Finance automation: 2024 guide & best practices

Published

Oct 16, 2024

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Meticulous financial management—everything from regularly closing the books out to setting budget-friendly headcount plans—helps companies control costs, drive profits, and get ahead.

But the neverending slog of manual work can slow businesses down. Bookkeepers drain time chasing down receipts to reconcile purchases. Employees get stuck in approval purgatory for time-sensitive invoices. And payroll administrators constantly double-check and update tax withholdings and wage garnishments across their workforce, endangering timely and compliant pay runs.

In fact, 44% of finance leaders say their teams spend more than half their time on admin tasks.

The good news? Automations can relieve this substantial burden. This guide will show you how.

Finance automation definition

Finance automation refers to using technology to handle money management processes—like budgeting, payroll, accounting, invoicing vendors, and more—on a company’s behalf. By automating these tasks, companies can save time otherwise spent on manual work, reduce errors, and bolster their financial reporting capabilities.

Examples of automated financial systems include an expense management platform that blocks out-of-policy reimbursement requests or a payroll software solution that automatically deducts required taxes from employees’ paychecks.

While automation allows companies to handle certain finance processes with little or no human intervention, it isn’t intended to replace employees. Rather, these set-it-and-forget-it workflows can free finance teams to spend more time on high-value tasks like strategic planning.

Business process automation vs. robotic process automation in finance

Companies can use business process automation (BPA) and robotic process automation (RPA) to streamline their financial management.

BPA: The broad use of digital tools to automate tasks, allowing companies to handle entire complex processes more efficiently (e.g., setting up role-based permissions to automatically route different types of expense reimbursement requests to the right approvers).
RPA: The narrower use of automations for specific, repetitive tasks (e.g., calculating the sum of different accounting journal entries to determine figures for your income statement).

RPAs are used to eliminate or reduce manual work for more targeted tasks, while BPAs can help finance departments streamline a larger scope of financial management processes.

Which financial processes can be automated?

With financial management tools, companies can automate financial operations related to:

Payroll

Running payroll is arguably the most vital component of managing employees. But when handled manually, it can become an error-prone time-suck. Payroll automations speed up the process. You can, for instance, automatically calculate relevant payroll taxes and file them with the appropriate federal, state, and local agencies. The best payroll automation solutions also let you sync approved hours, expense reimbursements, and benefits deductions directly to pay runs, helping you pay employees accurately and efficiently.

Tracking, reporting, and analysis

Finance reporting automation can help companies turn their spend data into high-visibility insights without the burdensome manual work. Instead of draining time tinkering with spreadsheets, you can tee up a report that tracks monthly spend by department, R&D salaries across offices, and get up-to-date glimpses into your cash flow that help you control costs. Expense report automation can help with budgeting, forecasting, and other financial planning and analysis (FP&A) processes.

Expense management

Companies can streamline expense management by enabling employees to upload receipts with software platforms that auto-capture relevant details for expense reports. Standout platforms can also automatically route these reports to different approvers depending on the transaction’s amount, vendor category, and employee attributes like role and location.

Automations can also flag receipt mismatches and sync approved expenses to your general ledger, saving finance departments hours of manual work when it comes time to close the books out.

Corporate card management

Some corporate card solutions can automatically block out-of-policy or fraudulent transactions. They can even automatically distribute cards with pre-set spending limits and vendor controls to new employees based on their role after they finish onboarding. Corporate cards with these automations can give you more control over spend while letting you set customizable policies that cater to different employees with different purchasing needs.

Bill pay

Bill pay platforms can automate your accounts receivable and accounts payable processes by automatically capturing bill details from invoices to reduce manual data entry. You can also auto-schedule payments from different accounts for recurring invoices and automatically route bills for approval so that different team members sign off on different purchases depending on the bill’s details. With automated systems, you can stay on top of purchase orders and maintain good relationships with vendors.

Tax compliance

Finance automations can consolidate your spend data and keep your accounting records organized, accurate, and up-to-date. This hastens your year-end accounting close, prepares you for any potential audits, and facilitates compliance with regulatory bodies. Payroll software can also help you stay on top of tax withholdings and filing deadlines.

5 benefits of finance automation

Automation software can help businesses run more efficiently and monitor spend, while giving both finance team members and the C-suite insights that help them make better budgeting decisions. Here’s a look at some of the biggest benefits.

Reduced manual errors

Manually calculating tax withholdings before pay runs and keeping track of flimsy paper receipts to reconcile them with journal entries not only drains valuable time; it risks mistakes. Finance automations mitigate the risk of human error by handling tasks like payroll calculations, approval workflows, financial reporting, and data entry on your company’s behalf.

Enhanced compliance

Finance automations can help teams adhere to generally accepted accounting principles (GAAP), keep up-to-date records in case of internal or external audits, and enforce employee spend policies by blocking unauthorized corporate card transactions or expense reimbursements.

Real-time visibility and insights

Automation solutions can help finance teams stay up-to-date on all their company’s financial transactions and set realistic budgets tailored to the unique needs of different departments. You can also use the automations to get a better view of your financial data, track monthly spend, and determine metrics like the average cost per new hire. These reports can help teams stick to predetermined budgets and forecast the company’s future needs.

