Finance and Accounting

Finance controls automation to mitigate finance industry risks

Risk management is one of the most critical functions within the finance and accounting (F&A) teams, having overreaching implications across the organisation. Typically, the finance industry has relied on tools like spreadsheets and manual processing – transitioning the ERP environments with digital transformation efforts – when it comes to managing financial risk. However, such manual processes can create fragmented workflows and compromise data integrity, thus exposing the organisation to a heightened level of risk. Finance controls automation can help mitigate some of the major finance industry risks, increasing visibility with real-time reporting while freeing the F&A team to focus on high-judgement business-critical activities.

Need for finance controls automation

Transparency, accuracy, and risk mitigation are crucial for F&A organisations; yet many still rely on spreadsheets and manual processes when it comes to finance controls. These are not only time-consuming and prone to errors but can also lead to control deficiencies and have devastating consequences when managing financial risks.

Here are four major limitations of manual finance controls that can leave you vulnerable to risk:

Obstructed visibility

Manual controls often lead to multiple versions of the truth as it becomes very difficult to consistently report exceptions or manage the account ownership and action items. Moreover, using spreadsheets can add complexity and confusion to the process, leading to further obstructed visibility.

Inaccuracies and errors

Anything from a simple data entry mistake to a broken cell reference can result in inaccuracies in account reconciliations. Additionally, if your local machine fails, you would potentially have to deal with lost work and wasted time.

Lack of control

Managing financial risk with manual controls often leads to inconsistent reconciliation formats and multiple versions of the same reconciliation – across different shared drives, local files, and printed copies. It is very easy to miss critical information while managing such multiple versions.

Barriers to approval

If you lack integration between your financial controls and business ERP systems, you will need to rely on a multiple-step process to validate your reconciliations. For example, you will not receive alerts for things like late entries or changes in balances when using spreadsheets, adding unnecessary complexities and barriers to the approval and validation process.

Finance controls automation can help you overcome these limitations while enhancing risk mitigation efficiency and the overall effectiveness of the F&A team. Dedicated industry-specialised solutions can serve as a centralised hub for all your financial information, streamline data connectivity, and help you maintain a single version of truth. This, combined with automated controls, can help you navigate the complexities of the modern finance industry while maintaining a competitive edge.

This has led to most organisations adopting robotic process automation (RPA), freeing up time and resources to focus more on strategic initiatives. However, in today's dynamic business and compliance landscape, adopting deeper automation or "hyper-automation" is necessary. It shifts the focus from task-oriented RPA automation towards sophisticated AI and ML-based solutions that can discover and analyse necessary data, automate finance controls, measure and monitor outcomes, and reassess accordingly.

Managing financial risk with automated controls

Finance control automation can play a pivotal role in managing financial risk by enforcing a pre-defined rule set without human intervention to ensure quick, uniform, and accurate actions across the board. Additionally, automated controls can also help you:

• Enforce segregation of duties and adherence to set responsibilities and powers to mitigate fraud.
• Eliminate any manual controls to improve business processes, enhance efficiency, and reduce costs.
• Reduce audit time and costs by employing the "one transaction" test for automated controls.
• Ensure regulatory compliance – such as information security, due diligence, anti-money laundering, and the like – by testing key controls with the help of sampling techniques to minimise costs and time necessary.

But can you achieve finance controls automation through your existing ERP systems or do you need industry-specialised solutions? The answer is not so straightforward; although many advanced ERP packages offer basic automated controls to help streamline F&A, there is always scope to strengthen finance controls through automation.

Especially in today’s complex and dynamic business environment, where resources are limited and managing financial risks is more challenging than ever, choosing the right automated controls – paired with implementation excellence – can be instrumental to enhanced governance standards, a robust bottom line, and a positive corporate reputation. Employing the right automated controls, you can facilitate rule-based risk mitigation, reduce control costs, accelerate transaction processing and achieve higher accuracy levels while allowing your F&A teams to focus on business-critical tasks.

How can Infosys BPM help?

Infosys BPM industry specialised solutions offer a spectrum of F&A services for industries like:

• Financial services
• Manufacturing
• Retail, consumer packaged goods, and logistics
• Healthcare, insurance, and life sciences
• Energy, communication, utility, and services

Handling various F&A processes and reports, our services can help you leverage next-gen technology and handle large volumes of data, allowing you to automate finance controls for managing financial risk more effectively and efficiently.