The finance industry is no exception when it comes to the general shift toward automation in daily life.
Automation is a powerful tool that eliminates repetitive manual processes, whether it’s to improving the bottom line by increasing productivity and output or offering better service to bank customers. One area of the business that bank executives and boards should absolutely take full advantage of automation is back-office accounting. Here are some of the top benefits banks can gain from automating the month-end close process.
Perhaps the most immediate benefit of automation for banks is the amount of time they can expect to save. Many bank accounting and finance teams are not closing on a timeline they or their CFOs are satisfied with. The month-end close is not something that can be skipped, which means allocating the time it takes for a full close can encroach into other projects or duties. Executives who have worked as accountants know that if the month-end close is not done on time, stressful days turn into late nights in the office. Automating areas of the close, such as balance sheet reconcilements, can free up time for more high value work such as analysis.
It is not uncommon for bank accounting teams to run lean. Cracks in the month-end close can lead to an overburdened workload, burnout and mistakes. When accountants work under stressful conditions, exhaustion that results in an error can be common. Even one mistake on a spreadsheet can create a material cost for the bank; it’s amazing how the tiniest miscalculation can multiply exponentially. One way to reduce human error is to automate processes with a program that can complete recurrent work using algorithms.
An additional pain banks must consider is compliance: external auditors, regulators and more. Things can start to go downhill if the finance team doesn’t properly generate a paper trail. That’s assuming they have, in fact, properly completed the close and balance sheet reconcilements. When a bank takes shortcuts or makes errors in their accounting, it can result in heavy fines or in extreme cases, even sanctions. In this context, automating the month-end close assumes the ethos of ‘An ounce of prevention is worth a pound of the cure.’ Digitizing the month-end close and supporting documents makes it easier to locate important data points and lessens the potential for discrepancies in the first place.
Lastly, accounting automation can help minimize a bank’s fraud risk. Fraud can go undetected for a long time when banks don’t perform due diligence during the month-end close. Reconciling accounts every month will make it easier to spot any red flags.
Companies that take advantage of available, advanced technology available have more chances to keep up with the ever-shifting business landscape. Bank accounting teams can benefit hugely by automating month-end close.