Stronger cost control

Finance automation software can help you catch non-compliant spend before it slips through the cracks and dings your balance sheet. It can also provide more accurate budgeting and forecasting, which can help finance leaders allocate their resources more efficiently to control costs and boost profits.

Increased time savings

Finance automations can save employees, bookkeepers, managers, and administrators several hours per week. With the right tools, you can automate approval workflows to route expense requests to the right approvers, sync approved transactions to your general ledger, and automatically send corporate cards to eligible new employees during onboarding. You can also save time manually poring through receipts during reconciliation and become less reliant on opaque spreadsheets that require constant upkeep.

How to implement finance automation in your business

Turning financial automation from concept to reality requires careful planning and a modern tech stack that’s up to the task of taking on your manual workload.

Step 1. Identify the finance processes to automate

First, take stock of your finance operations. What involves the most amount of manual work? What feels repetitive for humans to do and ripe for technology to take on? While you can’t necessarily streamline everything on your wishlist, pay close attention to the tasks that demand the most amount of your team members’ time and energy and see if there’s an automated tool that can take on the work.

Step 2. Evaluate and choose the correct finance automation tools

Consult your network and review sites like G2 and Capterra to see which automation solutions can best help what you’re looking for. Many options will be point solutions—like expense management software to handle employee reimbursements or payroll software to compensate your staff. But keep in mind the more processes you can consolidate under one platform, the more interconnected your financial data becomes which can pave the way for more automations and less cumbersome data entry.

Step 3. Run the migration and assign a stakeholder

Next, you need to incorporate the automation tools into your day-to-day processes. Keep in mind that they’ll be easier to implement if they integrate with solutions you already use, like an enterprise resource planner (ERP), or customer relationship management (CRM) system.

Another way to smooth out the implementation: assign a point person. This supervisor can set up the initial workflows, check for errors, and tweak the automated processes until it boosts your efficiency.

Step 4. Review and optimize

Once your preliminary workflows are up and running, test them to make sure they produce the intended results. You should also solicit input about what other repetitive tasks may be worth automating—always looking for ways to speed up processes and cut down on busywork.

Best practices for finance automation

While finance automations can take manual work off your team members’ plates, they require thoughtful implementation and frequent upkeep. Here are some best practices to make sure your automated processes save time and spare errors.

1. Conducting phased implementation

It may be tempting to upend all your legacy systems and automate as much as possible as quickly as possible. This could get disorganized and lead to costly mistakes. Start small, automating the top one or two manual tasks draining the most time (and refining workflows as needed), before addressing other, less urgent processes.

2. Running team training sessions

Conduct training sessions with team members to teach them how to use the new automations. Employees may feel resistant to change their tried-and-true methods of getting work done, so take time to educate them on the benefits of automation, walking them through how to incorporate it into their daily work and how it can save time team members can reallocate toward other, more strategic tasks.

3. Maintaining the human element

Automated processes will support your team members’ daily tasks, but it’s important to preserve the human element of your financial operations. Strategic tasks like creating an employee spend policy, prioritizing which new hires to make, and allocating capital to meet your short and long term plans require creative, flexible thinking. Make sure the automated processes handle the repetitive work in the background to free up time for the bigger picture initiatives.

Rippling: Easy and reliable finance automation

Rippling consolidates all of your company’s finances—from Payroll and Bill Pay to Corporate Cards and Expense Management–giving you a real-time view of cash flow across your company and offering unparalleled control over spending patterns.

While most expense management solutions only allow for basic employee-manager approval chains, with Rippling Expense Management’s advanced policy engine, you can set hyper-custom policies based on the vendor, dollar amount, and expense category, helping you block out-of-policy expenses with ease. You can also tee up automated, multi-stage approval workflows that help you control spend, like sending every expense over $300 for approval from the employee’s direct manager and the company controller..

What’s more, Rippling auto-categorizes expenses to your general ledger in real-time, saving bookkeepers hours of work manually logging transactions from different vendors to the right expense categories and reconciling them at the end of reporting periods.

With Rippling you can:

Automatically route expenses and bills to the right approver every time.
Flag out-of-policy spending with hyper-custom policies, like by vendor or value, for further review.

Close the books faster with AI-powered transaction categorization, and integration with your accounting systems.

Schedule a demo with Rippling today

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Finance automation FAQs

What are the risks of automation in finance?

When improperly implemented, finance automations can produce inaccurate reports (which endangers compliance with tax regulations) and processing errors that slow work down. Automation can also dampen morale if employees think it will replace their jobs outright.

How do I know if my business is ready for finance automation?

Your business could benefit from finance automation if employees spend hours a month on repetitive manual work. Companies should also assess whether all the manual work is producing human errors and hampering employees from handling the more strategic responsibilities of their job.

How do I ensure the security of my financial data when using automated tools?

To protect sensitive financial data, companies should restrict access permissions of automations so that only designated administrators can use them. Businesses should also adhere to standard data security best practices like encryption, multi-factor authentication, and regular software updates to protect against viruses. You should also research the security protections of automation tools before implementing them into your systems.

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