Introduction to Robotic Automation

The digitization era has introduced a new kid on the block called ‘robotic automation’. It imitates human actions in a structured form devoid of cognizant capabilities. Most industries unanimously embraced this innovation, so did finance & accounting.

With a fusion of robotic automation and artificial intelligence in accounting, it has the ability to drastically reduce avoidable manual errors to a negligible level. If structured data is input, then it will deliver accurate and quick results. It helps accountants relax as sufficient time is reclaimed due to robots mimicking their skills to do repetitive tasks.

Why Accounting Automation is important?

Going by a recent study, 33% of new jobs created in the US are for the jobs that did not exist 25 years ago. Further, 57% of employers are conditioned to automate their process in order to improve productivity and human capability.

Automation as a concept is a century old since Henry Ford introduced his moving assembly line at his plant in Detroit, USA. Automation has completely transformed the manufacturing industry even though it didn’t make much inroads up until recently into the services industry. However, in the digital era, automation has started to leave its footprints on the service sectors. The robotic process automation can be applied to most operations in a business including marketing, customer services, human resources and finance & accounting.

Automation in the accounting industry

For over a century, the work in a traditional accounting practice has remained largely constant relative to the other sectors. Its work constitutes plenty of manual tasks where humans have to perform their tasks vigilantly in order to avoid errors. If we summarise they are accounts receivable & payable, journal & ledger, transactional & reconciliation etc. all these tasks are repetitive, error centric & mundane to employees. They also add operating costs to the firms’ as they need to hire additional accountants to do the same job.

Bots can automate many of these accounting processes bringing the same level of refinement, recurrence and patterned formats. Therefore, it is relatively easier and cost efficient to introduce accounting automation. At the superficial level, automating accounting involves only accurate bookkeeping and records maintenance for compliance purposes. In reality, the abundance of data on hands helps businesses to make critical planning and prompt decisions by leveraging the accounting automation process.

Functions of accounting where automation is conducive to implement:

1. Automation of expenses function:
   Accountants wait for days to get the expenses records straightened out in order to make the adjustments for payments. This is extremely laborious to keep track of the records and filing of the supporting documents. With automation, the expenses records are digitized and all the services are easily synchronized.
2. Automation of Account Receivables and Payables functions:
   Both accounts payable and receivable are vital functions of an accounting department. Suppliers’ confidence enhances, when they understand their payment will be prompt, as their approval process is not delayed due to automation. From the receivable side, an updated customer database helps in managing the credit reports and payment receiving cycle. Both these functions help the management to know their liquidity position and sources of funds circulation.
3. Automation of Reconciliation functions:
   Reconciliation is a part and parcel of accounting function, all accountants are wary of this task. In order to bring credibility to the reconciliation function, they review multiple datas from various accounts & bank statements. They cross check in the accounting system in order to authenticate the accuracy of the figures.
   This is tedious, time consuming and yet has the probability of errors. Here accounting automation substitutes accountants from the hassles of reconciliation and the work taking days is covered in minutes.
4. Automation of Bookkeeping functions:
   A bookkeeping accountant is entrusted with the task of manually entering accounts statements. With accounting automation bots, it restores integrity of data fetched from the various statements, credits additional work hours to the accountants and maintains an updated accounting system. Furthermore, if programmed for auto rule, the accountants are relieved from organizing and classifying the transactions.

Also read : What are the eight important metrics used to measure the success of RPA ROI?

Benefits of Accounting Process Automation

1. Automation - creates a path for data centric decision making:
   Automation in accounting helps to gather unified, rapid and accurate real time data acknowledged by accountants and management. Accountants easily build reports and dashboards integrating live changes on the cost and revenue centers. The dependency of the IT division for maintenance is minimized as they build closer relationships with inter-departments.
   Accountants can now disown the traditional accounting practices of relying on previous periods of closing records for problem solving. Instead management can derive insights from the live data, make the right decisions through interpretation of the trends, decoding the exception etc.
2. Automation - creates a path for real time integration:
   Accounting system automation helps to stay relevant with the times. Since automation deals with digitized processes it becomes easier to be integrated with the other software utilized by the firms.
   For example, it is easier and feasible to integrate the payroll software tool with accounting automation. It thereby avoids duplication of information and all get access to real time data across all platforms connected in the firm.
3. Automation - creates a path for the security of data:
   Firms deal with a lot of confidential data and accounting firms especially are dealing with countless data of clients. Breach of data security is a loss of goodwill and trust from the clients’ side. Vanguarding the accounting records needs updating with the latest technical know how.
   One needs to move from the locked chamber of files to store confidential data to move to an encrypted data security. Through accounting automation, there is always a trail of records to find out the individual accessing information. All individuals dealing with the accounting software do not get access to all records (segregation of duties). There is a layered or hierarchical structure of authentication required to access files.
   With accounting bot, the information stays put and any form of cybersecurity breach is eliminated.
4. Automation - creates a path for upgrading of professional skill sets:
   Any activity that has a linear and repetitive process flow is meant to have the right ingredients for automation. Therefore, accounting is aptly on the right spot, where accountants can rely on the efficacy of automation.
   Though there can be noise of diminishing low skill set of jobs, it presents an opportunity for individuals to upgrade their skill set. Machines are yet to unlock human thinking and judgment. Accountants need to invest their time in strategy, analytics and client experience.
5. Automation - creates a path for boosting productivity & efficiency:
   Accounting automation is intended for enhancing productivity as accountants have a shortage of time. Bots work uninterrupted round the clock concentrating on its structured workflow. Therefore, it follows the pattern imitating human work style and displays excellent performance. Accounting automation clearly augments performance and productivity.

