, reduces human errors, and improves accuracy. This allows your business to streamline operations, save time, and focus on higher-value tasks.

Here's a brief mention of what financial processes are best fit for automating finance:

1. Accounts Payable

Automation can handle invoice processing, approvals, and payment schedules, reducing manual data entry and speeding up vendor payments. This ensures timely payments,  improves cash flow management, and increases overall accuracy.

2. Accounts Receivable

Automating bills, data entries, and tracking payments can streamline your cash flow, help reduce errors, and speed up your reconciliation process.

3. Payroll

Payroll automation simplifies tax deductions, salary calculations, and frequent compliance with regulations. It reduces payment errors, improves accuracy, and frees up time for HR departments.

4. Expense Management

Expense automation helps manage your employee's expense claims, ensuring compliance with company policies. It eliminates the need for manual review and data entry, speeding up reimbursement processes.

5. Financial Planning

Automation in financial planning allows your company to make accurate and data-driven financial forecasting and budgeting for informed decision-making. It helps your business swiftly adjust its financial plans based on real-time data.

6. Purchasing and Procurement

Automation in procurement streamlines your purchasing process. From requesting quotes to purchasing approvals and tracking orders, it improves your business's supply management. It also ensures timely delivery of goods and services while reducing the percentage of human intervention.

These automated processes can increase efficiency, reduce human error, and improve your organisation's financial management.

How Finance Automation Works?

Finance automation leverages various technologies and tools to streamline tasks, improve accuracy, and reduce manual dependency. Here's a breakdown of how it functions:

1. Integration with Data Sources

Finance automation starts by integrating with your existing data sources, such as accounting software, bank statements, or ERP systems. This integration allows the automation system to pull financial data in real-time, ensuring all information is current and easily accessible without manual input.

Want to know more about it? Enjoy seamless integration with Alaan.

2. Data Processing and Analysis

Once you gather data, the system processes and organises it. Automation tools can categorise transactions, match invoices to payments, and record all data correctly. The system can also analyse the data to generate reports, identify trends, and highlight discrepancies.

3. Task Automation

Routine and repetitive tasks that include invoice generation, payment approvals, or reconciling accounts are automated. By setting predefined rules, you can automatically complete these tasks, which can lead to reducing human errors and allowing you time to focus on higher-value work. With Alaan’s exclusive NetSuite, you can get rid of the reconciliation workload.

4. Workflow Automation

Automation tools can also streamline entire workflows, ensuring your approval processes or financial operations move smoothly through each stage. For example, submitting an invoice will automatically redirect you to the correct team for approval regarding payments and record-keeping without manual intervention.

5. Using Artificial Intelligence and Machine Learning

Artificial intelligence and machine learning enhance finance automation by extracting and researching data and making well-informed decisions. AI can predict trends, detect fraud, and suggest ways to optimise your financial processes.

With Alaan spend management, you can create an efficient, accurate, and scalable financial management system for your business.

Benefits of Finance Automation

Talking about the advantages of automation finance, it helps you in various ways, such as:

1. Accuracy and Data Integrity Enhancement

Automation minimises the risk of human errors, guaranteeing that financial data is more accurate and consistent. This leads to better financial reporting and reliable decision-making.

2. Cost Optimisation

Finance automation reduces manual tasks, leading to cost savings by streamlining processes, reducing human errors, and avoiding unnecessary expenses. It also helps your business allocate resources more efficiently.

3. Compliance and Risk Mitigation

Finance automatic processes ensure that all transactions and reports follow regulatory guidelines, reducing the risk of non-compliance and corresponding penalties. They also help identify and prevent fraudulent activities.

4. Improved Operational Efficiency

Finance automation accelerates your day-to-day tasks, including invoice processing, payroll, and reporting. This helps employees save time to focus on more strategic activities and thus boost overall productivity.

5. Enhanced Stakeholder Communication

Automation can help your business achieve more transparent and accurate financial reporting. Overall, finance automation improves communication with stakeholders, including auditors, investors, and regulators, promoting accountability and trust.

6. Real-Time Financial Insights

Your business can access real-time financial data with automated systems, which allows you to make prompt analyses and well-informed decisions. This timely access to information helps you adjust financial strategies based on current data.

These benefits make finance automation a valuable tool for businesses like yours that want to optimise their financial processes and operations.

Challenges in Implementing Finance Automation

Finance automation plays an indispensable role in streamlining business operations. Smart Zone was having difficulty getting things together. The company was finding it challenging to consolidate all team members' personal and corporate bank accounts. 

