Ready or Not, Here Comes Accounting Automation: Management Accountants Should Prepare Themselves to Master the Latest Technology Innovations to Provide Extra Value and Help Their Companies Succeed

By Brands, Kristine; Smith, Pem | Strategic Finance, March 2016 | Go to article overview

Ready or Not, Here Comes Accounting Automation: Management Accountants Should Prepare Themselves to Master the Latest Technology Innovations to Provide Extra Value and Help Their Companies Succeed


Brands, Kristine, Smith, Pem, Strategic Finance


During the last 50 years, technology and automation have fueled innovation, efficiency improvements, and cost reductions in the accounting and finance profession. Machines have become more intelligent as computers drive smarter and simplified processes. From 13-column green ledger paper to VisiCalc, Lotus 1-2-3, and Excel to workflow management systems, automation, and enterprise resource planning (ERP) systems, the role of management accountants has shifted dramatically from transaction processing to business analytics, strategic support, and cross-functional business process integration. What do we mean by accounting automation, and how can management accountants use technology to leverage it?

ACCOUNTING AUTOMATION

The basis of accounting automation is workflow automation, a set of rules-based processes that help an organization achieve its goals. Companies can use workflow automation software to automate the processing of accounting transactions such as travel claims, labor reporting and payroll processing, and accounts payable. The tools can speed up transaction processing, enforce internal controls, and identify processing bottlenecks. Process automation allows for the analysis of the steps and document flows involved to plan the automated process. Who needs to take action, and what information do they need to have at hand?

Some benefits of accounting automation are:

* Productivity improvements and cost reductions by automating repetitive tasks and reducing human error.

* Faster process cycle time, allowing more timely information with less effort.

* Improvements in internal control through consistent and verifiable application of business rules and processes.

Let's take a look at an example of an accounts payable automation project.

ROCKWELL AUTOMATION'S ACCOUNTS PAYABLE AUTOMATION PROJECT

Rockwell Automation, based in Milwaukee, Wis., is a provider of industrial automation and information products. With annual revenues of more than $6 billion in FY 2015 and business operations in 80 countries, Rockwell transformed its global accounts payable function with an Accounts Payable Imaging and Workflow Solutions (APIWS) system. According to Paul Smith, manager, global treasury at Rockwell Automation, the company's objective was to improve productivity and efficiency by migrating its accounts payable function from a legacy, manual, paper-based system to an automated system. The project goals were to reduce processing costs, create a more robust document storage and retention system, and standardize global accounts payable processing. When the project launched in 2009, the company's U.S. and Canadian operations were processing 1.5 million invoices annually with a spend of $3 billion but were only 40% automated. By project completion, they were almost completely automated. Benefits included lower processing costs, fewer duplicate payments and lost invoices, fewer late payments, adoption of standardized global processes, and improved regulatory compliance for tax and Sarbanes-Oxley Act requirements through automated controls.

THE FUTURE OF ACCOUNTING AUTOMATION

Accounting automation forecasts range from continuing refinement of the tools and techniques to increased efficiency of financial management to full replacement of the accounting and finance functions by artificial intelligence (AI) machines. Additional trends include Big Data and analytics and smart machines. Big Data and analytics can scan large volumes of data and perform analytics with sophisticated algorithms to facilitate decision making in the accounting and finance function. The sheer volume of the data prohibits traditional spreadsheet analysis. Smart machines can be taught a set of decision rules and learn how to handle variations and new conditions while AI agents can perform analytical and judgmental tasks currently performed by humans.

Proponents of the AI future suggest that finance and accounting professionals primarily apply specific rules to a particular transaction or event and that a smart machine can codify and "learn" these rules. …

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