5 ways to achieve financial process automation

Many finance teams are at various stages along the automation journey, and others are yet to fulfil all their aspirations for their data.
In the last decade, we’ve heard many predictions that technology is the death knell for accountants but that has not been the situation at all. Instead, technology has brought positive change to the industry, allowing finance professionals to upskill and add extended value across a business. Cloud-based software is common and finance teams are relying more on technology to automate manual tasks and back-end work so they can be trusted advisers, lead change and help others use data to make astute financial decisions.

In this blog we outline five ways finance processes have been improved via purpose-built software so companies can operate with greater speed and accuracy.

1. month end– cut the time to close the books

According to the American Productivity & Quality Center's (APQC’) General Accounting Open Standards Benchmarking survey, 2,300 CFOs from different companies were asked what is their “cycle time to monthly close” the results showed the bottom 25% said they need 10 or more calendar days to perform the monthly close process. The top performers, or the top 25%, can wrap up a monthly close in just 4.8 days or less — about half the time of the bottom 25%. At the median are the organizations that need 6.4 calendar days to close out a month’s books. Where do you sit on that scale? Want to move your close process from 6 to 2 days?

Purpose-built financial software creates month-end reports in the same tradition as the accounting team recognizes but instead of collecting and collating data from across the business – that has been done for you. You can build the statements any way you like and when the next month comes around, the statement will automatically populate with the up-to-date data. With the standard income statement already prepared, the finance team is likely to have more time to explain to various managers what’s happening within the numbers and what they can do about it.

2. visualizations – make it simple to analyse huge data sets, interpret and add value

The quantity of data a company collects increases every day and while finance people are good at understanding, interpreting and explaining it – they can always do with some help to make it easier to see the important messages or signs in the operational and financial data.

How does EBITDA stack up over the last three years or what happens if your compare your cash conversion cycle this month to last month? Such data visualizations can deliver clear insights. Big strategic questions such as Why are revenues falling? Where can we find efficiencies? How do customers interact with us?—can benefit from the creation of an exploratory visualization.

Cloud-based financial software allows the finance team to automatically layout financial ratios and comparisons in charts and graphs. These visuals better represent important attributes of key drivers like sales and headcount and enhance the understanding across the business of why performance may be in decline.

Instead of the old ways of converting spreadsheet cells into charts, financial visualizations can now help diagnose a problem. So instead of presenting the q1 financial results, accountants can present why the business missed its targets in a range of purpose-built visual dashboards.

3. workflows – integrate into the budget so more area experts can get involved

With more people working from home – good collaboration tools are in high demand. One business activity that benefits from several expert opinions and sharing of data is the budget process. Traditionally, master spreadsheets are created to share among different departments but are often abandoned, and instead, the finance team completes the budget on everyone’s behalf.

New budgeting software with workflow features enables multiple people to work simultaneously in the same worksheet. The budget also updates in real-time because it is created in a live environment and everyone can see the most up-to-date information.

The finance team gain lost time from not chasing and cross-checking numbers nor does the budget have version control issues. Finance continues to be the budget owner but the workflows automate feedback from the rest of the team and finance gets reminders to follow up if certain data owners have not completed their assigned tasks.

4. customize financial reports to create more buy-in of the numbers

Every business has a unique selling proposition, customer base and reporting requirements. Different business owners or branch managers often want specific measures includes in financial statements but the finance team don’t have time to include them. So being able to customize a profit and loss (income) statement and then set, forget and have it automatically update is a huge time saver for accounting teams.

Automated and customized financial statements take away the nightmare of producing and consolidating numbers thar are broken down by branch, division or consolidated for the entire company. With automated financial statements, the head office accounting team can consolidate or split the statements anyway the different entities want them and to any level of detail; be it top-level revenue and profit or viewing expenses at a granular level.

In the past, you have five spreadsheets and you add them together. Now it’s a click of a button to have a consolidated financial statement.

5. let the data tell you – set-up alerts for early warnings

Statistical short-cuts are built into purpose-built financial software to reduce uncertainty and risks. By setting up ‘alerts’ people are embedding intelligence into their data.

Trigger emails for the finance team might be when customers are tipping over the threshold of 60 or 90 days to pay their accounts or products are being sold below the desired profit margin. Alerts can be set-up at 10% or below 15% margin thresholds for the finance team.

Alerts can be used across the business so everyone has the insights, for example, the operations manager can also get an email when a product in the warehouse is overstocked or the sales managers when a product’s margin falls below its safety threshold.

Such a simple method can yield insights that help a team ensure there is enough capacity to meet demand, identify market opportunities and avoid over-investing in staff, equipment and other assets.

To find out more, download the eGuide: Save time and automate financial processes