Automation in the Finance Industry

When asked to write a thought leadership piece, my instincts went to Accountancy and Management.?Then my colleague Hazel pointed out that one of my biggest strengths is efficiencies through automation. ?That leads me to my first tip - if you’re unsure what your strengths are, ask the team around you!

Finance has come a long way from handwritten ledgers (which takes me back to my first exams!) to desktop accountancy systems and now cloud-based apps that are accessed anywhere.?

I have always approached my work with “how can we do this better?” It’s led me to look at processes and determine:

1.) What can we do to reduce the time it takes to do a task?

2.) How can we reduce errors in our work?

Batching

The earliest automation I implemented involved batch loading data into systems instead of staff manually entering them one by one. ?Spreadsheets would pick up supplier/customer names and similar descriptions after I typed just a few letters. ?I would batch enter invoices with the same date, copying the cell rather than typing the date - resulting in reduced errors.?We were less likely to mistype a date, descriptions were uninformed, and duplicates were no longer an issue with sequential numbers for references. ?It was simple, effective and cut the work in half.?

Credit Control & Customer Service

From a credit control perspective, automation has had an enormous impact.?I had teams working through a ledger, one by one, calling those who were overdue. ?I set up automated reminders for customers when payments are late – it was so easy and massively reduced the manual work. ?This basic automation allowed the credit controllers to focus on the customers that needed more than a gentle reminder.?

Further to this, I saw opportunities to improve customer service.?Implementing a chatbot that could provide customers with the information they wanted without dialling a number and waiting on hold.?This was surprisingly easy and affordable to complete and I was able to do so without using external suppliers.?Customers were getting information when they needed with no human interaction required at all.?This automation allowed staff to juggle admin tasks with answering chats, reducing pressure on the phone lines.?It had the knock-on effect of improved payments and increased staff morale.?Win-win.?

?Bank Payments

When I started my career, I had to write cheques to each of the suppliers and sit down with the CEO once a week with the supplier statements as he checked and signed each cheque individually. ?This process seems so outdated now, even when I used to sign the cheques myself up to a specific limit. ?I’d still have to write out the addresses on the envelopes, put stamps on and take them to the post box!

Bank payments, either by BACS or faster payments, became a more reliable and cheaper way of paying suppliers.??But it is still a lengthy process, keying in each supplier and then typing the payment separately. ?With large payrolls, this can become tedious. ?First came the option of ‘templates’ - for example, you could have all your staff under one template, so when you paid them, you’d just be entering the values and not searching for each PAYE separately first. ?This process still led to errors; when checking the whole value, it would be out by a few pence, and then you’d spend 20 minutes trying to figure out who had the wrong amount of pence by their name! ?Finally, the solution came with banks adopting bank file imports.?

The bank file imports allow the payroll software (and some accountancy software) to create files detailing the payments.?

No more typo errors, no more keying supplier bank details.?

This function is mainly reserved for large corporate companies; however, some banks have this function for SMEs. Santander is one such bank.?

Accountancy Systems

When cloud-based accountancy systems were first launched, they were met with fear and scepticism.?I still remember the worry in the accountancy community – will machines replace our jobs??I wondered if the accountant’s traditional role would become more of a strategic and advisory role.?I went from inputting clients' transactions in a spreadsheet at the end of the year to setting up systems and teaching them to use them with bank feeds feeding live data into the system.?I’ll never forget the first client I went out to after a year of inputting her information.?She was so proud of herself, and I thought this year’s books would be a piece of cake.?We sat down, and she showed me her system.?(Take a deep breath here)?Everything was categorised as ‘Direct Expense’.?No breakdown of motor, stationary, staff etc. – just direct expense.?That was the moment when I knew systems were never going to replace accountants.?I had to undo every single transaction and enter all the information again.?

Whilst larger companies have had the resources to implement automations before they have become cost-efficient to the SME’s cloud based software is one area SME’s have the advantage.?Larger companies accounting systems are so deeply embedded with other desktop applications that switching to cloud is not a feasible option.?

One of the most exciting automations came with software that promised to read your invoices, saving vast amounts of time. ?I must admit I felt sorely let down. ?I tried out Hubdoc (Xero’s software add-on) and QuickBook’s own systems, and they didn’t meet my expectations. ?There was very little that read correctly; the amount of time spent checking and correcting data negated any time saved. ?This experience put me off other software promising to save time, leading to another lesson learnt.?Don’t assume.?I wish I had been more open to Dext when I first came across it two years ago. ?I mean it was all in the name!

Dext is a fusion of two words: the dexterity that accountants and bookkeepers bring to their clients’ challenges and the next generation attitude that so many have.

The accuracy and ability to create rules within it are miles ahead of any other invoice reading software I’ve seen. ?The smartphone app for scanning receipts is equally impressive. ?The icing on the cake is the number of integrations it has with accountancy systems, Sage, Quickbooks and Xero - you can even create feeds if you have a bespoke accountancy system. ?With a price tag much higher than similar software – the saying ‘you get what you pay for’ is true here.?

What’s next?

Robotic process automation.?All of the automations we have discussed are RPA, they are structured, rules-based automated processes that are taking place.?

The future is self-solving, being able to recognise an issue and provide an answer.?You may have come across some of these with chat bots where it’s picked up your issue and provided an answer.?

Cognitive is fascinating, being able to analyse historical patterns and predict correct answers.?In financial terms this can be applied to credit control, e.g. customers in group A have a history of paying when a reminder goes out so will auto-send the reminder.?Then customers in group B don’t pay until they are called – send them straight to agents to contact.?

Finally, you have AI, predicting data - forecasting and advice.?I have yet to see any system that can do this with accuracy.?There are always too many external factors that a system cannot predict.?For example a system can predict sales and purchases based on historical options, but it can’t comprehend the market demand, competitors or the economic factors.??

Summary

Finance has come a long way in the last two decades and I urge you all to be open and embrace new automations that could benefit the business you work in.?

Automations are not to be feared, welcome them – drive efficiency.?

I encourage everyone to look at their daily tasks with a questioning mind and ask themselves, “How can we do this better?”

For more information, reach out to Rachael and start a conversation today!