As a business owner, if you've found yourself considering whether to implement robotic process automation (RPA) to manage accounting you're not alone. Many organizations are keenly assessing getting on the RPA bandwagon, partly because of the automation benefits of the "digital workforce" and partly because of the hype created by RPA vendors.
RPA in accounting, also called robotic accounting, is the application of automation tools to assist human efforts—and by extension reduce labor—required to execute redundant and repetitive accounting and financial tasks.
It's critical to gauge whether RPA is the right solution for your accounting processes and to weigh it against other options available in the form of financial applications.
In this article, we'll look at the things you need to keep in mind while exploring RPA options for your accounting processes.
The first critical factor to consider is how open your employees are toward adapting to changes. Some obvious changes include altered responsibilities of your finance employees and modifications to the technology infrastructure during/after deployment.
It's essential to gauge employee adaptability to RPA implementation, as their unwillingness to change may delay adoption or lead to errors or failures at different points in the process.
To assess how open your people are to change, conduct surveys and interviews across business units and generate heat maps to identify the areas or departments that require support. You can also conduct interviews with key stakeholders such as members of the project deployment team and those in leadership positions directly involved in the project.
Along with your people, it's your processes that will absorb the impact of RPA. To effectively anticipate the possible impact, you'll need to begin by understanding their type.
If your processes involve a lot of manual, paper-based, and repetitive tasks (such as invoice management and purchase order processing ), RPA may be the right choice as RPA is great at automating repetitive tasks. However, if your processes involve a lot of logical decision-making, which requires a technology to learn by analyzing data, RPA may not be right for you as it can't learn or be trained.
After careful evaluation, you may realize that your processes are more suited to a best-practice financial application than an RPA tool. A best-practice financial application could be a Software-as-a-Service (SaaS) tool, specialist finance applications, and a Business Process-as-a-Service (BPaaS) platform.
To identify how to best automate your processes using RPA, you'll have to begin by understanding how your processes work. You'll need to take into account the manual interactions, idiosyncrasies, and all the places where the processes are loosely coupled. The idiosyncrasies will require customization to the standard process flow.
These requirements will help you estimate the cost of deploying RPA.
To evaluate the total cost of RPA deployment, add up the cost of your current IT applications, manual labor, and the cost of time lost to rework resulting from incorrect data. For this purpose, you can use process mining or process discovery tools. You can then evaluate if the cost fits within your allocated budget.
Pro tip: You can implement RPA without standardizing accounting processes as standardizing a process can create more changes than implementing an RPA. Further, some RPA-automated processes become operational from day one, which in turn increases productivity and the speed of overall RPA adoption.
Let us look at the use cases of how you can implement RPA in some key accounting processes:
Cash flow statement preparation: Extract information in a predefined bank template and speed up cash flow statement preparation.
Fixed asset accounting: Create new asset record in the accounting system, open invoice, copy the date on which it was acquired and placed in service, its type and cost, and then paste it into the new record automatically.
Prepaid expense amortization: Verify amortization calculations and copy the total amortization amount from the prepaid expense amortization spreadsheet onto a standard journal entry. This helps reduce errors in financial reporting.
Variance report accounting: Access vendor invoice database, organize given items, highlight items with no invoice match, record invoice IDs, and arrange variances in tables. Accounting personnel can then reconcile variances in vendor invoices.
General ledger reconciliations: Open general ledger and compare the opening balance for each account with that of the ending reconciliation details for a given period. In case of any disparity, notify accounting personnel to ensure accuracy.
Pro tip: Use RPA in cases where you feel other automation options are too expensive and time-consuming (taking up months and years). RPA is better suited to “long tail" business process change where IT resources are involved in manual tasks and processes rely heavily on spreadsheets.
A Gartner report states: RPA can be used in finance and accounting where people have been performing the routine work of collating, rekeying and posting data between systems. (Full content available to Gartner clients.)
Let's look at some case studies that offer real-life examples of this.
A pharmaceutical company wanted to automate its purchase orders—approximately 1.5 million orders annually. The company was using an invoice processing tool to export data to SAP, to input data into systems, and for some transactional use cases. It used the SAP tool to export purchase order data. The process also involved steps such as data extraction, data classification, document processing, and process orchestration.
To automate the process, the company integrated the invoice processing tool with RPA platform from different vendors. The integration created a transaction-based process handled by a robot, which now facilitates smooth exchange of data and documents between platforms.
A multibillion-dollar dairy products company used RPA to automate 69 finance processes, which included balance sheet reconciliations, journal entries, and intercompany reconciliations and accruals.
The selected RPA vendor sold prebuilt routines for specific SAP ERP finance module processes. The robot routine for employee leave accrual and journal posting creates a salary report in the payroll system and a leave report in the HR system. To develop the accrual amount, the information is extracted and combined from each report. The robot then populates the accrual amount into a journal posting template and posts it into a finance system within the ERP. An email is then generated and sent to the management for review with evidence attached to it.
Pro tip: The lack of human analysis in RPA tools will not necessarily impact your accounting processes negatively if they involve the automation of repetitive tasks. You can allocate repetitive, low-value tasks to RPA while human workers manage high-value tasks that require analysis and decision-making.
After reading through this article, you should have some clarity about the things to look out for before proceeding with RPA implementation. Just remember, you should:
Consider how implementing RPA in your accounting processes impact your people and their responsibilities.
Consider the time and cost required to understand the process and implementing RPA and weigh this against the time and cost a finance application will take.
Be wary of the common misconceptions around RPA and try to tackle them.