Blog: How to automate financial administration processes: practical advice from finance experts

Automation in financial administration is nothing new. It has been a topic of interest for a good decade at least. Yet, it still remains often underused, sometimes poorly understood or even occasionally resisted. Why is this and what can companies do to increase automation in their organizations?

We reached out to nine experts in financial administration and asked them about their views on the state of automation in companies, what challenges they see and what advice they have for automating financial administration processes. 

The state of automation in companies 

The picture that emerges from the interviews is that utilising automation is a careful and fairly slow process in financial administrations. Unsurprisingly, big companies are usually far ahead of the smaller companies, where the benefits of automation might be understood but either resources or urgency for change is missing.

However, according to Taru Manner from Realia Group, companies do have a general interest in automation and its benefits, and some are making small experiments before committing more resources and time for the adoption of automation. 

“The more companies have good experiences with automation, the more willing they are to experiment different ways to automate routine tasks. Once they have seen that a robot or a basic automation tool can successfully automate some of the work, they move towards more sophisticated technologies like AI.”

Quite a few experts raised the point about technology becoming more sophisticated, which in turn helps companies to develop their processes further. Most companies have some softwares and systems that support basic automation and if they want to increase the level of automation, there are plenty of solutions in the market that don’t require massive investments in terms of time and money. 

Whilst most of the experts agreed that automation and its benefits are fairly well understood in companies, Janne Blomqvist from Azets notes that the magnitude of change that automation brings about is not usually understood very well. However, he does not feel this is very dramatic. In fact, he puts some of the responsibility onto the shoulders of software developers and solution providers:

“We should help companies to ensure that automation is used in a way that fits the companies’ circumstances and goals in the best possible way.” 

So what are the benefits of automation? Let’s look at what experts think about those next. 

The benefits of automation in financial administration

It is perhaps no surprise that all of the experts agreed that there are benefits to increasing automation in financial administration. In no particular order of importance, here are all the benefits they mentioned. 

Automation decreases routine, manual work

This is the big reason, perhaps the main reason to increase automation. Because many of the other benefits on this list follow directly from having less manual work to do. 

Automation frees up to time for more sensible and effective work

More sensible and effective work means supporting decision-making, offering predictions and foresight as well as analyzing trends and risks. In other words, becoming a trusted partner to business rather than being a button-pushing administrator.

Automation decreases mistakes in the process and ensures that data quality is good enough across the process

We will perhaps never eradicate all mistakes, but there are fewer mistakes when a machine speaks to a machine rather than a human typing everything up manually.

Automation prevents personnel costs from becoming too high

The more data financial administration has to process, the more it needs people to process it if the processes are not automated. Adding more people to the process is not a sustainable way to increase effectiveness.

Automation reduces costs and speeds up processes

This should be pretty self-explanatory. You only need to look at the automation of the purchase invoice process. Would you like to run that manually?

Automation helps to move the focus from performing routine tasks to financial expertise

As automation proceeds in companies, it also changes the skill set required of financial administrators. What companies need increasingly more is experts that not only provide numbers but also provide insights based on the numbers and can consult the business about the best ways forward.

Automation makes the financial admin job more interesting

This follows naturally from the previous point. Moving from doing repetitive tasks to being an expert for business should be a more interesting and rewarding job overall.

Automation affects recruitment

As technology does more and more of the routine work in financial administration, job seekers are looking for new job descriptions and more challenging jobs. Making sure your technology is up to date is a way to ensure your workforce is on top of its game. 

Automation does things that are not physically possible to be done manually by humans.

Handling hundreds of thousands of purchase invoices by hand every month? No, we didn’t think so either.

Automation benefits are in direct sync with the goals of financial administration 

The goals of financial administration are to have the company’s numbers correct and up-to-date. So the job is about correctness and speed which leads directly to cost-effectiveness. All of this is what automation is about and what automation can achieve. That is why it should be crystal clear that financial administration should be on the frontline of using automation. 

Despite so many clear benefits, what hinders adopting automation in companies?

3 roadblocks on the path to automation: people, processes, and lack of knowledge

Interviewees had a long list of bottlenecks they saw hindering the speed of adopting automation. These bumps roughly fall into three categories: people, processes, and knowledge. 

Let’s look at people first. 

Automation bottleneck: People

“It has long been discussed that digital this and digital that, but financial administrations are either too scared or unwilling to change their processes. Financial administrators are pedantic, obedient people who kindly do whatever is asked and do not question their ways of working.”

This rather provocative quote from Jouko Peltonen from Technopolis demonstrates one of the ways in which people are one bottleneck that slows down automation development in financial administration. 

But it is not necessarily always the case that people don’t question the status quo. Sometimes there is active resistance from people. Jesse Ahokas from Efima believes that some of the negative attitudes towards automation might come from previous bad experiences with automation, which might contribute to resistance to change. 

Some experts also noted that people might fear losing their jobs and that it is then psychologically easier to resist change than to go towards it.

The other side of the people-coin is resources. If financial administration does not have enough of their own resources either in terms of time or money, all development work becomes pretty hard, maybe even impossible. 

Roope Rauhalinna from Mehiläinen says that one of the hurdles is the way in which financial admins have to use their time. Their work is periodic: there is a rushed time period every month to record finances correctly. This is not conducive to development work. He adds,

“it would be good if the same people who do operative accounting work would not also have to do development work. That way development work would not stop all the time.”

However, it is not only administrators that belong in the people category. Management also needs to shoulder some of the responsibility. In fact, most of the responsibility is theirs. Four of the interviewed experts raised the point that automation is an organizational change and that if it lacks ownership on the management level, change won’t happen. 

