5 Steps to Finance Automation for Credit Unions & Banks

Against the backdrop of increasing competition, regulatory reform, and changing customer expectations, the banking industry is striving to keep up. Decades of acquisitions have introduced complex operational processes that make it difficult to implement change and control costs.

This is where finance automation comes in. New process automation tools free up time for analytics and streamline accounting operations to enable a more efficient, effective, and flexible organization. The results of using automation are already dramatic, with organizations seeing faster close cycles, increased accounting efficiency and transparency, and a more satisfied and engaged accounting and finance organization.

Sometimes the greatest challenge is knowing where to start. Here are five steps credit unions and banks can take to begin automating critical finance and accounting processes.

The first step is to overcome the obstacles to change. Manual and unstandardized processes plague many financial close and reporting processes, resulting in unnecessary effort, risk, and limited visibility. Legacy account reconciliation processes are manual and error-prone, and automating the reconciliation process ensures the accuracy of your loan accounting. For example, grouping your assets together can simplify the reconciliation process, and make it easier for auditors to access and review all transactions and supporting documentation in one place.

Pro Tip: Start with the low-hanging fruit. Consider which processes are not only risky and manual, but also those you may be able to tweak quickly for instant improvement.

High-volume reconciliations can be some of the most time-consuming and painful components of the monthly close. Manually ticking and tying thousands of transactions consumes valuable time that could be used for bigger picture tasks like strategic analysis. A transaction matching solution rapidly matches any and all transaction types and identifies unmatched transactions, so accountants can quickly create reconciling items and correct entries. Streamlining and automating high-volume transaction matching can save hundreds of hours each month.

Pro Tip: Beware of custom-built solutions requiring expensive development; not all transaction matching tools are created equal. Look for one that can both manage high volumes of data while also delivering out-of-the-box flexibility to meet your unique requirements.

Keeping assets balanced is critical to providing an excellent customer and member experience, but ensuring the validity of the balances of bank, credit card, lockbox, and other key accounts is a constant struggle for accounting teams. Associated complexities coupled with period-end time constraints mean critical steps are often ignored. Automating reconciliations enables financial institutions to continuously verify these key account balances and transactional details to ensure accuracy throughout an accounting period. Standardizing and streamlining routine processes with automation embeds control and auditability, and refocuses accountants on exception handling and discrepancy investigation.

Pro Tip: Look to automate most, not just a few of your reconciliations. Make sure automated reconciliation settings can be set at the account level to ensure your unique rules and controls are sufficiently satisfied, so that you can automate as many reconciliations as possible.

When tasks are performed by multiple teams and often in silos, managing the close process can be a huge undertaking. Automating task management provides a centralized approach to monitoring the close at any point in time. Workflows can be configured to control manual accounting and finance processes, and tasks linked to reconciliations and journals to ensure the correct sequence, flow, and roll-up of related activities. Real-time dashboards provide a clear view into potential bottlenecks, and automated alerts inform staff of pending tasks and overdue items.

Pro Tip: Stop using spreadsheets. They cannot provide the efficiency, control, and visibility needed for modern task management. They weren’t built for it.

Cloud-based accounting software is built for connectivity, and can save IT resources from the pain of performing costly, custom integrations and running ad hoc reports. Data importing from bank files, POS systems, credit card statements, and other systems ensure data integrity while minimizing the risk of conversion and entry errors.

Pro Tip: Look to enhance, not replace, your existing systems. Not only will cloud applications be better equipped to complement current investments, but they also help Finance and Accounting teams own their technology without the need for costly IT intervention.

Finance automation means combining both process optimization and technical automation. It facilitates unprecedented accuracy, control, and visibility. This unleashes accountants to focus on bigger picture tasks like strategic analysis and add more value to the organization. Modernizing the way accounting and finance work improves the efficiency, quality, and strategic impact of finance to better serve the broader organization while embedding confidence in financial reporting.

Visit our booth at the AICPA & CIMA Conference on Credit Unions, happening live in Miami on October 18-20, to discuss the current climate and top accounting and finance issues for credit unions.