Financial Process Automation: 80% Will Be Automated by 2025 - Are you ready?

The finance sector is going through rapid technological advances, and there's no slowing down - a recent report by Gartner predicted that by 2025, 80% of financial processes within companies will be automated. This prediction has a few implications: firstly, for the businesses themselves and how they operate - promising increased efficiency, reduced costs, and improved accuracy. Secondly, for the fintech providers as they will need to catch up with the new requirements and evolving needs. In order to stay competitive - both fintechs and businesses need to put automation at the forefront, so the question remains: Is your organisation prepared for this automation revolution?

Automating financial processes is not a luxury - it's an absolute must for global businesses in order to stay competitive and optimise their efficiency. Both smaller and larger companies are embracing automation in all areas of finance management - from their accounts payable processes, expense management, receivables, treasury and forecasting. Accounts payable and receivable definitely deserve a spotlight, given that a recent study by Ardent Partners revealed that over half of businesses consider accounts payable automation to be a top priority, a rise from 37% in 2019. This growth is substantiated given that best-in-class AP departments with automation systems in place act 5.3 times faster than their peers, with 65% lower processing costs.

For receivables, the growth of automated workflows is not as rapid, but it's without a doubt gaining more traction. It's estimated that the accounts receivable automation market will grow at a CAGR of 13.9% and reach $11.76 billion by 2032. Despite the fact that companies with automated AR flows see even 91% increased savings, cash flow, and growth, still over 33% rely on manual processes.

The rapid adoption of automation in finance is propelled by several factors - cost reduction, better accuracy, efficiency and improved decision-making.

A famous report from Deloitte brought to the attention of finance professionals that implementing an automation solution across their departments, specifically focusing on accounts payable automation, can lead to savings ranging from 25 to 40%. Depending on the size of your company, you can improve your bottom line by millions annually, even when taking into account the initial cost of implementing software and training.

Additional cost savings can come from a significant reduction in errors. Unfortunately, human work is prone to mistakes, and each one needs to be corrected, which takes time and very often costs businesses money. Automation removes the need for manual data entry and certain systems flag issues like duplicates, errors and inconsistencies. According to the Institute of Finance and Management (IOFM), departments with automated AP managed to get their error rate down from 3.6% to 0.8%.

Efficiency and time-savings are, however, what the accounts payable automation software is best known for. The number of days that can be saved on bill and invoice processing, reconciliation and payments varies depending on the complexity and volume; however, it’s not uncommon to see around 10 hours saved per month, translating to 120 hours per year.

Finally, thanks to real-time access to financial information on payables, receivables and expenses, automation gives accurate insight into a company’s cash position, allowing for more timely and better-informed decision-making with the ability to be proactive rather than reactive in financial tasks.

As mentioned, automation is overtaking multiple processes within the finance department. Payables, however, remain in the spotlight for the following reasons:

Time Savings: Payables automation, if done from end-to-end, can revolutionise the process from the moment the invoice is received, through payment all the way to reconciliation and reduce the time spent on each invoice by even 80%.

Cost Reduction: Considering labour costs involved in handling invoices and payments, reducing time translates to lower costs. A study from Levvel research claims that the costs of processing one invoice can be lowered from $15 to as little as $2.36.

Early Payment Discounts and Better Supplier Relationships: Additional improvements to revenue can come from taking advantage of early payment discounts offered by suppliers. A survey by Tungsten Network found that 47% of suppliers would offer discounts in exchange for prompt payments.

While the benefits of automation are undeniable, the road ahead for companies to achieve 80% automation by 2025 is riddled with challenges.

The major obstacles are mindset and resistance to change, whereby many employees see automation as a threat to their jobs. The way to overcome it is by investing in training and change management programmes that emphasise automation as a tool that allows finance professionals to do their jobs better and focus their attention on more valuable tasks and grow their careers.

Another issue many companies, especially larger ones, may face is implementation and integration. Firstly, old legacy systems may be incompatible or difficult to seamlessly integrate with newer automation solutions, which may require a bespoke, costly solution. It is recommended that automation be rolled out in a phased approach, focusing on automating various finance processes across an organisation and working with trusted vendors that offer flexible integrations. If cost is raised as a potential blocker, consider long-term ROI. A study by Nucleus Research found that the average ROI for financial automation projects is 3.5 times the initial investment. It is also smart to continuously track the performance of your automated processes and make adjustments as needed to maximise efficiency and ROI.

When implementing financial process automation, it is crucial to define clear goals, understand costs, and conduct thorough analyses to justify the investment. This approach ensures improved efficiency and accuracy within financial operations.

As we approach the 80% automation milestone, what lies beyond? Experts predict several emerging trends:

AI and Machine Learning: These technologies will make automated systems even smarter, capable of making complex decisions and predictions that can help with forecasting, trading and other more advanced processes.

Blockchain: Blockchain could revolutionise areas like auditing and compliance, providing unalterable records of financial transactions.

Robotic Process Automation (RPA): RPA is already in use in payables and receivables, but it is expected to evolve further, handling increasingly complex tasks and further reducing the need for manual intervention.

The prediction that 80% of financial processes will be automated by 2025 is not just a statistic—it’s a call to action. Businesses that truly embrace this change will gain a competitive edge and find themselves operating in a global market with greater accuracy, efficiency and insight. The time to act is now - by taking proactive steps to prepare your finance team, audit existing financial processes, and research the right vendors, especially in high-impact areas like accounts payable invoice automation, you can position your organisation at the forefront of this financial revolution.

Fyorin is here to help you. Our comprehensive financial automation platform brings accounts payable, receivable and expense management with integrated accounting under one roof to help you achieve greater efficiency, tax compliance and lowered costs without the need for complex implementation and multiple systems.

Here’s how Fyorin can help you get at the forefront of the finance automation revolution:

One onboarding to gain access to 100+ currencies to send, receive, hold and exchange payments

Seamless integrations with your accounting tool of choice (Sage, Xero, QuickBooks, Microsoft Dynamics, Zoho or NetSuite)

Automated accounts receivable with smart follow-ups for overdue invoices and automatic reconciliation

End-to-end accounts payable including payments and reconciliation

Fully fledged expense management that maps to your ledger and lets you issue virtual or plastic cards for expenses - and earn cash rebate every time you spend!

Are you ready for the automation revolution? The future of finance is here, and it’s automated.