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How Finance Automation Is Changing Today’s Landscape

The role of finance is one that continues to evolve constantly. With the evolution of technology and the rapid development we see in the Tech space, every industry is affected by this. Financial functions are slowly starting to move away from traditional methods of operations to more actions and processes being automated through software and machine learning. In this article, we will be looking at how automation has changed the official landscape of finance and accounting. 

What is finance automation?

Financial automation in Australia

Although the term “finance automation” can include a wide range of practices, it is usually used to describe processes that aim to improve revenue. The majority of businesses who assess their current automation capabilities in this area rapidly realize that the current toolkit is not sufficient. New pricing models have grown rapidly, necessitating sophisticated, automatic, recurring revenue recognition capabilities that are significantly superior to those achievable using Excel or the out-of-the-box features offered by standard financial accounting software. Software for financial automation employs artificial intelligence and machine learning. It is employed in the creation of financial statements as well as in the administration of payroll, invoicing, and collections. Utilizing such automated software lowers the need for human interaction in these financial tasks, which is its main advantage.

The Evolution of Finance Automation

Finance automation hasn’t always been this way. When we take a look at how much it has changed we can assess how efficient functions have become. Technically when we speak about automation the first major step up for finance automation was when computers and the internet were made. In the 1950s and 1960s, little attention was paid to the application of AI in the financial sector. However, a significant portion of the mathematics employed in modern AI solutions dates back to the early 1900s. Before the 1950s, AI was never given official acknowledgement. At the Dartmouth Summer Research Project on Artificial Intelligence, led by John McCarthy and Marvin Minsky, the phrase “artificial intelligence” was first used in 19561. Despite widespread disagreement about accepted practices, the conference had a positive reaction overall. After World War 2, there was a significant increase in paperwork, which increased the demand for systems to automate some of the jobs. Researchers did, however, predict the possibility of job losses brought on by automation. Expert computer scientist Andrew Ng claims that neural networks first emerged in the 1970s, rose to prominence in the 1980s, and then lost steam. Today, however, there is a resurgence of interest as a result of the abundance of both organized and unstructured data as well as the spread of affordable computing power.

How financial automation is changing the world

An award-winning mathematician named James Simons launched the quantitative hedge fund Renaissance Technologies in 1982, which was the first time artificial intelligence had a significant impact on the financial services sector. Renaissance had a market value of $165 billion as of April 2021. In order to estimate statistical probability for the trend in securities prices in any market, the company uses data from its petabyte-scale data warehouse. These mathematical models use large data analysis to make predictions by first examining non-random movements.

As we saw the internet develop over time then so did automation and making logging in data entry a lot more easier. Now we see automation at a point where artificial intelligence has revolutionized the way we approach certain tasks.

Benefits of finance automation

Finance automation in Companies in Australia
Locating archived records – The ease of finding any document is maybe the biggest benefit of any automated digital finance department. You can discover all the information you require in one location — your digital cloud – rather than scouring filing cabinets, leafing through piles of documents on your desk, or looking through notepads in your day planner.

Reduced data entry, reduced errors – In some way or another, the financial department must digitize its data. Businesses would have to manually input everything, from purchase orders to invoicing, absent finance automation. There is potential for human error in these financial procedures. By automating financial processes, your company may improve the precision of all financial papers.

 

Less data entering work also means less money wasted. Employees must be recruited and trained to perform manual chores. Data entry is a laborious and time-consuming operation that can be done automatically using computerized processing and reporting procedures.

Measurable growth – Among partners, shareholders, employees, and customers, your company develops a reputation. Your financial division balances all these shifting factors in terms of money coming in and going out. Your finance department handles everything from year-end taxes to employee pay stubs, not to forget investment money, corporate gifts, and other things.
The potential for improved customer service – Many of the most difficult aspects of running a business will soon be performed by machines, freeing up business owners and their personnel to concentrate on serving clients. With minimal disturbance, many back-office tasks can be automated, freeing up resources that might be better allocated to marketing or customer support positions.
Responsibility for the environment, society, and government – The pandemic brought into sharp focus for everyone how precarious stability is, as well as how much society and the environment influence business. Organizations began to perceive themselves as components of a larger system that shares resources, both natural and human. They changed their perspective on ESG as a result of this strategy and now see its value for improving company performance. For instance, pro-active C-level managers consider waste reduction to be cost-effective because it will ultimately reduce environmental threats.

