Scope of Intelligent Automation in Finance

Various industries have been embracing automation for some time. While on one hand, industrial manufacturing companies have been using Automation; where giant robots are being used to assemble products, create armors, etc., software ‘robots’ on the other hand are being used to create specific rules and sequences of actions, to automate back-office systems that generally require tedious efforts from human operators. With that, we can safely say that automation is one of the most exciting technologies in business today.

However, as automation matures, it is clear that its potential is limited by its rule-based nature. Blending RPA however, with Artificial Intelligence technologies, and other advanced techniques, can expand the scope of automation, not just bringing down its limitations but compounding the benefits delivered. This combination of AI and RPA is called Intelligent Automation.

The most important feature of Intelligent Automation is its non-invasive nature where no major changes are required to the existing landscape and can be integrated across multiple applications, helping in faster deployment, and continuous improvement as opposed to legacy system automation that would require invasive integrations and has long turnover rates.

 

Driving value across Finance with Intelligent Automation

Let’s understand how intelligent automation can be implemented in the back-office processes of Finance, such as: Account Receivables (AR), Account Payables (AP), and Financial Planning & Analysis (FP&A) that are critical elements in the functioning of any corporation.

Challenges

Account Receivables: Accounts receivable (AR) is the payment/balance due to an organization for the use or purchase of its goods, products, or services. Companies that are still using humans for their account receivables process face the challenge of errors in invoicing leading to delayed payments, credited invoices, and other disruptive and troublesome issues. Thus to overcome these problems automation of account receivables is important.

Account Payables: Accounts Payable (AP) is a liability and a short-term debt on a balance sheet where a business owes a payment/money to its vendors/merchants/providers that have furnished the business with goods or services on credit. Perhaps the most high-risk errand in the financial services industry is managing payments. AP serves the ideal conditions for automation and guarantees a more prominent ROI i.e. return on investment. In order to streamline the account payables process, AP automation is a necessity.

Financial Planning and Analysis: Financial planning and analysis (FP&A) involve activities that support an organization’s financial health: these are activities such as planning and budgeting, forecasting and modeling, management and performance reporting, integrated financial planning. When processes such as these are not automated and handled through emails, attachments, and spreadsheets, it leads to inefficiency and there is a high risk of delays, lack of visibility, and improper approvals. Organizations running FP&A on manual mode would not have enough resources to make forecasts at a faster cycle time as they require regular updates on the latest financial statements, capital expenditures, and investments making for weak financial planning.

Clearly, the finance industry requires processes that ensure tedious, repetitive, and time-critical patterns are not an issue. In addition, these cycles are data-sensitive and a slight mistake or error could bring about considerable losses, so robotization of errands requires an unflagging precision.

How can Intelligent Automation (IA) help?

Account Receivables: IA helps streamline the AR process and helps distribute all your customer invoices electronically regardless of your customers’ digital capabilities. Rules can be modified basis each customer’s needs and requirements generating a fully digital workflow. Also, it benefits in lower distribution cost, faster payments, and invoice handling, improves cash flow, increased accuracy and security, and most importantly customer relations.

Account Payables: The timeline for sending and receiving payables can be automated. RPA bots can build approval workflows and process payments and receipts; ensuring that all the transactions take place on time and all financial audit policies and regulations are adhered to.

Financial Planning and Analysis: Performing analysis of the latest financial trends is instrumental for visibility over the workforce. Automation of processes helps in the reduction of process inefficiencies, increasing process visibility which leads to better decision making, and maintaining a stronger, more transparent relationship with business units and departments.

Some other benefits:

  • Reduction in operational costs
  • Improved accuracy-by almost ~99.99% and increase in compliance as the human error rate is reduced
  • Productivity, faster processing time, and reduced average handling time by 35-50%.
  • Improved decision-making capabilities
  • 24*7 Availability: BOT will execute tasks even during odd working hours.

F&A processes where Intelligent Automation can be applied

Listed below is a list of processes that were automated (% wise) and the benefits of IGT’s IA implementation in Finance and Accounting.

Accounts Receivable

Accounts Payable

Financial planning and analysis

Sub-processes

  • Fixed billing
  • AR report
  • Telecom invoice processing
  • Daily exchange rates upload
  • Travel invoice processing
  • Headcount
  • DNB credit analysis report
  • Profitability in SAP
  • Entity wise report
  • SG&A report
  • Travel report
  • Detailed MIS
  • SFDC pipe

% of Robotization

           100%

           70-80%

          80-85%

Benefits

  • 6 months ROI (break-even)
  • >95% improved accuracy rate
  • 50% improved processing time
  • Efficiency – 60-70%

 

  • 6-7 months ROI (break-even)
  • >99% improved accuracy rate
  • 35-45% improved processing time
  • Efficiency – 60-70%
  • 6-7 months ROI (break-even)
  • >99% improved accuracy rate
  • 40-45% improved processing time
  • Efficiency – 60-70%

 

What would the automation of the above processes look like?

Account Receivables: Once applied, AI rules allow the BOT to access and process the billing data, prepare daily AR dashboards and reports, provide visibility on invoice statuses and all customer accounts & share the generated invoices with the revenue department. The system’s ability to deliver more granular results makes it highly accurate, precise, allows for fine detail analysis, and quickly resolves issues related to invoices.

Account Payables: Let’s look at an example to understand how the automation process takes place in AP: Essential cycles of Account Payable include Telecom and Travel invoice processing, Daily Exchange rates upload, and Trial Balance. The BOT reads the invoices using an OCR and creates their entries in SAP based on defined business rules. In case of a failure, notifications are sent to the respective users. The BOT is scheduled to pick up the currency exchange rates for multiple countries daily and update them in SAP. It also extracts data from SAP, consolidates and filters to deliver all the reports under the automation scope, and emails them to the Finance team.

Financial Planning and Analysis: Let’s look at an example to understand how automation works in the headcount of FP&A: Essential cycles of Finance Planning & Analysis include undertakings such as headcount, profitability in SAP, SG&A analysis, reports- DNB credit analysis, entity wise, travel, MIS, etc. The BOT extracts the required details from the SAP headcount dump which is then processed to create a headcount report.

Conclusion

RPA is an innovation that can change the realm of the finance industry.  RPA solutions are expected to grow in several main areas. It offers the clearest path towards a true digital transformation for businesses. IGT Solutions Pvt. Ltd supports businesses driving transformative efforts with investments in automation.

 

Author:

Ramani Giri is the Senior Business Analyst at IGT Solutions’ Intelligent Automation Team. She has an overall experience of 1.75 years in intelligent automation and the hospitality industry. Outside of work, Ramani likes to swim, travel and read.