Why partial automation is holding finance teams back

Rob Israch at Tipalti explores the opportunities and obstacles of implementing automation in the finance function

 

Automation is everywhere, but the real question for business leaders is how they embrace it in a meaningful way to drive true efficiency in their business. With such a variety of finance automation options available, one of the main challenges is knowing where to start.

 

This lack of knowledge is reflected in the numbers. Full automation of finance operations remains rare, with only 1% of CFOs having automated at least 75% of their finance processes.

 

The challenge isn’t just about implementing technology, it’s doing so in a way that integrates with legacy systems, scales efficiently and delivers measurable value. When automation is not integrated strategically, it can lead to insufficient tools, partial automation capabilities, and implementations that deliver little more than surface-level improvements to workflows. This will ultimately lead to redeployments of new technologies to replace those partial systems in the future. 

 

We see this being played out with the explosion of AI: research shows that while 74% of companies have adopted AI, only 4% have advanced AI capabilities that drive clear business value.

 

It’s not just about hype and one-off deployments. Finance teams need a comprehensive, seamless suite of tools that span the whole finance function: end-to-end finance automation. The impact of this more strategic implementation will be felt across the board, from those handling multiple invoice types and onboarding new suppliers to others working to minimise fraud risk and close the books.

 

 

Myths of automation in finance

Many finance teams declare they’ve automated their processes, but scratch beneath the surface, and what you often find is digitisation, not true automation. And the data backs it up: while nearly 98% of CFOs say they’ve invested in automation technologies, roughly half (41%) admit that just a quarter or less of their finance processes are actually truly automated.

 

What’s the difference? Well, there is one, and it’s important to understand the nuances. Digitisation is about converting manual, paper-based processes into digital ones, a necessary step, but not automation. Automation involves eliminating manual effort altogether through intelligent systems that manage workflows end-to-end.

 

Take Optimal Character Recognition (OCR) or basic rule-based workflows, for example. These tools are used by many finance teams to free up time that would have been spent keying in data. But using that as your entire automation strategy can only take you so far. OCR is typically only accurate 75% of the time, and it only automates a sliver of the range of AP tasks completed by finance departments. It’s helpful, but far from the full picture and won’t help your organisation scale properly.

 

 

Definition of end-to-end automation

There’s still a lot of confusion around what true end-to-end automation really means, which isn’t surprising given the vast number of tools available. Our research shows less than half of businesses (40%) realise that full AP automation should include both invoice processing and payment execution, at a minimum. In fact, 29% think it only means automating supplier invoice processing.

 

Just 5% of mid-sized firms have fully automated accounts payable (AP) or accounts receivable (AR) functions. When only parts of the AP process are automated, finance teams are left to fill the gaps manually, which opens the door to errors and creates inefficiencies that drain time and resources down the line.

 

End-to-end automation should feel seamless. What businesses don’t want is extra layers of complexity; they need a straightforward and unified platform that solves real problems. It needs to cover the entire AP lifecycle, from the moment a supplier is onboarded to the final reconciliation of payments. The best AP automation platforms make this easy by connecting directly to ERP and accounting software, so data flows smoothly across every stage.

 

The truth is, finance teams don’t have time to juggle multiple tools to close the books each month. What they really need is a single, purpose-built platform that brings everything together, giving them visibility, control and efficiency across teams, processes and systems.

 

 

Doing more with less

Amid rising costs, demands to increase productivity and streamline operations, finance teams are expected to do more with less – maximising value while minimising resources. Achieving this isn’t just about working harder or faster, it requires working smarter with intelligent systems.

 

As the cost control centre of the business, finance teams have a crucial role to play in driving efficiency from the core. Streamlining financial operations can reduce payment errors and bank fees, allow them to stay on top of expenses with real-time visibility and avoid non-compliance penalties.

 

To make that happen, finance leaders need smart systems that take care of the mundane, repetitive tasks so they can focus on more exciting, high-value tasks like driving growth.

 

End-to-end solutions save finance teams time managing suppliers, as well as enhancing those relationships. Instead of sending countless emails chasing payments, suppliers get regular automated updates and real-time visibility on the payment status of their invoices. That transparency is what lets finance teams “do more with less”.

 

 

Reassessing current finance tools

True AP automation consists of the entire AP lifecycle, including everything from managing invoices to processing outbound payments. However, there is a common misunderstanding of the breadth of its scope by finance teams. If they can’t confidently say they have the real-time insights to make strategic spend and cash flow decisions, then they need to reassess their tools.

 

End-to-end AP automation is the gold standard CFOs should aspire to if they want to streamline processes and reduce costs. By going for a fully integrated approach, finance leaders can unlock the full potential of AP automation to drive efficiency, accuracy and long-term value.

 

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Rob Israch is President of Tipalti

 

Main image courtesy of iStockPhoto.com and cyano66