Automation in accounting is on the rise – change in accounting
Future of Work: Accounting jobs to envy?
Covid is forcing companies to transform their daily operations. Automation is no longer seen as a costly and complicated way for accountants to lose their jobs. Instead, it is an urgent necessity and brings with it a host of benefits.
Covid brought to light two truths that accounting experts had long suspected: first, the old-fashioned, manual processes that prevailed before the pandemic were not fit for purpose and would not withstand a sudden and severe shock to the system. And second, accounting teams that used automation were much better prepared for unexpected events.
Automation as a catalyst for change in accounting
How accounting teams benefit from automation:
1. Eliminate paper, reduce manual processes
One of the most obvious reasons to invest in automation is to reduce the manual effort associated with all processes. Covid has turned this long-held desire into an urgent priority: A 2021 survey of accounts payable professionals by Ardent Partners found that the biggest challenges are that invoices and payments take too long to approve, invoice exceptions are high, and there is a flood of supporting paperwork.
By automating invoicing, companies can delegate the tedious and time-consuming steps in the process. For example, by using artificial intelligence (AI) with machine learning to code and approve invoices.
Companies can flexibly scale the level of automation up and down. This gives them complete control over all processes. A survey conducted shortly after the outbreak of the pandemic found that 63 percent of companies using automation in their accounting departments felt they had handled the impact of COVID well: They were able to transition seamlessly from the office to remote work.
2. Save time, reduce errors, reduce costs
Which invoice are companies more likely to receive: one that is printed out and mailed to the office, or one that is sent electronically? The answer is clear: electronic invoices and digital processes are not only fast, but also more reliable than traditional processes based on paper documents.
With cloud-based automation, accounts payable departments can store all invoice- and payment-related information in one centralized and secure location. This makes it easier to access data as well as retrieve detailed information. At the same time, companies can customize their workflows, rules and restrictions to automatically move invoices to the approval stage.
Another benefit is increased accuracy. Especially when it comes to checking invoice content as well as reconciling it with purchase orders, automation is a useful tool. It reduces human influence on the process, virtually eliminating costly and time-consuming invoice exceptions.
Companies also benefit from cost savings: In a recent study, IOFM calculates that automation reduces the average processing cost per invoice from $6.30 to $1.45, and that invoice review teams can process twice the number of invoices in the same amount of time. Other empirical data shows even more significant savings, such as average costs dropping from $11 to $2 and processing time decreasing from eight to three days.
3. Place accounting at the center of the corporate strategy
Why doesn’t the accounts payable department sit at the top of a company? After all, it is the largest source of cash outflow for a company (other than payroll). One reason is that the world has been talking about the strategic value of Big Data and analytics for more than a decade, but it seems to have completely bypassed the accounting department.
That’s changing now. As Jess Scheer, senior editor at the Institute of Finance and Management (IOFM), points out, finance is becoming more strategic. According to her, accounts payable teams are no longer just the people who pay the bills. They are regulatory experts. They are cash managers. They need to do more Big Data analytics and are often the last line of defense against fraud.
For all the talk about robots taking away jobs, this is a clear example of how automation is elevating the importance of workers and making room for them to do other more responsible and value-added work. This will go a long way toward eliminating one of the profession’s biggest criticisms – that they don’t get the respect and status they deserve. So it may turn out that the biggest impact of automation for accounts payable clerks is one that can’t be measured: greater pride and satisfaction in a role that makes a real difference to the business.
Author: Jonathan Laverentz, Head of Digital Innovation, Tradeshift