Robotic Process Automation –  A Technology Saviour For A CFO:

A contemporary CFO is expected to not only partners with the CEO in addressing critical business and governance issues, but he is also expected to provide real-time insight on performance. One of the critical roles that a CFO delivers is making the analytical presentation of the monthly book closure numbers – which requires him to bugle the month-end and year till date financial position of the organisation. 

In the world of SAP, Oracle and other ERPs, the expectations from the CFO during these month-end communications are very high. Generally, the time gap between the month-end book closure and the date of releasing the analytical findings is very short, and therefore any technological advent which facilitates reducing the time commitment for data crunching is always welcomed. Well, Robotic Process Automation (RPA) is one such technological boon which can come to rescue for a CFO during those critical moments.

 

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RPA – The Concept:

Robotics And Other Combinations Will Make The World Pretty Fantastic Compared With Today – Bill Gates

All those activities which are digitalised, rule-based and standardised could be automated. Thus RPA, in a nutshell, blends the capabilities of machine learning with Artificial Intelligence (AI) and delivers an impeccable output. In simple language, we may visualise RPA as advanced versions of Excel Macros, which not only run across Microsoft Applications but can interface and interact with an array of other accounting and data processing systems. Further, by tagging user ID to these machine accesses by a BOT, all the activities that a BOT does in and around the accounting system are entirely available in the audit trail.

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RPA In Financial Reporting Functions:

Below are some of the tasks that a Bot can flawlessly execute:

  • Consolidate the financial statements of multiple organisational entities,
  • Splice and dice the financial statements based on business activities or cost centres,
  • Present monthly variations and flag unusual deviations,
  • Populate dashboards and communicate the emails with the access links to share drives,
  • Auto-populate mails to relevant business partners seeking for critical reasoning for deviations,
  • Flag significant deviations from the expected norms in the holding of inventory,
  • Run a GoalSeek on several parameters for achieving an expected ROI (Return On Investments) / ROWC (Return On Working Capital),
  • Knocking off inter-company transactions in consolidated statements,
  • Flag cases of Related Party Transactions warranting a need for documentation and disclosures.

Practically the above list is ever-expanding and can permeate in several sub-functions.

What To Automate:

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Automation Applied To An Inefficient Operation Will Magnify The Inefficiency – Bill Gates

The 2 step approach for assessing whether there is a potential to implement RPA in your accounting functions involves:

Step 1:

List down activities that are critical during the month-end book closure process.

Step 2:

Scan each of the above activities to find how many of these involve tasks and subtask that are entirely running based on a set of standardised rules.

All those tasks which are currently running entirely on the foundation of a set of standardised rules have the potential of RPA evaluation.

Further, documenting an “Automation Selection Criteria” and specifying the business rationale should be adhered to at this stage.

Key Advantages Of RPA In Financial Reporting Activities:

  • Accounting teams will spend less energy in collating the numbers and instead have more time in analysing the number and presenting qualitative conclusions/indicators.
  • Facilitate resilience in circumstances where few last moments critical accounting entries are to be plugged in.
  • Promotes accuracy and timeliness in reporting.
  • Finance and accounting RPA has no working hour constraints. Therefore overall productivity levels are very high.
  • All steps in the process are machine replicated, and therefore it is practically error-free execution of the process.
  • One can expect the same set of quality results in same time parameters.
  • RPA sits on top of existing applications and replicates the actions of a human user at the user interface level. Therefore there is no need to change or substitute the existing enterprise applications.

Dependencies For Success:

Key To Success

 

The key to the success of RPA in any accounting function depends heavily on:

1) Process Mapping

2) Clarity on the accounting conceptuality of the ultimate output

3) Standardisation.

4) Documentation.

RPA in Financial Reporting Functions requires a combination of in-depth process expertise and domain knowledge on financial reporting functions. It warrants for a capability of not only understanding the accounting/tax aspects of the activity but also requires an ability almost to talk and document the activity. Such tasks demand to handle multifaceted algorithms and further correlate and validate the data from multiple sources.

Pitfalls To Avoid:

  • Note that RPA is a bottom-up exercise. Therefore there is a critical need to involve the user and the actual executor in the process.
  • RPA is a brilliant servant to an intelligent master. Thus you and your team are the real authorities who invent the mechanism. What RPA does is that once you tell the BOT what and how to do, it emulates you. Thus do not mistake BOT to invent for you or repair for you a fractured process.
  • RPA should be applied to processes which are matured and never to the processes which are evolving and in the state of getting standardised.
  • Note that for ages, the accounting concepts have not changed. Instead, what has changed is how these processes are executed. Therefore do not mistake RPA as workforce eliminating tool, instead, look at RPA as a technology boon which gives the accounting function “TIME” to analyse and invent. Thus genuine insights that a human brain can give can never be replaced, instead what RPA does is it facilitates the Human Brain to work on core areas where a machine is handicapped.

Conclusion:

A machine is a child born out of Human Brain. We have seen in several science fiction movies of this child becoming so authoritative that it attempts to wipe out the existence of human being. However, for centuries we have witnessed that for every job taken over by machines, there are far more opportunities getting produced. This game of “invention to be done by the human brain and then replacement of human labour to be done by the machine” has been played again and again. Thus we may perceive this unique relationship between humans and machines to be a symbiotic relationship, each helping the other. Both copartner and coexist and traverse this journey of LIFE. We soon may see this symbiotic association in the team and the office of a CFO.

Disclaimer : Opinions expressed are current opinions only as of the date indicated. The Author does not accept any responsibility to update any opinions or other information contained in this material.This material should not form the primary basis for any decision that you make in relation to matters referred to herein.Review carefully the material and perform such due diligence as you deem fit, including consulting your own independent legal, tax, accountancy and other professional or specialist advisors, as necessary or appropriate.Neither the Author, nor any of his officers, directors, agents or employees, makes any warranty, express or implied, of any kind whatsoever, or assumes any responsibility for any losses, damages, costs or expenses, of any kind or description, relating to the adequacy, accuracy or completeness of this material or its use including, but not limited to, information provided by third parties. You should not construe silence by the Author, or any of his officers, directors, agents or employees as approval or endorsement of any statements made by a third party.

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