Top 5 Benefits of Automating Your Financial Reporting in 2024
The biggest downsides of a manual reporting process are that:
- It is time consuming
- It stops accounting teams from tending to more important matters
- And the overall process is susceptible to manual errors.
To overcome these challenges, accounting teams can automate the entire reporting process by deploying a financial reporting automation solution. In this article, we’ll explore the top 5 benefits accounting teams can achieve by moving away from paper-based reporting and implementing an automatic counterpart.
1. It’s scalable in scope
As a company grows in size and stature, so do its financial obligations and activities. More accounts mean more numbers to deal with, and those growing numbers require more accountants to keep track of in order to produce financial reports.
A reporting automation software is scalable at little to no cost. This means as a company adds new clients’ accounts to the software, the robots will treat new accounts just as they did the old ones. The implication is that you will be able to keep the number of human accountants on your payroll at a manageable number, while the software would automatically be programmed to make reports from the accounts and datasets.
Lastly, a reporting automation can be implemented to tackle reporting for different books of accounts, such as account receivable, expense accounts, and more.
2. It gives your team time to analyze
Manual creation of financial reports forces your teams to spend the majority of their time coming up with them, rather than analyzing them. One of the benefits of a financial reporting automation solution is that by automating the process, it frees your accounting teams to not worry about creating the reports, but rather making sense of them.
3. It’s less error prone
According to a study by Audit Analytics, there were 364 restatements by public companies in 2020. Restatements are revisions to a financial report, following an error. Unfortunately, there is no report to know whether these errors were caused by humans or robots.
But it’s safe to make the claim that robots are less likely than humans to make an error. Unless there are faults with the data itself, or the underlying programming codes are incorrect, the software robot will always execute commands as they are defined. Whether it’s moving data from column A to column B, or calculating ratio by leveraging formulae, robots are more consistent and accurate than humans.
4. It’s always on time
Automation solutions, regardless of the purpose they serve, use RPA and schedule triggers to initiate the execution of tasks on predetermined time schedules.
Financial reports should always be submitted on time to keep stakeholders and managers informed of the company’s financial position. Timely submission of reports is important for managers to plan ahead for the coming months. Timely reporting is also important for audit purposes to ensure the company is in compliance.
A reporting automation solution starts a process whenever you tell it to. This means that if the accounting system is programmed to start generating reports at 9 a.m. on the last day of the month, the reports will be generated on time. And ad hoc adjustments can also be made seamlessly.
The overall benefit is that accountants will have the peace of mind that deadlines will never be missed again, and that their reports which took days to materialize will now be done in minutes.
5. It provides a visible audit trail
The Audit Analytics report specified that revenue recognition, in financial reports, was the most recurring error that was observed in 2020. This means there was limited visibility into the source of companies’ stated revenues.
Because automated solutions work with captured data from different ERP systems to generate the reports, there is the possibility to click on a number on the report to see where it has come from. The visibility of the reports, and the ability to track back your steps, makes for a visible and transparent audit trail.
For more on financial automation
If you are interested in learning more about financial automation, read:
- CRM in Financial Services: Key Features, Benefits & Suggestions
- Top 10 Financial CRM Software Benchmarking
- Top 9 Benefits of Client Reporting Automation
- What is Intercompany Accounting & How to Automate it?
- Top 4 Best Practices For Financial Close Automation
If you believe your business would benefit from a financial automation solution, head over to our FinTech hub, where you’ll find data-driven lists of vendors for different use cases.
And we will help you choose the right tool for your business:
Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.
Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.
Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.
He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.
Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.
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