8 ways Finance can use Intelligent Document Processing (IDP) and Robotic Process Automation (RPA)
The finance function is a critical component of any corporate entity, responsible for managing the organization's financial resources and ensuring its long-term financial health.
With the rise of automation and digitization, finance teams are increasingly turning to Intelligent Document Processing (IDP) and Robotic Process Automation (RPA) to automate tasks, improve accuracy and efficiency, and ultimately reduce costs. Let’s look at the top 8 ways the finance function can use IDP and RPA to achieve these benefits.
(1) Accounts Payable
One of the most common use cases for IDP and RPA in the finance function is accounts payable. With IDP, software can automatically extract relevant information from invoices, such as the amount due, the vendor, and the payment terms. Machine Learning has made it possible to extract data from different formats of invoice document. The extracted information can then be entered into or uploaded into the accounting system or ERP automatically using RPA, eliminating the need for manual data entry and reducing errors.
(2) Accounts Receivable
RPA can also be used to automate accounts receivable processes, such as invoice creation and sending payment reminders. This can help reduce the time required to manage outstanding payments and improve cash flow. Although some accounting system has the ability to send invoices directly and follow up with customers for payment, the ability to customized an approach for each customer is limited. Hence, RPA allows the flexibility to customize accounts receivables approaches.
(3) Financial and Management Reporting
RPA can automate financial and management reporting processes, such as generating reports from multiple systems and combining the information to prepare the required reporting and do necessary reconciliations. This can help ensure accuracy and speed up the reporting process, enabling finance teams to provide timely insights to stakeholders.
(4) Budgeting and forecasting
The finance function can use RPA to automate the budgeting and forecasting process, making it easier to collect and analyze data from various sources. This can help improve the accuracy of forecasts and enable finance teams to make informed decisions.
(5) Expense management
Managing employee expenses can be a time-consuming and error-prone task. IDP and RPA can automate the expense management process by extracting data from receipts and invoices and automatically categorizing expenses. This can help reduce errors and ensure compliance with corporate expense policies.
Account reconciliation is a critical task in the financial close process. IDP can be used to extract information from bank statements, customer and vendor statements, and other financial documents, which can then be matched against entries in the general ledger. RPA can be used to automate the reconciliation process, automatically identifying and resolving discrepancies, and posting adjustments to the general ledger.
(7) General Ledger
The finance function relies heavily on accurate and timely recording of financial transactions in the general ledger. Manual entry of data into the general ledger is often prone to errors, time-consuming, and can be a bottleneck in the financial close process. IDP and RPA can help automate journal entry creation, accruals, fixed asset accounting, inter-company transactions etc.
(8) Maintenance of Master Record
IDP and RPA can also be used for the maintenance of master records in finance. IDP can help extract and verify data from source documents, while RPA can automate the process of updating and maintaining the master records in the financial systems. This can help ensure data accuracy, reduce manual effort, and speed up the overall maintenance process.
IDP and RPA offer a wealth of opportunities for the finance function within a corporate entity to improve its operations and reduce costs.