Finance automation for SMBs

Now more than ever, businesses are looking to their finance leaders to help them stay on course – not just when it comes to budgeting, but overall growth strategy, too. 

This is no easy task. Between daily surprises from the markets, significant regulatory changes and increased scrutiny from stakeholders internal and external, the modern finance director is expected to make crucial decisions at the drop of a hat. And it’s becoming clearer than ever that manual processes aren’t up to giving them the insights they need to do it.

That’s why automation tools are quickly becoming the finance professional’s new best friend. They’re taking the legwork out of a variety of time-consuming processes, and delivering detailed answers to key business questions before they’re ever asked. And they don’t require so much as a basic knowledge of coding practices to implement.

There’s no doubt that automation is the future of the industry. But it’s the finance leader’s – who for many SMBs is often also the business owner – responsibility to grapple with what exactly it means for their organisation, and how to leverage it in their firm’s best interests. Because those that do will be the ones to gain the edge on tomorrow’s competition.

Chapter 1

What exactly is finance automation?

Finance automation lets technology do manual tasks for you, so you can manage your workflow in a more efficient, accurate and cost-effective way. 

Manual work represents a massive workload for your finance team. Each line on a balance sheet alone represents hundreds of transactions which need to be recorded to tight deadlines at the end of the month. And that’s to say nothing of additional complicating factors: variable international financial standards, floating forex rates, multiple spreadsheets owned by multiple stakeholders and so on.

The result? Basic errors, misfiled reports and inaccurate calculations which throw everyone else off course.

But automation tools eliminate the risk of error, while giving your finance team back their time to spend on value-adding tasks. That’s why, according to an EY study, 65% of finance leaders see automation as one of the highest priorities for their business. Many are already implementing it across a wide variety of finance-related tasks, including

We’re at a crossroads – the halfway mark between old and new approaches. There’s still plenty of room for traditional practices, but the direction of travel is clear, and the pace of change is not going to slow down.

Lucy Cohen, Founder of Mazuma Accountants

What does finance automation mean for you?

Finance automation can already save your team countless hours of wasted energy, and we’re still in the early days.

As new machine-learning techniques emerge, machines will be capable of doing more and more complex tasks which are currently the preserve of finance professionals. In fact, as much as 45% of the activities your finance team currently spends their time doing, McKinsey & Company tells us, could in theory be automated. 

Understandable, then, that there’s some concern among finance teams that automation is a threat to their careers. But if anything, the opposite is true. In reality, automation is simply there to enhance efficiency and productivity in your workforce. This means it will free you and your team up to focus their expertise on the work that brings the most value to your company. 

In short, finance will likely become more of a strategic role than a hands-on one, and team members more responsible than ever for understanding, interpreting and acting on financial data – and aligning it with the wider aims of the business.

No matter your feelings on automation, it’s bound to happen sooner or later. So let’s take a closer look at the benefits it stands to bring you and your team.

Chapter 2

Four great reasons to automate your finances

1. Your finance team will have more time to spend on value-adding tasks

Someone has to enter your company financial data into spreadsheets, and that responsibility has inevitably fallen to your finance team.

But tasks like these keep them from the work no one else is equipped to do. They could, for example, be using that time to tease out meaningful insights that will accelerate business growth. They could get involved with other business objectives, too, where their expertise would be invaluable: understanding and challenging core strategy, for example, or building strong relationships with business leaders.

Automation tools are perfectly placed to take on the responsibility of these long-winded and repetitive tasks, and give members of your team more hours in the week to flex their strategic muscles. An automatic approval system alone, for example, could save you as much as eight hours each week. In fact, the best performing companies haven’t stopped there: according to AccountancyAge, they’ve reduced the time they spend reviewing, approving and consolidating tasks and activities by as much as 40%.

If someone – or something – could come and save you six hours a month, just imagine what you could do with that freed up time.

Emma Jones, Founder of Enterprise Nation

2. Your finance team’s reporting will be more accurate

Even if your accounting team is the best in the business, the game is still rigged against them. 

After all, they’re under a lot of pressure from a variety of factors: difficult suppliers, changing policies, tight deadlines, not to mention the tiredness or boredom that comes from being expected to plug line after line of data into the system. Every pass of accounts reconciliation alone can involve thousands of reconciliations and hundreds of employees. It’s a wonder they don’t make more mistakes than they do.

But while they may not be to blame, any mistakes they do make can still have a significant impact on the results of a report. All it takes is a typo or rounding error, and every calculation based on that figure is thrown out of whack. Some estimates suggest around 80% of manually generated Excel sheets contain mistakes or gaps in information – and tracking down this mistake can prove a significant drain on time.

Finance automation tools, however, don’t get tired, bored or distracted, which makes them ideal to transcribe data with no risk of error. Any entry or amend made is automatically applied to every document it impacts, which means everyone works off the same, up-to-date information. So executives across the organisation can rest easy knowing they’re working off standardised, accurate data sets. 

3. Your finance team will be able to extract better insights from your data

You could have endless data to hand about your business, but 66% of finance professionals asked by Accountancy Age say they don’t have enough time to spend on analysis.

The right tools, however, can produce highly detailed reports at the click of a mouse, consolidating diverse data sets in one place. This saves your finance team from hunting around for the information they need, so they can instead focus on turning the insights it provides into a powerful action plan. They may even be better placed to create new, more focused KPIs for the business, and rethink traditional metrics altogether.

What’s more, by automating your data collection, you’ll be able to identify and address problems or inconsistencies in the record-to-report process in real time. This will give you close oversight of potential bottlenecks and high-risk areas before they have a negative impact on the business – which individuals are yet to complete certain tasks, for example, or which actions are outstanding. With this increased visibility, you’ll be able to make long-term plans for improvement in the coming months as well.  