Heikki Pulli from OpusCapita says:

“it is the responsibility of finance management to begin to think about how to combine processes, how to create processes between business units and how to set KPIs that help to make processes more straightforward.” 

So, CFOs: if you’re not yet focusing on this, time to start now. 

Automation bottlenecks: processes

This bottleneck has two strands: either financial admins don’t know their processes at all or they can’t see the whole picture of their processes. 

The first strand usually manifests in the age-old “this is the way we have always done” argument. In this case, the issue is to learn away from this attitude and from old ways of doing things. 

If financial admins are not able to perceive the big picture of their processes, that is usually because the processes have been chopped into many different parts and financial admins are only responsible for one part of it. There is no visibility at the end of the process into what happens at the beginning or the middle. Hence it is hard to see what parts of the process are the most cumbersome.

One of the experts also raised an interesting point. It can also be the case that financial administration is too diverse.

Janne Blomqvist explains:

“Too often we run into a situation where the financial processes are hindered by too many exceptions in the processes. Now, sometimes there is a legitimate business reason for those exceptions. But that is not the case every time.”

Or the process can be too complicated.

He adds, “the problem might be manual paper processes, contradictory system architecture, flawed or incomplete data or incoherent processes.” 

Automation bottlenecks: lack of knowledge

For many of the experts, one of the biggest bottlenecks is the lack of knowledge about the possibilities and benefits of automation or about the effectiveness of financial processes. 

Now, there was some variation of opinion about how much financial admins should understand about automation and the technologies related to it. Some of the experts thought that it would be beneficial for everyone to understand the basics, some said that at least management should have an understanding and some emphasized the role of service providers to bring that information to companies. 

Relying solely on service providers might be a bottleneck in itself because it can prolong the process further. 

Pepitta Nyman from Versowood explains,

“the service provider needs to find that one person in a company, who is genuinely interested in the topic and willing to take the issue further within the company.”

What if the service provider is not on top of its game either?

Olli-Pekka Kuha from Premis thinks that most service providers still have a lot to do themselves when it comes to the latest technology. 

“Based on my observations, most financial software providers have not yet used the latest advances in technology in their solutions to offer their customers good enough options to benefit from automation. With some solutions you might even end up with the situation that almost all saved time by automation has been shifted to maintain it.”

So, the consensus seems to be that there needs to be more knowledge about automation but, who should have that knowledge, varies. 

Steps to take when increasing automation in the organization

Experts varied a little on where organizations should start when they are considering increasing the level of automation in their organization. When there’s a lack of knowledge about the technologies, then starting from basic research is probably a good start. If you already have that and your company has given you green light to move forward, you can start shaking up the current processes. 

Here’s a list of different steps the interviewed experts recommended taking. They are not in order of importance or in the order the steps should be taken. Rather, they are a collection of steps to be kept in mind when you embark on the automation process. 

• Research. 

Familiarize yourself with automation technologies: AI, robotics, machine learning etc. Understand their possibilities. 

• Use outside experts’ help 

“Everyone thinks that their financial administration is unique. It isn’t. Be brave enough to show your sandbox to others, let them question the way it is set up and be willing to question it yourself.”  – Jouko Peltonen, Technopolis

• Be open and involve everyone from the very beginning – especially financial administrators

When you involve people from the very beginning of the process, you make people more committed to the future change. Also, the people who do the daily work know the processes best. Their expertise is invaluable. 

• Communicate more than you think is necessary

“Frequent and open communication can reduce resistance, and advance a positive atmosphere and enthusiasm towards the automation project.” – Jesse Ahokas, Efima

• Research and question the tasks that are still done manually

“Research your current data and try to find those points where it is easy to get big gains by automating. Focus on the mass of data to automatise first and ignore the exceptions. You’re going to manually handle the exceptions anyway, so leave them aside at the beginning of your automation project.” – Maya Hänninen, Newsec

• Prepare the organisation for changes in the ways in which their work is done

Increasing automation may require big changes in the ways of working from employees. Start preparing people for these changes long before you have any technological solution.

• Define goals and KPIs for the project. 

And think about whether your current systems support these goals and is your data in order. This will help in choosing the right service provider later. 

• Determine ownership and resources for project

Without ownership, any organisational change is doomed to fail from the beginning.  

• Investigate what’s on offer in the market

Get to know the solutions available on the market. The best solutions will fit with your current systems and ways of working seamlessly. 

Final word: automation is not complicated, it is for our benefit

Here are some of the points that became clear from the expert interviews:

• A little bit more knowledge about the uses and benefits of automation would do a world of good for companies. You don’t need to become a technology expert, just get the basics straight in your head.
• Automation has way more benefits than not using automation at all. In fact, the benefits are extensive. With the speed of technological advances, the list of benefits is likely to grow. 
• Make sure you understand your own processes from the beginning to the end. This helps you on so many levels: to better argue the case for increasing automation, to be more effective in your work, to start conversations about how things are done versus how they could be done, etc. 

In the end, automation is ultimately all about people: it starts with people, it is used for the benefit of people, it works best together with people and it will take people and companies to the next level. 

Industry experts who were interviewed for the article: 

Jesse Ahokas, Efima, Linkedin

Taru Manner, Realia, Linkedin

Roope Rauhalinna, Mehiläinen, Linkedin

Janne Blomqvist, Azets, Linkedin

Heikki Pulli, OpusCapita, Linkedin

Jouko Peltonen, Technopolis, Linkedin

Pepitta Nyman, Versowood, Linkedin

Olli-Pekka Kuha, Premis, Linkedin

Maya Hänninen, Newsec, Linkedin