Finance Automation Trends

Advanced Risk Management – Ridding the organization’s finance divisions of risk is a constant priority. Risk should be reduced across the organization thanks to finance automation. Automation tools should really be introduced using a risk-based strategy to accomplish this. The use of automation solutions with integrated risk management capabilities is growing. These features increase productivity while reducing risk throughout the whole financial closing cycle. Businesses can significantly increase the risk sensitivity of their internal control systems by implementing risk-based automation solutions.
Increased Attention to Machine Learning – AI is used in finance to speed up automated software processes. This plays a crucial role because it makes it possible for more intelligent automation solutions to work for your company. The addition of machine learning expands the capabilities of AI systems. A finance automation system can utilize machine learning to automatically learn and enhance its operations based on the data it uses. This means that the capabilities of finance automation technologies go beyond what they were designed to perform. A significant trend is the emergence of finance automation procedures that can continuously expand with your company and customize to its particular needs. The growing usage of advancements in AI makes this possible.
Robotic Software – The emergence and maturation of new robotic software, which enables automation across a range of processes and operates across several software systems and platforms is what’s fascinating at the moment. The maturation of digital tools such as machine learning, cloud technologies, speech synthesis, and enhanced modeling has further accelerated this transformation. Because of this, process management service providers and computer programmers are combining these capabilities to develop algorithms that are appropriate for particular points along the value chain and to drive persistent performance benefits. The benefit formula has also undergone a significant change, moving from pure labor/software cost arbitrage to a fundamental redefining of process outcome expectations in terms of speed, agility, customer experience, and the use of analytics to drive business strategies, as well as a 24 x 7 storage augmentation. Naturally, all of this happens for a far lower price and with much less rework.
How finance automation is changing the world

How is Finance Automation affecting job roles?

Automation has long been seen as unavoidable, and many people in various industries worry that technology will someday replace them. What if the situation isn’t as dire as initially believed? Perhaps the benefits of automation for workers in the finance industry will be incalculable. The financial industry has already begun the automation revolution. Some are concerned that this may result in numerous job losses. But since pure AI is a long way off, there is adequate time to consider where people belong.
Expense management – The expense management process contains a lot of moving pieces, which makes it particularly prone to error. Employees used to submit expense claims by saving a physical receipt (which was prone to damage or loss) and giving it to the appropriate coworker when they returned to the office. Many of these stages are now eliminated by modern Cloud-based solutions, enabling employees to submit their claims instantly in digital form. Non-compliant claims are deemed invalid by the technology before they can be sent to the proper approver.
Bank Reconciliation – Bank reconciliation is one of several finance operations that has already benefited from automation. Businesses must now verify the numbers on their bank statement against those in their own books. By doing this, any inaccurate data and weaknesses in their bookkeeping procedure can be uncovered. The process can take a long time to complete manually. However, digital tools are currently available that can display current general ledger balances and verify them with the relevant bank account.
Forecasting – When forecasting, performance-related data from the past is taken into account and extrapolated into the future. A forecast that can be used effectively will be more accurate as more data is obtained. Accounting software can analyze far more data in a shorter amount of time than the average person. Budgeting is related to this activity since it’s simpler to establish a reasonable budget once the team is more assured of the results they will achieve in the future.

Conclusion

The use of automation in financial business procedures has become crucial. Regardless of the size of the firm, using automation increases accuracy, saves time, and makes accounting a lot simpler. For expanding SMEs without a sizable financial team, this might be a game-changer. It’s crucial to follow trends while using corporate finance automation. By doing so, you’ll be able to get more out of your automation processes and keep your company competitive in a digital environment that is continually evolving. In the landscape of Finance & Accounting, Intelligent Automation adopts a comprehensive perspective and plots an integrated route across the compartmentalized automation options. Businesses must embrace an automation-first strategy if they want to increase production and efficiency. They might begin small with their Intelligent Automation project and then grow it. The important path to automation is adopted by intelligent automation. It enhances straight-through processing and gives the process design a high level of responsiveness, optimizing the Finance & Accounting environment.

 

At Brisca we have the tools to take your financial department to the next level by working with multiple technologies that streamline and speed up the process. Contact us and let’s work on bringing you into a new age of finance and accounting procedures!