Seventy-three percent of chief financial officers are looking to new technologies as ways to streamline processes and add value to their organizations, according to Protiviti’s 2019 Finance Trends survey. There are many off-the-shelf solutions that promise to help them do that by automating everything from check processing to call centers. Another, sometimes overlooked solution is robotic process automation (RPA).
As we’ve written before, RPA is a great way to automate high-volume, repetitive tasks, working across multiple systems without significant process modification. In finance, executives have been putting RPA to productive use throughout the record-to-report cycle. One area where it has proven particularly useful is in account reconciliations.
Successful RPA deployment depends on the availability and reliability of transactional data. Stability in the system and stability in the data are key. Unstable systems that experience a lot of downtime or interruptions or where the data frequently changes formats can pose challenges.
Reconciliations are a good fit for RPA because they are rules-based. The processes require accessing more than one system — typically an ERP or payables system, and multiple banks or third-party service providers, which a bot can do easily, avoiding human errors. Further, account reconciliation involves working with highly structured data, comparing populations of data — say, “checks issued” and “checks cleared” — lowering the data barrier that prevents other processes from being easily automated. Any anomalies are passed along to human co-workers for further investigation.
By eliminating matched transactions (presumably the bulk of all transactions), RPA allows finance team members to focus their time more productively — not only investigating outliers but also looking for trends and trying to find ways to eliminate such exceptions.
Deploying RPA for account reconciliations can save a tremendous amount of time considering the hundreds of reconciliations — of invoices, purchase orders, etc. — that a finance department might have to perform on a weekly, or even daily, basis.
Some would argue that off-the-shelf solutions can do a similar job. While that is true in some cases, one of RPA’s recognized advantages is that it already sits on the enterprise architecture, it is already compatible, and it can be quickly and easily deployed, helping generate immediate benefits. And companies don’t have to limit themselves to one or the other: They can deploy a focused, specialized solution to reconcile cash accounts, for example, while bots could be used as stand-ins for humans to kick off the new automated processes.
RPA is a versatile but limited technology. While it can be applied to a wide range of tasks and subtasks, it should be viewed as an initial solution in a larger, more holistic digital transformation that might require a combination of RPA with point solutions and advanced automation (artificial intelligence, machine learning, etc.) for a full process automation. However, for the specific task of account reconciliation, one of the most labor-intensive finance department activities, RPA can offer great value and an immediate return on investment.