Finance automation: Risks Associated With Not Automating Your Financial Services


Finance automation can be as basic as depositing your paycheck, paying bills, or setting aside a percentage of your monthly income. The concept is similar for firms and corporations, but on a much larger scale and with more moving components. Finance automation uses technology to complete tasks with little or no human intervention. In other words, tasks that are typically completed by employees are automated using technology such as artificial intelligence(AI). This not only frees up employees' time but allows them to conduct more difficult tasks that require human cognition.  According to the McKinsey Global Institute automation study, current in-use technology can fully automate 42 percent of finance processes and mostly automate an additional 19 percent.


So how exactly does automation work? There are a few different levels of automation that all offer a different user experience. The first forms of automation are macros and scripts which are simple rules-based automation that repeats simple work with highly structured data. This includes things like general accounting operations, revenue management, and cash disbursement, which are fully automatable with existing technologies in over 75 percent of cases. Robotic process automation (RPA) is the base of macros and scripts and is considered basic software that can complete repeated operations rapidly and with low effort, such as some of the chores listed previously.


Artificial intelligence is at the other end of the spectrum. Theoretically, the incorporation of artificial intelligence is accomplished when software can make intelligent judgments while still adhering to controls via algorithms or machine learning. Machine learning algorithms exhibit computers' capacity to take in a steady stream of data, evaluate that data for patterns, and offer solutions to issues people can't even notice, resulting in dramatically improved financial proficiency. What was once a dream for finance experts and company owners is now becoming a reality. These advancements are shaking up the way activities are conducted and even putting new elements into the mix, such as forecasting.


The initial step toward finance automation can be intimidating. However, as more organizations incorporate automation into their day-to-day financial procedures, the value of this technology becomes apparent. If you're still not convinced, here are the risks associated with not automating your financial services:


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To put it simply, electronic payments are less expensive than paper checks. According to a 2019 analysis by Levvel Research, organizations that used highly automated accounts payable procedures paid €2.36 for each invoice on average. Companies that used limited automation, on the other hand, spent €15 on each invoice, more than six times as much as their competitors.


Mailing checks require printing supplies, stamps, paper, and, of course, staff work, which is one of the reasons why manual payments are so expensive. Payments are significantly less likely to slide through the cracks now that electronic payments are more visible, ensuring that businesses do not suffer late fees.


Slower Finance Payment Processing


When B2B payments are processed manually, invoices might languish on desks or in email inboxes for days, if not weeks, awaiting clearance. By standardizing the approval procedure, payment automation eliminates such delays. Accounts Payable (AP) departments can use automation technologies to specify who authorizes which invoices by when and send reminders or error messages if those criteria are not followed.


The top B2B payment automation solutions have configurable dashboards that provide a high-level, real-time overview of invoice processing, providing AP executives with immediate visibility into any pending bills.


Decrease in Productivity

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B2B payment automation removes the need for human processes. This not only allows AP team members to work more effectively but also provides them the time and energy to focus on more strategic initiatives that may help the business grow. Furthermore, contemporary B2B payment automation software is cloud-based, allowing AP teams to collaborate or operate independently in a secure environment regardless of their location or device.


Fraud and Other Risks


Manually monitoring check payments is difficult and time-consuming. It's easy to overlook red flags while performing checks by hand. This is especially troubling given that checks are the payment type most commonly used by people conducting or attempting to commit fraud.


Fraud may be a financial nightmare for your organization, but B2B payment automation reduces the likelihood of fraud by:

  • Identifying incorrect invoices
  • Controlling which users are permitted to do specified activities
  • Providing entire transaction visibility
  • Detecting missing or inaccurate information

Automating your finance services can give your AP team peace of mind and a potential rise in the probability of pulling ahead of the competition without shoring up vulnerabilities against fraud.

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Impacted Vendor Relationships


Having an all-star reputation for paying bills on time distinguishes you from competitors and strengthens your connections with suppliers. Developing excellent vendor connections is critical to the success of your organization. B2B payment automation maintains existing strong vendor relationships in a variety of ways, including:

  • Faster service - Automating payments saves the time it takes suppliers and AP team members to reply to invoice and payment status inquiries.
  • Real-time visibility - B2B payment solutions provide an ACH portal that allows suppliers to see the progress of their transactions in real-time.
  • Shorter Payment Cycles- With B2B payment automation, critical KPIs like Days Sales Outstanding are lower (DSO).
  • Payment errors occur, however they occur significantly less frequently with automated payments.
  • On-time payments - B2B payment systems automatically transmit payments on or before their deadlines.
  • Keeping penalties at bay - Nothing ruins a buyer-seller relationship like late fees, but with B2B payment automation, you can keep your working relationship good.


More Human Errors


As you are aware, human data input is far from ideal, and even little errors may divert important time away from critical tasks, harm customer and supplier relationships, and result in duplicate payments, overpayments, or underpayments. B2B payment automation identifies minor difficulties before they become large concerns. Mistakes will be few and far between with the right software.


Financial technology helps avoid little to no insight

Businessman doing online banking, making a payment or purchasing goods on the internet entering his credit card details on a laptop, close up view of his hands


B2B payment automation software gathers financial data by default, which is essential for doing sophisticated analytics. Using financial technology like analyzing AP operations can show opportunities for process improvement and provide inspiration for ways to shorten the payment cycle.


B2B payment services, for example, clearly display which phases of the cycle take the longest, where approval bottlenecks are located, and who to contact when there are delays. Furthermore, financial data may be imported and exported in real-time, providing AP teams with the information they need to submit quarterly reports on time. Improved insights and visibility can pave the way for the integration of other strategic tools that improve cash flow, such as ERPs or human capital management systems.

Fyorin is a payment and financial operations platform that helps businesses of all sizes to automate and monetize their financial operations teams. Fyorin can help make services swift, flexible, and frictionless for all your customers to enjoy no matter what part of the world they may be in. Fyorin also offers countless benefits that range from tailored financial products for your business across a curated network of financial providers. From one unified platform, Fyorin offers multi-currency business accounts, sub-accounts, automated payables, and corporate virtual cards to better control and manage spending throughout your organization, helping your business keep risks low and your services automated.


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