Finance automation: how to build efficient processes & workflows

Every finance team needs more focus time. Less data entry, and fewer of those “quick questions” from well-meaning colleagues. And the quickest way to reach this dream is with the right software and smart automation. 

But you already knew that. For almost all of the companies I work with, the question is not why to automate, but where to start and how to get it right?

Here I’ll explain how to begin answering these questions, and the key considerations for truly effective finance automation.

What most businesses already automate well

I usually start working with a business when they're around series A. They typically already have accounts payable automated. That's a lot of data that needs to be processed on a daily basis, and so much of the reporting is off the back of this data. So it has to be accurate and timely. 

Then there’s the flipside - the sales side. And most companies have this sorted too, since it’s a matter of getting paid. E-commerce and SaaS businesses are using Stripe or Shopify tools right from the start. They don’t want to have to send out sales invoices manually. 

And for some industries or business models this is less urgent. If you're just invoicing larger amounts but less frequently, you can get away with keeping that manual until it becomes problematic.

And then there’s making payments, whether that's using virtual cards or linking your bank to your general ledger. 

They’re the three areas that most businesses do pretty early. And I think it's worthwhile otherwise you'll have to hire a finance manager straight away just to do all that processing. You used to have two or three accounting people by the time you had 50 full time employees, but nowadays you can automate a lot of the finance tasks.

So the above are pretty much table stakes. Most of the companies I work with need to take the next step towards more scalable process automation. 

The low hanging fruit for finance automation

A quick caveat: this conversation keeps changing; what I write here may well be out of date next week. But these are usually the first real finance automation wins for the companies I work with. The no-brainers. 

Payroll and HR

Here’s an obvious statement: employees like being paid on time. Speak to anyone who has made a major mistake in payroll and they’ll tell you just how stressful it can be. So getting your payroll and HR systems working autonomously is vital. 

And there are now really good payroll automation tools you can manage in house, which also means you don’t have to pay to outsource. You have full control and can build the system the way you need it. 

Reporting

There are already some great reporting automation tools out there. But I think this will be the space that develops the most in the next 12-24 months. 

Today, a lot of people spend far too much time doing analysis in Excel. The amount of time it takes to prepare and confirm management accounts and other internal reports is staggering. 

And it's very rare to find management accounts that don't have human errors. So you're spending most of your time making sure reports are accurate and they're showing the right numbers, rather than looking at what the numbers are actually telling you. 

Automating reporting is so essential for the finance team to be useful and adding value. At month end, if you can just click a button and all the reporting comes to you, you can spend time looking at the numbers. 

The commentary and strategic insights are where your time should be spent, with far less pressure on preparation.

Consolidation

Companies dealing with multiple entities or even just a high number of bank accounts need to be able to reconcile and consolidate those accounts quickly. And this largely depends on how your data flows.

It’s surprising how many third party bookkeeping firms are still consolidating manually. There is absolutely no need for that. Particularly when you’re going through a month-end review and making changes all the time, having to reconsolidate it is such a waste of time. 

Which then feeds back into reporting. Re-creating revenue reporting, internal reporting, board reporting, and investor reporting because the numbers have changed can take days. Every month you could easily create six reports, each of which relies on clean data and accurate consolidation.

Employee expenses

Some businesses have this sorted when I arrive, but expenses can become trickier as you scale. You don’t want to centralize every payment through a few company cards, and you also don’t want the finance team processing dozens of Excel expense claims every month. 

Virtual cards are again a good option for online payments. These let any employee make a secure transaction and submit the receipt, so they don’t need to create a reimbursement claim. And you can get this data flowing to your reporting systems easily since it’s all digital. 

There’s also the option to give individual employees expense cards, which are easier to control than distributing actual company credit cards. And then you can also automate the actual expense claim process if people need to be reimbursed. 

All of this easily replaces the mix of paper and plastic that most businesses are used to.

