4 Benefits of Automating Financial Processes

These days, it’s not uncommon for businesses to rely on automation. Many companies are using technology to automate various processes, such as data entry, onboarding, and invoicing. Doing so helps them become more efficient and productive, allowing them to focus on tasks that need human involvement—like customer care.

Automating finance processes is becoming increasingly popular. A McKinsey report reveals that an estimated 40% of financial activities can be automated, enabling you to boost efficiency substantially. While you may initially feel apprehensive about leaving important financial operations in the hands of new tech tools, you’ll be glad to know that doing so presents several advantages:

1. It saves time and manual labour

Finance processes are lengthy. The manual processing of numbers and different data sets can take hours—if not days—out of your business' time and available labour. By automating such processes, you can save on resources, which would have otherwise been sub-optimally spent completing repetitive tasks like data entry, bank reconciliation, and report creation.

Automated bookkeeping software can even be customised to update in real-time, so employees only need to double-check if everything is correct and included before submitting reports. This way, they can do more tasks and accomplish bookkeeping responsibilities quickly.

2. It reduces the likelihood of making financial errors

The process of manually inputting and computing numbers is prone to human error. Even finance professionals can make mistakes, especially when they have too many invoices, receipts, or other documents to go through. Fortunately, one of the powers of automation lies in its ability to prevent human errors.

Automated software, like payroll systems, can make instant and correct computations given the data it is fed. From here, all employees need to do is validate these computations. By reducing errors, businesses can spend less time resolving issues caused by human error, such as incorrect salaries sent to employees.

3. It future-proofs your ability to mitigate credit risk

To support your business growth or to finance projects, you may have to take out a bank loan. The current process of getting loans from banks will change in 2025. This is the year the UK's banks will start complying with Basel 4, which Wolters Kluwer explains is a regulatory framework that helps banks meet goals beyond regulatory compliance.

Once Basel 4 is enforced, businesses will have to change the way they take out loans. Banks will become more selective, only approving loan applications from companies with low credit risk. Automating finance processes—like accounts payable—can help you fit the bill by ensuring you pay bills, former loans, and other financial obligations on time. Even banks use automated software for Basel compliance, so you can rest assured that automating your finances will benefit you, too.

4. It is more cost-effective

Finance processes can be costly, especially if you need to outsource an accountant or bookkeeper. Our article ‘Moving On From Legacy Software’ adds that any outdated—or ‘legacy’—software you use may still meet your finance process demands, but will be expensive to maintain due to its age. This is such an issue that £22 billion could be wasted by UK companies in the next five years due to these outdated systems.

Switching to automated finance processes is more cost-effective because you don’t need to hire finance professionals and pay maintenance fees. Another factor that makes it low-cost is that automation can prevent you from missing deadlines. For example, tax compliance software can automatically file your dues for you, helping you avoid penalties. You can also have tailor-made software developed should your finance processes have specific requirements. This would be a wise investment in the long run as it meets your standards and completes processes unique to your business.

Automation can be incredibly beneficial for your business' finances. Start automating your finance processes today to reduce errors, mitigate risk, and improve the cost-efficiency of your financial operations.

Get in touch to find out how Clever Software can help to digitalise your financial processes. 

Written by Anna Winter Cooke
Exclusive for cleversoftwaregroup.com