Automation in accounting is integral to streamline financial processes, not only helping to speed up tedious manual tasks and processes, but also helping to reduce human error.
Let’s examine the benefits of automation in accounting, namely increased accuracy, faster processing, improved data visibility, enhanced compliance and lower operational costs, as well as addressing its challenges and best practices to follow when it comes to accounting and automation.
What is accounting automation?
The concept is rather simple: automated accounting lets finance teams make specific processes and procedures automatic. The aim is to improve efficiency and accuracy, all while making sure that the data and integrity and standard operating procedures (SOP) within an organisation are properly looked after.
Automation is made possible by technologies such as artificial intelligence (AI), machine learning (ML), and robotic process automation (RPA), which are transforming traditional accounting practices through features like predictive analytics, dynamic reporting, and end-to-end automation of entire workflows—including procure-to-pay (P2P), order-to-cash (O2C) and record-to-report (R2R) processes.
For example, AI algorithms can forecast future financial conditions by recognising patterns in historical data, aiding in strategic planning and decision-making. This all leads to greater accuracy and compliance, as well as savings on operational costs.
Benefits of accounting automation
Automation of accounting is especially useful when it comes to simplifying financial reporting. Because automated systems can pull data from various sources and process financial data in real time, they greatly accelerate the rate at which financial reports can be generated. This means accountants don’t need to focus their time and attention on these menial but important tasks, and instead can focus on strategic financial planning and analysis.
Tasks that normally take hours or days when done manually are completed in minutes with automated systems. Plus, automation accounting tools are programmed to recognise and adhere to the latest regulatory requirements and standards. They can maintain detailed records of all data inputs and processing steps to ensure compliance, regulatory adherence and transparency.
Automated systems apply universally consistent logic and rules when applying reports, so they drastically reduce the amount of human errors associated with manual calculations and data entry, helping ensure uniformity and accuracy across an organisation’s financial data.
Challenges and considerations
While there are many benefits of automation in accounting, there are also some challenges that arise when implementing new automated systems.
Legacy systems
For example, when attempting to integrate a new automated system with your organisation’s pre-existing ERP software and legacy systems, you might run into issues with data mismatch and inconsistencies. These challenges are worth considering before an organisation decides how they want to integrate automation and accounting with their preexisting systems.
Security and privacy
Evaluating data security and privacy is essential, as issues can lead to serious legal and reputational damage for an organisation. New automated accounting systems can lead to data mismatch and protection issues, as well as compliance issues (e.g., with GDPR and financial reporting regulations). Extra actions must be taken to ensure data security and compliance, including the following:
- Conduct a risk assessment
- Implement data encryption
- Enforce strict access controls using role-based access control (RBAC) mechanisms and implement multi-factor authentication (MFA)
- Only collect data needed for the automation process and ensure that data retention policies are followed
- Conduct regular audits and monitoring
- Provide employee training and awareness
- Ensure vendor compliance
- Develop and maintain an incident response plan for automation-related threats
- Stay up to date with data protection regulations
Case studies and success stories
Thungela
In their first year, the leading South African thermal coal producer and distributor, Thungela, struggled to manually deliver their three main reports: a full set of financial statements, an ESG report and an integrated report combining both financial and non-financial information.
By pursuing the automation of accounting, Thungela has been able to save time by cutting out lengthy manual amendments and verification processes. Their teams are also more connected.
KeyBank
Another company that has experienced firsthand the benefits of accounting automation is KeyBank. They combined accounting and automation to simplify, streamline and modernise their resolution planning and financial reporting. Before adopting an automated accounting solution, these tasks were cumbersome and time consuming, as KeyBank needed to perform them manually.
Now, the organisation has more time to work on value-add projects, such as restructuring policies for user-friendliness.
Both Thungela and KeyBank have managed to take advantage of accounting automation benefits, minimising the risk of human errors and the amount of time spent on manual tasks.
Implementation strategies
When deciding whether or not to implement automation in accounting, it’s important to set goals and understand the challenges.
Organisations can start by mapping out current accounting process to identify areas with high manual effort, frequent errors or bottlenecks. From there, they can evaluate and compare different technological solutions and perform a cost-benefit analysis, considering the cost of software and implementation against projected savings from faster processes and manual error reduction.
When selecting an automation accounting solution, there are several factors to consider to ensure you make the right call: features, scalability, industry expertise and available support services can all prove instrumental to your success. If you’re uncertain, look out for automated accounting solutions that offer live demos so you can see the solutions you’re considering in action.
It is especially important to check that the provider you choose follows robust security protocols for protecting financial data, and follows the relevant accounting standards and regulatory compliance rules within your industry.
Below is step-by-step guidance on how to plan and properly implement automated accounting:
1. Project planning and preparation
Before implementation, it’s important that your organisation defines its objectives, assembles a project team and establishes a budget and project timeline.
2. System design and configuration
Create a detailed map of how the new system will interact with existing processes and configure your new software to meet your organisation’s specific needs.
3. Data migration
Develop a detailed plan for data migration over to your new automated system.
4. User training
Develop training materials, offer your employees training sessions and ensure ongoing support to your organisation's employees.
5. Continuous monitoring and improvement
Continue to monitor and resolve issues, collect feedback and run periodic reviews of system performance performance and user satisfaction.
Future trends and innovations
Looking at emerging technologies and current trends in the automated accounting processes helps to reveal future trends in the field, from AI-driven predictive analytics to blockchain-based ledgers and cloud-based accounting platforms.
AI is set to analyse historical financial data and forecast future trends. Blockchain-based ledgers can be used to enhance trust and compliance by ensuring a tamper-proof and more transparent ledger system, while cloud-based accounting platforms can streamline real-time collaboration, regardless of different team members’ geographical locations.
As companies integrate financial and environmental, social and governance (ESG) data into annual reports, the same automation that can accelerate financial reporting while reducing the risk of error can be applied to ESG data collection, preparation and reporting as well.
Final thoughts on accounting automation
Automation in accounting allows organisations to drastically reduce the amount of human errors and time spent on tedious tasks, and lets them focus more of their efforts on strategic analysis.
When implementing a new automation solution, organisations need to consider possible data inconsistencies, along with maintaining their compliance and data protection. That way, organisations can get the most value possible out of embracing automation as a strategic tool in their accounting.
The Workiva platform’s automated accounting features can help you to simplify your organisation’s difficult and tedious tasks in a centralised, secure and audit-ready environment. Ready to see how the Workiva platform can transform your work? Book a custom demo today.