Here's the list of financial loopholes that most companies encounter, just like Smart Zone during implementation.

1. Change Management in Automation

When you introduce automation, it changes how tasks are done, which can make employees uncomfortable or resistant to the new system. Having a good change management plan is important to make valuable adjustments in your company. This means providing proper training and clear communication so employees understand how automation will benefit them and make their work easier. Doing so reduces any pushback or refusal and ensures a smooth transition to the new way of working.

2. Data Security and Privacy

Automation involves processing sensitive financial data and raising concerns about security and privacy. Therefore, businesses must ensure secure data storage, robust encryption, and compliance with privacy regulations such as GDPR. Any keyhole in these areas could expose the company to regulatory penalties or data breaches.

3. Integration Complexity

Integrating new automation tools with existing financial systems can be a complicated process. Often, businesses use multiple software platforms, including ERP or legacy systems, and ensure that these systems require careful planning, effective communication, technical expertise, and sometimes overpriced customised solutions.

4. Investment and Up-front Cost Concerns

Initial investments in automation technology can be pricey. These include infrastructural software costs, infrastructure, and the time required for implementation. Additionally, companies may be concerned about when they will see returns on investment (ROI), as automation savings and efficiency improvements may take time to materialise fully.

With Alaan tools, you can easily calculate how much your business can save annually.

5. Retraining and Talent Acquisition

Introducing automation may require new skills in managing automation tools, interpreting AI insights, or overseeing automated workflows. Finding the right talent or retraining your current staff can be daunting, as these technologies often require specialised knowledge.

Addressing such challenges with proper planning and investment can help your business successfully implement finance automation while reducing disruption and achieving long-term benefits, just like Smart Zone.

Alaan's comprehensive dashboard turned out to be a breakthrough for them. Besides resolving their consolidated finance issues, it's now easier for them to allocate funds to someone within a few seconds.

Speaking on Alaan, Abhinav Sangar, the Head of Operations at Smart Zone, said:

“One of the major pain points we were going through was getting everything together. We have corporate and personal bank accounts associated with PROs for the whole team. But that couldn’t be consolidated quickly. Alaan’s comprehensive dashboard has been a game-changer for us. In addition to consolidated finances, we love how easy it is now to allocate funds to someone within a few seconds.”

Best Practices for Successful Finance Automation

Implementing finance automation requires meticulous planning and execution to achieve maximum ROI. Thus, here you'll find some key practices to ensure success:

1. Assessment Needs Assessment and Goal Setting

First, evaluate your current financial status and identify areas that can benefit from automation. Then, set clear goals, such as improving accuracy, reducing costs, or speeding up processes. This will help you select the right tools and ensure that automation aligns with your business needs.

2. Choose the Right Technology Solutions

Not all automation tools are the same. Choose technology solutions that fit your company's size, existing systems, and specific financial needs. Select scalable, user-friendly, and compatible tools with your current infrastructure to ensure a smooth integration.

3. Implement in Different Phases

Rather than automating everything at once, it's best to implement automation in phases. You can start with more straightforward processes, such as invoicing or payroll, then gradually move to more complex areas. This incremental approach allows your business to troubleshoot issues and adjust as required, ensuring a smoother transition.

4. Provide Training and Manage Change

Introducing automation involves a significant shift in how tasks are executed, making it crucial to provide comprehensive training on the new systems. Clear, structured communication paired with hands-on training ensures that your staff can steadily transition into the new workflows, minimising resistance. A well-managed change process is essential to help staff understand the advantages of automation, ensuring they are confident and comfortable with the updated tools and procedures.

5. Monitor and Continually Optimise

Automation is not a "set it and forget it" process. You need to monitor automated systems' performance regularly to identify areas for improvement. Also, continual optimisation of the method based on your feedback and data analysis is required to ensure that automation delivers the best results as your business thrives.

Following these best practices will help ensure the successful implementation of finance automation, leading to increased efficiency, accuracy, and long-term growth.

Wrapping up on What Future Holds for Automation Finance

Implementing finance automation requires thoughtful planning and strategic decisions to implement the right tools and processes. By thoroughly evaluating your organisation's requirements, you can unlock long-term benefits such as cost savings, improved accuracy, and enhanced operational efficiency.

As we anticipate future developments, automation will continue to evolve, with artificial intelligence and machine learning driving more advanced solutions. These technologies offer deeper insights, better predictive capabilities, and more streamlined processes. Alaan can help you implement the latest finance automation solutions for seamless business operations. 

Ready to step into the automation world? Schedule a demo today and see how Alaan can transform your finance workflows!