Robotic Process Automation (RPA) is software technology that you should be taking advantage of to grow your business. While useful in most parts of your business, using bots is particularly efficient when it comes to accounting and bookkeeping. These parts of your business are all about quickly and precisely processing numbers, and making sure everything is in order, to make accurate reports. In this blog, we’ll be focusing on areas in your financial process that would benefit from RPA integration.
Managing your accounts receivable can sometimes be a problematic administrative task. It’s important to stay on top of them so you can do accurate bookkeeping. The problem, however, is actually staying on top of them. Given the nature of accounts receivable, they are usually handled manually by businesses where an accountant will have to manually input all your accounts receivable into their books, and then a receipt must be sent to the customer to process the payment.
The biggest issue with manual bookkeeping is the high possibility of human error. Since accounts receivable is an unusual part of bookkeeping, human error is a more common occurrence when dealing with them. For example, you may have one person processing the accounts receivable, and one person in charge of billing the customer. These two employees would need to be in constant communication in order to avoid delaying the processing of a single payment. Scale this up for all your credit-based transactions, and you can see how it would be ambitious to hope for a smooth human labor-based process.
Since you’re dealing with your cash flow, you really want to minimize any processing and accounting errors as much as possible. Mistakes or gaps in your finances will very quickly trickle down to every aspect of your business. It’ll ruin your growth metrics, and it’ll lead you to make the wrong decisions for your company.
Manual bookkeeping is also painfully slow. With things like accounts receivables, you want to keep your Days Sales Outstanding (DSO – the time it takes to receive the payment from the customer) as low as possible. One of the easiest ways to add extra time onto your DSO is to always be waiting for the data to be entered manually. With all the delays that can happen on a customer’s side, you want to make your end of the process as smooth and fast as possible since it’s the only part of the equation you have control over.
Integrating RPA into your processing of accounts receivables is a great way to solve a lot of these problems. First, RPA can fully manage the entire process for you. There is no need to have multiple bureaucratic steps that increase delays and risks of miscommunication. With RPA, you can process accounts receivables, and automatically send out invoices to your customers by email. You can even add more tasks to be automated, such as following up on your customers, or monitoring their credit with you — all without compromising on speed and precision. All of this can be done immediately following the order, which would greatly reduce your DSO. Given that the process is automatic, there is very little room for anything to go awry. As long as all the information is available, RPA will offer much more reliability than any human labor could.
The other side of the coin of accounts receivable is of course accounts payable. Processing accounts payable can be just as time-consuming and tedious, if not more, than accounts receivable. The problem with accounts payable is that you rely on invoices from the outside to reach you. Each vendor or business has its own style of invoicing because there’s no standard approach. Furthermore, your business has to cross-check these invoices with your own orders to make sure that everything is in order. Once everything is received and cross-checked, the account payable can be approved and processed.
Because of the lack of standardization in invoicing, this process can’t be fully automated easily. You will still need some degree of human labor to ensure that each invoice matches the order properly, and of course, approval has to be done manually. You can use RPA bots to review invoices and flag inconsistencies between your orders and the invoices. However, bots can only detect mistakes, they can’t tell you where the mistake is exactly (is it on your end or the vendor’s?) and how to fix it. A bot would make sure that the mistake doesn’t go unnoticed so that someone can manually address it.
What you want to do is to speed up and streamline each area you can afford to make things as smooth as possible. By using RPA bots, you can automatically send invoices to the right person for cross-checking and approval. Once approved, you can use bots to process payments automatically and send standardized confirmation and follow-up emails to the vendors. All this reduces the amount of human labor (and error) involved in the process.
Client onboarding is becoming more and more complicated each year. Just in terms of KYC regulations, things are starting to get long and tedious. There’s ID verification, face verification, document and proof of address verification, biometric verification, etc. Complying with these regulations can add a significant amount of time to your onboarding process, and as you know, once onboarding goes beyond a certain time, customers start to lose interest.
One thing you can do is integrate RPA into your client onboarding process to speed things up. You can use bots to process documents and verify their validity. Unlike invoices, documents follow standards and bots can reliably review them for you. This will streamline the process for your compliance manager who will spend much less time reviewing whether your new clients are in line with KYC regulations. Bots can also assist in entering your client’s information into your system after they’ve been approved, reducing manual data entry even further.
Reconciliations can be a constant problem for your financial team to deal with because reconciliations require very precise data entry and number-crunching, and when these are done manually, you inevitably run into mistakes that will paralyze your entire team until they are resolved.
RPA bots can help you with the data-entry part of the job, increasing speed and accuracy, so that your team can focus its labor on other things, like analyzing data rather than entering it. Just like in previous examples, bots can be used to automatically review and approve transactions, and flag any mistakes or discrepancies. Bots are great at processing bank reconciliations too. They can automatically download statements, link them to accounts, and validate transactions, among other things. You can even use them to create standardized journal entries for everyday tasks.
Preparing financial statements
Software robots can easily be used to automatically generate financial statements – both for internal and external purposes. For something so simple yet so ubiquitous, RPA is an amazing solution. It’s another area where you can take the burden of data entry off your team’s shoulders and let them focus on more analytical work.
While they haven’t been too common in recent times, business trips can sometimes tend to be a mess from a finance point of view. Executives will go around for meetings and will come back with food, housing, and transportation receipts and invoices. All these will be handed to the accounting team to handle. If you thought processing non-standardized invoices from your business partners could be a headache, then just imagine dealing with invoices from businesses in different places and countries!
Bots can be used to review and process things like travel expenses for your company. You can also teach your bots to compare the nature of an expense to your company’s policy, and tell you if that expense qualifies or not. In the case where receipts are missing, bots can be programmed to automatically contact employees and request more information from them. It’s a lot of stress removed from your accounting department to automate these processes.
Reporting taxes is a process that is highly standardized yet still done manually by businesses and individuals. You can integrate RPA into your reporting system to automate the whole thing. Bots can be used to gather data, generate reports, calculate taxes, and even send your finished file out. Given that reporting taxes is basically just data entry, this is easily streamlined and automated through RPA.
Financial Processes Need RPA
Overall, integrating RPA into your financial process means you’ll be increasing your precision by reducing human error, all while increasing your speed. Using bots will lift the unnecessary weight of data entry from your accounting team’s shoulders, as well as allow you to manage your compliance, risk management, and other processes without any worry. This allows your finance and accounting team to use their labor in more impactful areas and increase efficiency. Whether it’s building a simple chatbot, or automating complex back office processes, or monitoring transactions, the need for automation and precision is apparent.
At K2 University, we’ve partnered with industry leaders Automation Anywhere to offer RPA Training for Finance Professionals. Our Mastering Bots course offers best practices, certificate guidance, web data management, and chat bot development – find out more.