by Varishtha Team
Robotic Process Automation. This is a term that has been floating around the industry for quite a while now, and it is here to stay. So, what exactly is Robotic Process Automation (RPA)? RPA is the use of machine learning software to handle high volume, repeatable tasks that previously required humans to perform. This includes queries, computations, and entering transactions. RPA is widely being used by organizations in different departments like Finance, HR, Procurement, etc. Off all of these, Finance is the most lucrative for RPA. Finance is one of the most integral functions of an organization, responsible for the overall profitability and financial integrity of a company. The significance of finance will never change, but the approach towards finance is ever changing. One of the key factors for this shift is emerging technologies like RPA.
With the current uncertainty in the economy there is a higher pressure on Finance and Accounting executives to deliver revenue and growth while keeping costs at a minimum. Developing technologies like RPA is the perfect solution to ensure that your return is high while costs are lower as compared to a traditional model of operating.
In RPA, any function that is repeatable and consistent, manual in nature, and has a set of rules/templates is ideal for automation. According to Gartner, 89% of General Accounting Functions are highly automatable due to this nature of activities being performed. This leads to increased Return on Investment (ROI), reduced Turn-Around-Time (TAT), and reduced costs due to reallocated Full-Time Employees (FTE) to higher value roles.
Accounts Payable (AP) and Accounts Receivable (AR) can sometimes be a cumbersome task for finance departments. One of the reasons for this is that invoices (and other documents from vendors and customers) are of varied templates with non-standardized data. RPA BOTs can easily perform AP and AR functions like Invoice Validation, Invoice Creation, Supplier On-Boarding, Outstanding Monitoring etc. by capturing data from documents (like invoices) and effectively posting them onto a required platform, thus reducing manual intervention and human error.
One of the biggest areas of RPA in Finance is for Reconciliation as it can be a time-consuming process for Finance Departments. This covers Bank Reconciliation, AP& AR Reconciliation, P&L Reconciliation etc. RPA BOTS can read, consolidate, and match data between various applications (like a company’s ERP) and documents much faster than staff. The probability of human error is also reduced. A report by EY suggests that automating the reconciliation function itself can result in a 40%-60% reallocation and reduction.
End of financial year is often dreaded by finance departments due to the large volume of reports that must be generated and distributed. In today’s business climate, reporting has become imperative not only for compliance purposes, but also to enable an organization to make informed decisions about its operations and strategy. Inaccurate or overdue financial reports can impact a company’s bottom line resulting in them losing their competitive edge.
The reporting function can involve a lot of ledgers, applications, documents, etc. making the process quite tedious. RPA is apt in such a scenario and can provide Finance Managers and CFOs with much needed support.
RPA adoption by finance departments is on a constant increase. More and more decision makers are realizing the importance of RPA and actively incorporating it into their processes. In fact, consider RPA BOTs to be like virtual assistants to the Finance Department. The BOTS will take care of the menial routine activities, thus freeing up personnel to focus on value-adding decision making.