The Impact of Robotic Process Automation in Accounting
Technology continues to transform society at a quick pace, and accounting is one of those areas that have adopted these innovative changes. New technologies are growing able to mimic human activity, taking on repetitive work more rapidly and accurately than people can. The authors offer an overview of Robotic Process Automation (RPA) in accounting that will change the ways the profession operates, with a specific focus on the field of revenue audits.
With the implementation of RPA, several accounting tasks that are usually repetitive and time-consuming will be at ease. RPA automates all tasks such as data collection, risk management, accounts payable, accounts receivable, and many more. RPA enhances and simplifies complicated human work. RPA gets more effective if it is used to make processes more efficient so that manpower can be utilized for performing value-added works. While deploying RPA in accounting it should be noticed that the automated processes may have minor errors. Accountants must recheck the data to be sure that it has accuracy.
Robotic Process Automation (RPA)
RPA takes help from the end-users to configure a software robot and also to employ existing applications that manipulate data, execute transactions, and communicate with other systems. It is a technology solution, which automates rule-dependent and standardized functions using scripts. The use of RPA has become more popular in recent years, several software robots are been easily trained and programmed to perform rule-related, repetitive, high-volume works by replicating human actions when accessing other multiple systems, documents, and applications.
The robots can do work with the help of a user interface in the same manner a human does that eliminating the requirement to modify applications (e.g. ERP, software warehouse, accounting, and payroll) or the important information technology infrastructure. Each robot operation is logged and tracked to meet audit needs and ensure data integrity.
Human involvement is very necessary to manually feed the robot with processed data because robots are not yet capable of managing or processing unstructured data. For instance, scanned documents. There is also a certain limitation in automating cognitive works. There are a lot of existing tasks that cannot be automated with the available technology because these cognitive tasks contain certain rules which are tough to be modeled because they need a certain level of experience and expertise of the staff.
RPA in Accounting
RPA has gained huge interest from several public accounting firms, specifically related to taxation, advisory, and assurance services. For instance, a significant portion of tax activities, like the calculation of book-tax variations and the preparation of tax returns, have got automated due to the adoption of technology in accounting. RPA is also presented to clients as an advisory product and service. The RPA software has been vastly applied for tax and advisory works.
The main objective of RPA in accounting is the well-managed of repetitive functions and enhance productivity as well as cost-effectiveness. Accounting divisions are a perfect match for RPA because they consist of repetitive work that is tedious, and demands a lot of attention understand in detail. Accounting mechanisms like Accounts Payable and Accounts Receivable are crucial for a firm's end-to-end functionality.
Use Cases of RPA in AccountingThe management of a business's accounts often needs a diverse set of software systems, because a single package cannot take care of all the necessary work. That separation of systems often results in a massive amount of time-consuming and recurring work, which is solely suitable for automation through RPA. Let’s have a look at some of the use cases of robotic process automation in accounting.
Unifying Policies, Procedures & Systems
It’s important to have unified policies, procedures, and systems before using RPA in the accounting field. Otherwise, it will also result in speeding up the production of waste besides the automation of essential tasks. The hidden part of RPA is that it extends across the entire process and automates those manual, error-prone procedures in the last mile of accounts, which drastically minimizes the risk while delivering dependable data.
During the financial close, balances are required to get validated, records should be consolidated, journal entries must be adjusted, financial data is taken for disclosing, and financial statements need to be prepared. There are high chances of risk for error in these works, and that’s the time the hidden value of RPA gets available.
Reducing Cost and Enhanced Efficiency
According to Gartner, “The last mile of Finance is ripe for cost reduction and efficiencies. While costs and resource consumption can be reduced by automating these processes, the bigger financial impact is in preventing the fallout from penalties, fines, lawsuits and valuation that result from inaccurate filing of financial statements.”
With RPA, huge volumes of data can be processed in very less time while offering accuracy and giving visibility into the tiniest of details, irrespective of region or division. Though is unquestionably immense value in the reduction of the close timeline that gives analytics time, RPA gives unparalleled accuracy, visibility, and elimination of risk. According to the Institute for RPA, “RPA solutions can help organizations save 25-40 percent in labor costs.”
While RPA also offers Return on Investment (ROI) across the complete procedure, a few ROIs are simpler to measure when compared to others. It is easy to compare ROI on the reduction of FTE hours on mundane work and maximization in mere efficiency but the greater impact of RPA is in its elimination of negative financial aspects, which include the capability to avoid mistakes before they are made or automatically attach documentation to proactively ignore the audit fees.