4. Your business processes will be more secure

No matter how good your IT team or how advanced your technology infrastructure, a manual workflow comes with ancillary security risks. 

During your reporting workflow, you have no choice but to pass sensitive information from one stakeholder to another unguarded. In theory, there’s nothing to stop different members of the journey from copying or manipulating the data entries, whether deliberately or by accident. But when you use cloud-based automated processes, all the data is stored and updated centrally, which means you can control which contributor has access to which data entries.

You may instead be cautious about entrusting your financial information to a third-party provider, but cloud companies are maintained by dedicated experts who constantly optimise the security and availability of their applications, as well as regulated by bodies with your best interests at heart.

Chapter 3

The ultimate finance techstack

To unlock the full potential of automation, you’ll need to use a portfolio of collaborative tools and technologies. Here’s our rundown of some of the best out there.

Soldo is a multi-user spending account, complete with secure prepaid debit cards, a payment control console and mobile app. 

Just give Soldo cards to as many members of your team as you like. They’ll be able to buy what they need, and submit expense claims in moments using the app. Your finance team, meanwhile, can keep spending in check with customisable rules and limits, transfer funds instantly and for free to each cardholder, and create detailed reports in a couple of clicks.

You can even integrate Soldo with your accountancy software. It features the world’s first complete expense integration with Xero, so you’ll get a free automatic daily bank feed, and be able to send enriched transaction data in a click. 

Xero is a cloud-based small business accounting software that helps you manage accounts reconciliation, inventory, purchasing, expenses, bookkeeping and more. 

Using Xero, finance teams can get a closer insight into their cash flow by highlighting bank balances, outstanding invoices, upcoming bills and expense claims. Daily bank transactions, meanwhile, will automatically be uploaded to Xero and matched to their corresponding accounting transaction. That means reconciliation is as simple as confirming the match is correct. 

Finance teams can also integrate Xero with more than 500 third-party apps, including those on this list. The data these apps collect flows directly into the Xero ledger, making manual data entry a thing of the past. 

Klipfolio shows your company key information from all your connected apps in one place – whether that’s Quickbooks, Salesforce, Google Analytics and Hubspot. 

You can build your dashboard using data from over 300 integrations, spreadsheets or APIs. This makes it easy to showcase and track your progress on a whole variety of metrics, including departmental performance, account status, expenses, cash, burn, MRR, conversion rates and more. You can also visualise the data however you like with the Klip Editor, using a library of bar charts, line graphs, gauges and more. 

Sage’s cloud-based software streamlines and automates payroll processes like payslips and tax calculations.

You can add all your employees to the system, along with their banking information and wages, and set how often payroll is processed. Sage will also help you automate tax calculations and submit to HMRC online. And because of regular updates to the software, you can rest easy knowing you’re always up to date and compliant with the latest payroll and pension legislation. 

Invoicely automates the accounts receivable process to ensure that invoices are paid quickly and on time. 

You’ll be able to see hourly billed tasks, expenses and trips on the dashboard, and convert them into invoices or estimates in a click. Clients can pay right from your invoice – even on a mobile device – and they’ll get reminders if they miss their deadline to pay. Invoicely also syncs with accounting software like Xero to make sure you don’t lose any data when you manually input payment information.

Chapter 4

A step-by-step guide to automating your financial workflow

Automation presents a lot of exciting opportunities for your business, but there’s an art to rolling it out successfully. Here’s how. 

1. Decide what you want to automate

There are a wide variety of financial processes where manual work can be eliminated, including general accounting, tax, analysis, revenue management and financial controlling.

In fact, according to McKinsey Global Institute’s automation research, current technologies can fully automate as much as 42% of financial activities – and mostly automate a further 19%. But it’s neither practical nor particularly sensible to automate everything in one go, so it’s your job to assess where the change will have the most meaningful impact.

Sketch out your current workflow on a whiteboard, and invite other stakeholders into the planning so you can take their experiences into account. You’ll quickly be able to see the easy wins – tasks you can switch up with minimal disruption and still see a dramatic improvement – which are a good place to start. 

2. Rethink your existing workflow

It’s tempting to try to shoehorn a particular automation tool into your current process and leave it at that. But to capture the full potential of automation technology, you need to be willing to reengineer your processes completely. 

Once you’ve decided on a technology or portfolio of technologies to use, you ought to go through each part of the R2R process systematically. Consider how information will pass from digital parts of the workflow back to manual. You may discover you need to restructure organisational structures to fit around these changes. You may even realise you need to  redefine team members’ roles, and shift their responsibilities within the business. 

Be wary of limiting yourself to short-term thinking. Keep in mind the other areas you may want to automate in the future, and create a roadmap that takes into account how you’ll roll them out, too – even if that won’t be for a year or so. 

3. Get one step ahead of disruption

It’s in no one’s interests pretending everything’s going to stay the same when automation arrives. These changes to your existing workflow will lead to disruption, maybe even redundancies, within the business. 

A key part of your role will be managing this, and there are a few things to keep in mind:

4. Sign up for your automation tools 

Once you’re ready, you’ll need to sign up for the automation technology you need. It’ll be easy to get started. 

With Soldo, for example, you simply need to:

Back when Excel spreadsheets first replaced handwritten ledgers and manual calculations, it represented a revolution for finance departments across the globe. Automation is going to have as big an impact, if not bigger. The real question is whether you’ll opt to take the opportunities these tools and technologies are now opening up to your business – or whether you’ll leave them to other businesses to gain the competitive edge.