What is finance automation and why is it important?
In an era where digital transformation is not just a buzzword but a business imperative, many small businesses still find their accounting teams entrenched in outdated, manual processes.
To put it frankly, there is simply no need for finance teams to painstakingly sift through endless spreadsheets, manually enter data, and navigate through a labyrinth of invoices and receipts. And if you’re still drowning in manual tasks, you’re probably doing something wrong.
Feeling called out? There's an easy solution! Finance automation software is a game-changer in how companies approach expense management. This guide will explore the concept of finance automation, its benefits, and what automation can do for your business.
What is finance automation?
Finance automation refers to the use of software to automate key finance operations like bookkeeping and accounting, invoicing, and expense management. It involves replacing manual, repetitive tasks with automated processes and using technology to streamline and optimize your financial workflows.
Financial automation is about more than just replacing human effort — it’s about enhancing it, allowing finance teams to focus on strategic tasks rather than getting bogged down by tedious paperwork.
What are the benefits of finance automation?
The benefits of finance automation extend across all levels of a business.
For the front-line staff, it simplifies expense reporting and reimbursement processes, ensuring they can focus more on their primary roles rather than administrative tasks. Business owners and executives benefit from real-time financial insights, aiding in strategic decision-making and operational efficiency. Meanwhile, accountants and finance teams are released from the drudgery of manual data entry and can (finally) devote their skills to more analytical and strategic financial tasks.
At the root of it, the benefits of finance automation tools are efficiency, risk mitigation, and consistency. Let’s explore each of these benefits below.
Increased efficiency
This one’s a given. Finance automation software significantly speeds up financial processes. Tasks that once took hours, if not days, can now be completed in a fraction of the time. This heightened efficiency means finance teams can close books faster, process payments more swiftly, and provide realtime financial insights, which paves the way for timely, informed decision-making.
Reduced risk of error
We don’t love to admit it, but manual data entry is inherently susceptible to human error. After all, we’re only human! Financial automation reduces this risk by using technology to ensure data is processed consistently and accurately. Automated systems can also provide checks and balances by flagging anything that looks off, so you can breathe a sigh of relief knowing that your financial data is reliable and trustworthy.
More consistency
Every employee has a different way of doing things. While individuality is a great thing, it’s not always great for business. Automated processes ensure that all financial operations are carried out uniformly, following the same set of rules and criteria. This consistency is key in maintaining financial control and compliance, so you can rest assured that every transaction is processed in line with company policies and requirements.
What should you be automating?
Pretty much any financial task you’re currently doing manually could benefit from automation. In fact, a better question might be, “What shouldn’t you be automating?”
For now, though, let’s explore five core finance functions that could benefit from automation.
1. Preaccounting
Oh, preaccounting…such a tedious job, but it’s one that absolutely can’t be overlooked. If you’re not familiar with the term, preaccounting is the process of organizing and preparing financial documents before they are officially recorded. Traditionally, this involves manual data entry, sorting receipts, and categorizing expenses, which is time-consuming and prone to inaccuracies.
With finance automation, the entire preaccounting process is streamlined. Receipts can be digitized instantly, expenses are categorized automatically, and financial documents are prepared with precision.
Plus, finance automation tools offer features like realtime expense tracking and digital receipt storage, making it easier for teams to collaborate effectively. They eliminate the need for physical document handling, reducing clutter and saving trees. It’s a win-win for everyone involved.
2. Invoicing
Invoicing is essential — without it, you don’t have a revenue stream. Unfortunately, though, manually tracking and processing invoices can be incredibly time-consuming and prone to error. Invoicing typically involves a number of different teams working together (for example, sales, customer service, and finance), which increases the risk of mistakes and delays.
Finance automation tools leave these invoicing issues in the dust. Invoicing software gives you the power to automatically create and process invoices and collect payments in one centralized, digital space.
Finance automation software also allows you to set up recurring invoices, overdue payment reminders, and recurring credit card payments, so you and your team can not only reduce the risk of receiving late payments but also keep invoices error-free while saving heaps of time.
3. Payroll
Faulty payroll systems = unhappy employees, which is never good for business. When employees aren’t paid on time, they’re less likely to go the extra mile for your team — and you’ll have to work harder to gain back their trust.
The tricky part? Payroll can be incredibly difficult to manage manually. Not only do you have different salary levels to account for, but there’s also taxes, vacation time, pension and retirement plans, employee perks, and more to factor in.
Automating these processes can save your team time and stress, with the added benefit of keeping you in the good graces of your employees. Automating payroll guarantees employees are paid correctly and on time while also ensuring compliance with tax laws and other regulations. Plus, integrating your payroll systems (like Expensify’s integrations with ADP and Gusto) keeps everything centralized and streamlined.
Another benefit is that automated payroll systems often come with self-service portals for employees to access their pay slips, tax forms, and benefit information. This can enhance transparency and employee trust and also reduce the administrative burden on the payroll team.
4. Expense reimbursement
Since the dawn of time, business expense reimbursements have been an incredibly time-consuming, costly, error-prone process (and you don’t have to take our word for it — use our business expense calculator to see how much dough you’re wasting on manual processes).
Employees have to accurately track and submit their expense reports (a rarity), managers have to review and approve every expense quickly, and finance teams then have to rush to process reimbursements. It’s stressful for everyone involved.
With finance automation software, the stress melts away. Employees can easily scan and upload receipts and file reports digitally, streamlining the approval and reimbursement process and ensuring nothing is lost in the shuffle. With everything digitized and automated, there’s no mad dash to reimbursement, just a consistent, error-free assembly line that everyone can manage.
5. Paying bills
Don’t you wish bills just weren’t a thing? Since that will, unfortunately, never be a reality, automating bill pay is the next best thing.
Paying bills is a cumbersome process involving checking information, sending the invoice to the correct person or team for approval, processing the payment, and, finally, recording the transaction. These numerous steps and parties involved increase the risk of delays, inaccuracies, and bottlenecks.
Automating bill payments ensures timely and accurate transactions, improving financial management and operational efficiency. Automated systems, like Expensify’s bill pay app, help track payment deadlines, manage cash flow effectively, and maintain positive vendor relations, contributing to a smoother financial operation overall. It’s almost as good as not paying bills at all!
How to set up automation for your business
If you’re reading over this guide and having a finance-automation-related epiphany, let’s get you prepped and ready to set up automation for your business.
To effectively select software for your business, follow these steps:
1. Assess your current processes: Audit your current manual processes to better understand where automation can be most beneficial. Are you drowning in paperwork? Still filling out receipt books? Missing payment deadlines? Figuring out where you need the most help is a great place to start.
2. Choose the right tools: Once you’ve figured out what areas need some improvement, select tools that specifically address those needs.
3. Integration and data migration: Make sure the software you select is able to integrate with your existing systems seamlessly.
4. Training and change management: Change is hard, but the learning curve is worthwhile! Take the time to ensure your team is well-trained and ready for the transition so no one is shocked when you suddenly throw away their spreadsheets.
5. Continuous improvement: Finance automation isn’t a one-and-done thing. Be sure to add regular reviews to your month-end close checklist so you can forever be optimizing.
You deserve some time back. Automate with Expensify.
Holding on to “the way we've always done it” isn’t justifiable when it leads to unnecessary time and resource wastage. Embrace finance automation to elevate efficiency, minimize errors, and shift your focus toward growth and innovation.
Why wait any longer? Join Expensify today and experience the relief that comes with streamlined financial processes.