Accounting effort is used to explain open things and flush out the intercompany plug (imbalances) continuously in the month and not at the end which can make it late the downstream consolidation, forecasting, and financial reporting processes. If these types of transactions are not correctly accounted for, any out-of-balance accounts can impact the financial statements, making compliance problems and risk of restatement, SEC-imposed fines, and shareholder lawsuits.
The Intercompany Hub embeds configurable matching ways to operate intercompany reconciliations based on the RPA in accounting tolerance levels, identifying exceptions automatically that are best for managing the growth of intercompany transaction volumes. It also enables companies to centralize documentation, transactional insights, intercompany agreements, and cost while acting as an ERP-agnostic connective tissue between different entities.
Financial Planning & Forecasting
Planning becomes very difficult if there is no availability of accurate data. The actuals are the blueprint for the business, by comparing these against budget, and this is also where they can extract the forecast. The variables are changing rapidly in the current market environment, the modern accounting processes gets adjusted accordingly. In the traditional environment, finance often spends most of its time painfully getting the numbers right with manual, spreadsheet-based processes. According to EY, “finance teams spend the majority of their time working on the financial works itself, which means the business has to wait until after the period-end for information.”
The technology in accounting helps to transfer the nature of Finance’s work from canned after-the-fact reports to answering questions to the business has with better, quicker insights. RPA is a powerful value driver for data analytics initiatives in an ever-emerging digital landscape, working in tandem with APIs to unify the technology ecosystem and putting data or results into downstream systems. By connecting systems and data in this way, the efficiency acquires unlock more time for accounting to analyze results and look deeper at trends to better support agile forecasting and scenario planning.
This planning focus is an energizing fuel for accountants to own the data ecosystem and work mainly as reliable business advisors. Their role is to give details of the financial health of the business to their fellow team members and to advice on the financial factor of their decisions. For instance, suppose product sales and margins are off at the mid-month.
Advantages of RPA in AccountingRobotic process automation in accounting bots meets with legacy systems, implying that they cannot disrupt processes that are in place. Compared with several various traditional IT solutions and accounting software, RPA is applied in very less time and most affordable prices.
RPA possesses huge potential, it provides better efficiency. Let’s have a look at a few advantages of RPA in accounting:
RPA saves a lot of accountants' time. One can spend more time focusing on works that are useful for the growth of the business. According to UiPath, “RPA can also reduce processing costs by up to 80 percent.” RPA gives a quicker turnover of documents for approval, resulting in rapid clearing of suppliers’ invoices.
Accounting errors result in a costly business. Technology in accounting like RPA is useful to fill several ledgers within less time by retaining the quality of data with less to zero errors.
By automating accounting processes, a lot of time will be saved for the employees. This will give them time to focus on other important tasks, which will enhance their productivity. They can use their time and skills for doing other essential tasks to serve clients the best.
Better customer experience
The RPA has helped to focus more on enhancing the quality of work, which increases customer satisfaction. Deploying an RPA system gives firms better customer service, get a competitive benefit, and scale operations while decreasing the cost. It also enables a top level of customer service and more strategic work for the team.
The Future of Robotic Process Automation
There is a vast adoption of RPA in several organizations globally, less than one-third of adopters use the technology in accounting and financial reporting. The RPA application is growing in popularity. If the business adopted the RPA, one can expect RPA to be adopted in other departments – and soon.
Combining Artificial Intelligence (AI) with RPA it becomes more powerful. Intelligent automation will be a higher value technology than just RPA. For instance, RPA can easily fill out a tax report, but if the tax form changes; its rules must be reprogrammed. Adopting AI to read a tax form and change RPA rules depending on its discoveries will give a whole new path to accounting automation.
Robotic process automation in accounting survives the effort that can help the strategic role of finance, such as continuous improvement. Several organizations have frequent process reviews that will seek ways to fixes. Process automation stays and sustains consistency in execution, which translates into lesser process problems to deal with. A well-designed RPA system makes it straightforward to make adjustments to the overall processes.
RPA frees individuals to turn the value-adding tasks that take benefit of their professional skills, training, and experience. It also ensures finance executives use the profits efficiency to concentrate on filling a strategic role in their organization by offering timely and insightful details that are rapidly transforming the tech landscape and advancing in the accounting changing initiatives.