ARTICLE | March 27, 2024

Authored by RSM US LLP

For more information, please contact Mark Stamer at mstamer@dopkins.com.

Finance and accounting are essential aspects of every business, but they’re historically reliant on time-consuming and error-prone manual processes. Finance automation seeks to replace these processes with fully automated and modernized ones. Understanding the five levels of automation and the four key steps you can take toward digital transformation will help you ensure your efforts deliver the best possible results for your business.

What transformation looks like

Finance automation has the power to transform your entire finance and accounting function, from the staffing levels you need to the reporting you deliver, to your overall growth and efficiency. Here are some ways finance automation can benefit your business:

• Increased efficiency: Develop efficiencies by automating processes within finance functions to eliminate manual tasks, data entry and human errors while improving accuracy and operational performance.
• Data accuracy and consistency: Integrated and connected systems ensure you get consistent answers irrespective of the data’s source.
• Improved customer and employee experience: Customers enjoy a frictionless experience and employees are freed from transaction processing to focus on financial analysis and meaningful insights benefitting the organization and fulfilling resources.
• Reduced costs: Automating processes increases the productivity of existing staff and can provide future cost avoidance in the form of staffing and/or risk reduction.
• Powerful insights/increased transparency: Artificial intelligence (AI) and machine learning (ML) embedded in finance and accounting applications use historical data to offer recommendations to drive strategic decision making.
• Scalability for future growth: Many of today’s finance automation solutions are managed in the public or private cloud. For middle market businesses, the cloud offers the ability to scale up or down as business needs evolve without purchasing additional hardware or software. Cloud applications also provide the infrastructure to support a digital workforce, providing the ability to locate talent remotely.

Adjusting to change and challenges

In addition to building efficiency and optimizing processes, automation can adapt to trends that may influence the finance function at your organization. Some examples include:

• Disruption: Whether it’s due to changing customer expectations, new technologies, regulatory updates, economic conditions or new market entrants, moving your finance function toward a fully automated, data-driven approach will enable you to take preemptive action to meet industry disruption head-on.
• Regulatory shifts: Regulatory agencies are increasing their focus on customer protections, data retention policies and more fair treatment of disadvantaged communities. Automating regulatory compliance enables you to make centralized updates and ensure that these changes are reflected across your tools and applications.
• Skilled labor shortage: In a recent RSM survey, 58% of middle market businesses say that hiring is “very” or “extremely” challenging, and 68% say they are struggling to attract experienced talent. Automating processes reduces staffing requirements and can boost employee retention by engaging your existing talent in more interesting, fulfilling work.
• Process innovation: A plethora of new technologies such as generative AI, ML and big data can transform the finance function. Taking advantage of automation today will lay the foundation to make the most out of these new technologies as they become more widely utilized.

Finance automation maturity: A continuum

Many businesses have implemented a variety of finance automation solutions but haven’t achieved the nirvana of transformation. Often teams are overwhelmed by their options and/or have difficulty gaining the necessary stakeholder buy-in.

Remember that finance automation exists on a continuum. It’s important to keep moving forward, building momentum as you go, until you arrive at the highest level of finance automation: autonomous finance and accounting processes.

Here’s how RSM defines the five levels of finance automation maturity:

• Level 1: Manual. An organization uses older technologies such as Excel and email to collaborate and communicate. This outdated approach results in inefficient processes, errors and siloed data.
  • Example: Accounting personnel must manually enter general ledger data for intercompany accounts into Excel and manually compare debits and credits between accounts. Approvals are still done using pen and paper or email.
• Level 2: Digital. An organization has implemented a foundational layer of technology that provides improved visibility, collaboration, controls and standardization.
  • Example: A cloud-based solution is used to capture budget inputs, assumptions and formulas to forecast amounts for business decision making.
• Level 3: Optimized. An organization has stabilized its use of digital tools, achieving a high level of adoption and best practices with upskilled talent.
  • Example: Using an existing digital solution, an organization unlocks further functionality by integrating additional systems or data sources.
• Level 4: Automated. By maximizing automation within specific tools, platforms and integrations across the technology stack for end-to-end automation, an organization reduces—and may even remove—manual intervention.
  • Example: The digital solution automatically creates a journal entry for exceptions and posts the missing or incorrect data in the general ledger.
• Level 5: Autonomous. An organization’s technology environment includes multiple integrated solutions sharing data and triggering process completion without human intervention.
  • Example: The digital solution uses reconciled data to create payment files that are passed to an adjacent solution to initiate payment from the bank.

4 key steps toward maximum impact

For most organizations, the transformation journey begins with automating a single routine task. Then it can evolve to a broader focus. Those organizations that remain stuck in lower-level digitization and automation likely still will see some modest cost savings but will miss out on the opportunity to significantly affect business outcomes including revenue generation, profit maximation and business process reinvention.

A typical automation journey follows four core steps:

1. Task automation. Automating or digitizing a task using a single tool
2. Process automation. Using one tool or pairing multiple tools to automate an end-to-end process such as account reconciliation
3. Orchestration. Integrating multiple tools that talk to one another into a platform to automate the entire chain
4. Business operations creation and reinvention. Using multiple tools to connect to a variety of internal and external ecosystems

Making strides on the path to automation

Whether you have yet to embark on your financial automation journey or you haven’t achieved the transformation you were hoping for, continuous improvement should be your goal. As automation technologies continue to proliferate, your organization will need both a vision of what is possible and a road map for getting there in order to keep up with the competition.

This article was written by Jonas Melton and originally appeared on 2024-03-27.
2022 RSM US LLP. All rights reserved.
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For more information, contact

Mark B. Stamer CPA

As a member of the Assurance Services Department, Mark primarily focuses on consulting services provide to a variety of the firm’s closely-held businesses. Mark helps streamline processes and provide management with financial information by researching, analyzing, and preparing financial statements. As a member of the Firm’s Forensic Accounting Group, he routinely assists in forensic accounting matters, litigation support services, and fraud prevention techniques.