The Four Steps to Automated Accounting: Your Complete Guide to Getting Started
Automating processes in accounting and finance represents a huge opportunity for business leaders, and is especially a golden opportunity for chief financial officers (CFOs). It gives them the opportunity to excel in their traditional role, working to improve processes and reduce costs. Additionally, these CFOs can leverage their automation experience to become central to digitalization initiatives across their companies.
Automating processes in accounting and finance represents a huge opportunity for business leaders, and is especially a golden opportunity for chief financial officers (CFOs). It gives them the opportunity to excel in their traditional role, working to improve processes and reduce costs. Additionally, these CFOs can leverage their automation experience to become central to digitalization initiatives across their companies.
According to data from the American Productivity and Quality Center (APQC), nearly 75% of companies have active financial transformation projects underway. This change poses long-term benefits for the CFO and the entire company. It gives the CFO the ability to enhance their role and achieve digital transformation of business processes.
By charting APQC's data for success and sustainable transformation in finance and accounting operations, it becomes clear that there are significant differences between companies with excellent performance and their counterparts who are less successful.
For example, when looking at invoice processing costs, this analysis shows that these cost differences are often the result of some companies adopting non-standard, ad hoc manual accounting processes that rely heavily on paper documents. This preference for manual accounting ultimately results in lower costs for companies that have not relied on the automation of document management-based financial processes.
Four main mechanisms for improvement and facilitation in accounting work
The automation of accounting processes is one of the most prominent developments witnessed in the field of accounting and finance in the modern era. These processes have become more effective and accurate through the use of technology and automation. Based on this continuous improvement in accounting processes, we can identify four main mechanisms that play a crucial role in improving and facilitating accounting work.
The automation of accounting processes is one of the most prominent developments witnessed in the field of accounting and finance in the modern era. These processes have become more effective and accurate through the use of technology and automation. Based on this continuous improvement in accounting processes, we can identify four main mechanisms that play a crucial role in improving and facilitating accounting work.
These mechanisms are not just a technical development, but rather are basic tools that enhance the ability of companies and institutions to better control their financial and accounting operations. This article will address in detail each of these four mechanisms and how they play a vital role in improving performance and facilitating accounting work. We will also discuss the benefits of implementing these mechanisms and how business leaders can leverage them to enhance operational efficiency and successfully achieve financial goals.
1- Managing accounts payable
Automated accounting uses software effectively to carry out vital financial operations. This software automates repetitive tasks such as data entry and checking accounts, enabling accountants to focus on more important tasks.
According to a report from APQC, there are a variety of skills and competencies that can be gained by automating the invoice management process. Consider how leading organizations perform compared to the rest, and how this day-to-day impact can positively impact business efficiency, costs and productivity at scale.
This is why it is urgent to eliminate manual and paper-based processes. It is much more difficult to achieve any level of efficiency in invoice management when invoices are paper-based. Paper invoices often remain in the inbox for long periods, or are lost altogether, causing company employees to waste time trying to keep up with them, and pose a risk of missing out on opportunities for early payment discounts.
Thanks to the use of the digital workflow provided by the DMS, documents are transferred very efficiently within the organization. Additionally, staff are automatically notified of errors and allow them to look up additional information quickly, rather than waiting to fix them. Providing an immediate way to flag non-standard invoices, effective routing to the appropriate decision makers, and providing clear feedback are critical to the exception management automation process.
2- Improving auditing processes through digital documentation
Everyone, especially the finance department, sees the annual audit as very important. But if you have a paper-based system, the auditing process will be a difficult task for the accounting department and auditors alike. Think about the time accounting staff waste searching for paper files that may not be stored in an organized manner or in the right place, before the audit process even begins. If paper files are incomplete or disorganized, the audit process can be time-consuming and stressful.
Everyone, especially the finance department, sees the annual audit as very important. But if you have a paper-based system, the auditing process will be a difficult task for the accounting department and auditors alike. Think about the time accounting staff waste searching for paper files that may not be stored in an organized manner or in the right place, before the audit process even begins. If paper files are incomplete or disorganized, the audit process can be time-consuming and stressful.
By replacing cumbersome paper processes with secure digital documents, your team will be more prepared, as they will have everything they need conveniently at their fingertips. It is crucial to know who has accessed accounting documents and when. This is especially important for companies listed on the stock exchange. To comply with the Sarbanes-Oxley Act, businesses need a Destination Management System (DMS) to track audits with extreme precision. Using digital technologies, your employees can quickly respond to auditor requests and maintain a high level of control over business information.
3- Procurement processes and supplier relationship management
In procurement, vital processes are performed that include translating business requirements into supplier requirements. This means controlling the goods and services that must be supplied to ensure the sustainability of the production process or the efficient provision of services. In addition, there must also be a significant focus on effective supplier relationship management, as the team must build strong and sustainable relationships with suppliers to ensure sustainable cooperation and continuous fulfillment of the company's needs.
In procurement, vital processes are performed that include translating business requirements into supplier requirements. This means controlling the goods and services that must be supplied to ensure the sustainability of the production process or the efficient provision of services. In addition, there must also be a significant focus on effective supplier relationship management, as the team must build strong and sustainable relationships with suppliers to ensure sustainable cooperation and continuous fulfillment of the company's needs.