Challenges In Automating Accounting process

When there is a new technology, there will always be some problems and challenges that need to be identified and addressed. Accounting automation challenges are no exception and cannot expect to be welcomed immediately.

We are accustomed to the fact that each firm has their own regulations, governance and therefore, their own set of problems surface. Yet, there are some common challenges that most firms inevitably face, now let us just look at them.

1. Challenge of employees’ resistance towards automation:
   It is a known fact employees’ play the victim card when new technology is introduced in the firm. Therefore, you can expect a silent resistance in the form of not providing the essential information or being non-cooperative with the deployment automation team. Regaining the confidence of the accountants is the first step towards accounting automation.
   Once they are confident their jobs will be not compromised but their position will be promoted for better jobs, then, they will identify the areas or processes which are user friendly for implementing the accounting automation process. Educating the accountants that only mundane tasks which have no room for cognitive thinking are automated is half battle won.
2. Challenge of not embracing a clearer vision towards automation:
   There is a preconceived notion which states the success rate of automation is less. Therefore, some may feel that it is not a reliable tool to implement in the firm deploying the funds, expensive labour and nonrenewable time. For getting anything right there needs to be proper integration of objective and strategy.
   Few firms deploy automation in a piecemeal manner, depending on the departments needed in accounting and finance where there is no blue-print in place. Some start at a basic level and scale depending upon the needs and success rate.
   Whatsoever is the method involved, what is required is a proper guidelines to the business unit to follow the protocol and get all team members involved.
3. Challenge of support from IT towards automation:
   The team of automation can act as a standalone devoid of intervention from the IT division. However, at the initial stage of the implementation, the various accounting divisions need interaction with the IT support team. They have to understand the infrastructure of the IT wing and its capabilities to handle additional capacity, flexibility to scale etc.
   Therefore, IT division cooperation is extremely essential for starting an accounting automation journey.
4. Challenge of selecting the exact business process for automation:
   Selecting the right process to automate is the foremost step towards automation, followed by which department to automate. It is also a critical step that sets the tone for automating the other processes in accounting. Let us see the what other factors needs to be considered too, though it varies between firms, yet
   • Processes where the data entry workload exceeds and captures more employees' time.
   • New business processes where it is not yet assigned to accountants.
   • Processes where a lower skills set is only required.
   • In case an accountant left or moved to another department, if the job is repetitive then automation is the best choice.
   • Where the accountant demand is more and replacement is expensive.
   • Input data is structured and follows a linear path.
   • Where there is cost efficiency and anticipate an early ROI.
5. Challenge of testing the business process before deploying for automation:
   Testing of the accounting automation process before implementing in the cloud / server etc. is essential. There can be no other divided opinion on this fact, because every ERP system or its enhancements should be tested before deployment.
   For this to take place successfully, you need to create the same ambience in the form of
   • Create a non-production test site
   • Allocate the required manpower resources and time for hands on testing
   • Create well thought test scripts with all possible scenarios.
   
   Though, there are some problems in creating all the requirements like creating a non-production test site, some firms do testing on production which is not recommended.

Conclusion/Summary

When new technology knocks any firms’ doorway management and employees always have their own mixed reactions. It is welcomed both with awe and apprehension, viewed as a time saver and job stealer, introduced in parts of the operations to increase efficiency and maintain a stringent budget.

Yet, where human capital becomes scarce due to various reasons, work needlessly cannot be stagnant. Alternative, cost effective solutions need to be brought into forefront. With robots being a hot topic at various symposiums and boardroom meetings, automation is not a luxury but a necessity of the day.

Accounting is one area where automation fits like a hand and glove. The perks of having accounting robots revolutionize the way financial accounting functions is a necessity and definitely not a luxury. It brings to the table enhanced efficiency, accuracy of its structured functioning, real time updates, accessibility, responsiveness to the client/customer at all times.

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