What to look for as you add new automation

Here are the starting points you want to examine before diving into an automation project. We’ll use an example from a recent company I worked with to illustrate them all. 

Broken workflows and missing data

This is an obvious starting point, but perhaps not in the way you think. Of course you want to automate the processes and workflows that are slow or financially inefficient, but first they need to work. 

Automation isn’t going to fix a broken workflow. If the logic doesn’t make sense or the data is inaccurate, you’ll just have a faster path to nonsense and inaccuracies. 

One of the companies I'm working with has larger ticket items (unlike the e-commerce companies from earlier). They've always had the sales team raise those invoices and chase the payments. In a way it makes sense, because the salespeople get commission on invoices paid, so they’re incentivized to fulfill the process. 

But do you really want to pay sales teams to do administration, or do you want them to sell? Clearly it’s the latter. So before bringing in automation, we have to reconsider the whole workflow. And we need clear expectations about who is responsible for issuing and chasing those invoices. 

In this case, we can fully automate the issuing step, and customers can pay right away. The new process also automatically sends reminders for late payments, which covers most common issues. Then, if there’s a particularly outstanding invoice or a tricky customer, the salesperson is responsible to finish the job. 

For that particular company, that's a really big shift. And while good software makes it all possible, a lot of thought and flow redesign went into how the final product should look. 

Effort vs impact

In a perfect world, you’d find a simple tool to quickly upgrade your finance processes, leading to transformational change. But aside from that low-hanging fruit above, most impactful projects will take some work. 

In the sales invoicing case above, it's taking us about three months to implement. There are so many nuances, templates to prepare, and the sales team has to change their entire process. 

Given the scale of impact, it’s certainly worth it. But there will be many instances where this isn’t the case. 

Often the biggest sign that effort will be high is where the project goes across departments. If it’s finance only, you can manage it with a couple of people and you can ensure that the team understands the value. But where automation reaches across teams and disrupts existing processes, it’s going to be hard to install. 

And because corporate finance teams are right at the heart of the company, there will almost always be a wider impact. 

The fewer tools, the better

Looking at those broken workflows above, it’s often tempting to identify and fix each trouble spot with its own solution. In the moment, that’s usually lower effort. And there are lots of tools available to address one or two problem areas. 

But ideally you want end-to-end solutions that integrate with everything, particularly where you have all these different touchpoints. For starters, there are just a lot of logins to manage. 

You can quickly have 20 add-ons to your general ledger. And most people eventually realize it’s simpler and easier to have a couple of tools, rather than 20. 

The other major consideration is the non-finance or non-operational people using them. To go back to our Sales example, the best outcome is having them never leave the CRM. Or for them to have just one platform for all their spending - whether it’s virtual cards, invoices, or expense claims. It’s much easier to train other teams to log into one tool for everything, 

Which obviously has a positive effect on relationships, too. If they don’t have to come to you for reminders on how to do process x versus process y - if they’re all the same process - you save on a lot of unnecessary back and forth. 

Automation unlocks your finance team’s true value

Financial efficiency is almost always appealing in and of itself. But the ultimate goal here is to put your resources where they’re of most importance. 

The days of having the finance function in the dark corner with stacks of filing doing data entry are gone. AI will take that role any day now. 

The finance team needs to add value and help make commercial decisions. It certainly shouldn’t be the police unit that nobody wants to deal with. But to keep your seat at the table, you need your team’s minds off processing and on better decision making

Of course, the finance team is still responsible for keeping the lights on - we have to do that. But it requires far fewer human resources and can be done much more easily than in the past. It’s no longer the sole focus.

Let’s set those onerous tasks aside, and put our brains to better use. 

About the author

Alysha Randall is Portfolio Finance Director and CFO at Fast Growth Consulting, where she helps founders and directors build the perfect finance processes. Typical clients include companies preparing their first major audit or fundraise, developing more detailed forecasts, developing an in-house finance team and automating time-consuming finance systems.