How Automation Enhances Productivity
For finance professionals, the primary obstacle to maximized productivity in a modern business context is the continued time wasting engagement in manual tasks. For decades in corporate finance, grinding through spreadsheet after spreadsheet, countless transfers of data between departments, and other examples of manual work have resulted in reduced efficiency and ruined data sets due to the inherent error proneness of these tasks. Given the degree to which such traditionally manual processes have been automated by new technologies, finance teams should take advantage of this competitive edge in whatever capacity they are able to.
Obstacles Created by Manual Tasks
1. Time Consumption:
An organization’s employees may need to copy data from one system and paste it into another system to answer a customer’s question or approve an application. Continuing this repetitive activity day after day quickly snowballs into a very disadvantageous waste of time.
2. Data Entry Errors:
The more manual tasks you have, the more error ridden your data will be, which can incur substantial costs to your organization. In 2016, bad data cost American businesses a whopping $3.1 trillion per year, according to an IBM estimate. That considered, businesses face a serious risk of failure if they don’t have the appropriate resources to automate more manual tasks, so that they can ensure that all their data is accurate.
Business leaders have been aware of this issue for some time: A 2019 Experian survey found that 95% have seen poor quality data undermine their businesses’ performance. And human error is among the leading culprits behind data inaccuracy. From customer data security lapses to system failures, fallible humans have triggered an array of both balance sheet and PR crises for all manner of businesses.
3. Increased Labor Costs:
When you factor in training, payroll, facilities, equipment and benefits, you’re paying a lot for people to copy and paste data. Rework and data re-entry due to manual errors can slow your operations down, leading you to hire more people just to keep things moving. Any organization can save themselves the headache from these costs by simply automating more.
4. Inconsistent Workflows:
Every employee has their own workflow. Reconciling these workflow variations across dozens or hundreds of employees can be costly. Manual variations and errors within critical tasks such as claims processing, mortgage lending, accounts receivables,
and shipment tracking can directly impact your profitability.
5. Increased Compliance Risks:
When you perform critical tasks manually, it’s easy to jeopardize compliance. For example, when banks use manual tasks to onboard a new customer, employees may key in inaccurate information when verifying and authenticating a person’s identity for requirements to know your customer. Failure to follow regulations and requirements can result in hefty penalties and fines.
6. Lack of Visibility Into Processes:
Manual tasks are inconsistent and much harder to track than automated activities. Because you’re not starting with 100% accurate data, the insights you gain from manual processes will be inherently flawed. Figures from numerous surveys show the significance of this issue in the eyes of financial executives: 45% of controllers surveyed identified lack of visibility into invoices and payables information as their top payables challenge, and 41% of senior finance executives cited improved visibility into invoices and payables information as the biggest benefit of AP automation.
7. Lack of Business Elasticity:
Manual tasks can slow an organization down when trying to rapidly scale. Since repetitive tasks often depend on human workers to complete them, scaling up during seasonal or peak times is extremely difficult to manage from a resource and cost perspective. This creates a need to find, hire, and train new employees, taking time to guide them throughout the learning curve. This can result in a loss of growth opportunities due to a lack of trained staff, or the inability to quickly adapt to changing demands.
8. Heavy Reliance on Outsourcing to Meet Labor Needs:
You can’t afford for your staff to waste time on mundane, repetitive tasks, and may need to outsource many of these routine activities. But outsourcing has many drawbacks, including delays, errors and loss of control of quality and operations that may hurt your
customer service. Outsourcing also puts your compliance and security at risk when
you hand your data to an outside firm.
9. Inability to Innovate:
Mundane administrative work takes time away from your employees and knowledge workers more valuable business building, customer oriented and strategic activities. This is particularly critical in IT, where the department is valued by how much it leverages technology to drive business innovation. When you devote 70%-75% of your IT time and budget to keeping the lights on, you can’t innovate.
How Automation Eliminates These Obstacles
The use of new technologies such as FP&A software is among the best ways to automate traditionally manual tasks; it provides solutions to all of the aforementioned issues in manual tasks. The two overarching benefits of automation in corporate finance are improved accuracy and efficiency. Other benefits that are less directly a result of automation include visibility of work processes, the elimination of labor costs, as well as the time cost of hiring and training new employees. The advantage of automation will prove to be the game changer for finance professionals in the leading businesses of the future.