RPA, cutting through the noise

How to successfully use robotic capabilities for financial process automation

RPA, cutting through the noise

Are you thinking about replacing part of your workforce by automated robots? Think again, because Robotic Process Automation (RPA) is not about getting rid of what may be your company’s most valuable asset. The full potential of this innovative technology will only be captured by enabling your employees to work in harmony with automated technology.

Nowadays we hardly do anything without digital devices. By using apps to perform basic day-to-day tasks, such as managing our agenda, we free-up time to spend on the things we value. Well, this is exactly what RPA is about. It’s a software that performs rule-based work, interacting with systems, websites, or applications in the same way a human would.

RPA basics

Robots are excellent at performing repetitive and rule-based operations that humans often consider uninteresting. Alleviating humans of these tasks means they can dedicate more time to work that requires value judgements and human interaction. Considering that, in most companies, the treasury function still performs high-volume, low-complexity processes, RPA can be used to take over these tasks, allowing employees to focus on value-adding activities. RPA automation software directly integrates with any application once installed on your server, so it’s not necessary to build interfaces with other systems. That means that implementation doesn’t have to disrupt the regular course of business and is cost effective. As a general rule-of-thumb, the more structured the process and data, the more efficient a digital workforce can carry them out. In contrast to conventional automating practices, RPA is especially suited for processes that involve multiple systems, websites and applications since RPA software simply performs tasks in the same way a human would. Unlike ordinary system enhancements or interfaces that provide rigid solutions, RPA gives its users the flexibility to shape process activities in any way desired.

Automation: attended or unattended?

The most common method of automation is unattended RPA. This method involves automating an end-to-end process with no human intervention at any stage. All the activities are performed by the RPA-software or the so-called ‘bots’. Usually, unattended RPA is applied to straightforward, high-volume, low-value processes. Finance activities that are suitable for unattended automation include reporting, month-end activities, and invoice processing. Once programmed correctly, bots will execute the process flawlessly time after time with a higher quality and speed than a human.

A common thought is that robotics will take over a lot of jobs. However, most processes are only suited for partial – or attended – automation. In attended RPA, robots and humans work side by side, as some segments of a process are automated, leaving only the decision-making or customer-focused activities to the employee. These tailored automations help the employee to complete a process more quickly and more accurately.

Most of the time, both types of automation, unattended and attended, are used in collaboration. For instance automatic end-to-end processes can trigger the approval of an employee if exceptions arise. But again, the good news is that you don’t need to choose one or the other. Collaboration between humans and robots brings most value to the business, and yields the highest return on investment (ROI).

Figure 1 - Attended Vs Unattended Model

Figure 1 – Attended Vs Unattended Model

Applying RPA within finance

Implementing an RPA solution does not require your finance or treasury department to be cutting edge. An environment with lots of manual activities could be perfectly suited for RPA, as long as the processes are standardized. In the example below we take a closer look at the global cash position process of a treasury department. Composing a consolidated cash position report will take a lot of effort, as it requires the collection of data from varying layers within the organization. Composing the cash position requires information from revenue systems, payroll information from HR, CAPEX from Excel spreadsheets from FP&A, tax and legal provide some e-mails, and of course we must include the balances of the e-banking system, the TMS and the ERP system.

Tired already? Well after collecting all the information someone still needs to send the report to HQ, for consolidation and decision-making activities. Ultimately, the process is repeated again…

By applying RPA to this process a robot will execute any desktop activity the employee would otherwise do to report the cash position. At the same time, bots can monitor thresholds and variations in the data, hence controls can be placed to alert errors.

Figure 2: Example

Figure 2: Example

RPA benefits

By now you probably have some idea of the benefits that result from adding robotics to the team. They work 24/7, are fast, make no errors, create a data log of all their activities and simultaneously work in multiple applications at high speed. These benefits are straightforward and directly realized through unattended RPA.

Figure 2 – RPA benefits

Figure 2 – RPA benefits

Our cash position example showed that creating a consolidated cash position may involve going through 40 screens, 14 applications, 472 mouse-clicks, several checks, and often comes with pressure from treasury HQ to have timely cash visibility to execute deals. By using a robot to gather and analyze all the data and present it in a dynamic dashboard, a process that would take experienced employees more than two hours can be reduced to only 10 minutes. Automating this daily process for multiple operating companies quickly amounts to a significant amount of annual resources freed for value-add activities.

Applications of RPA to treasury processes

RPA perfectly suits standardized and high volume processes, such as those encountered in transactional departments. Finance departments normally start applying RPA to P2P, OTC or even accounting processes. As in many other areas, treasury can also take the lead as RPA thrives in this process-driven environment. Here are several examples of how treasury can achieve ROI with RPA:

  • Cash positions and cash flow forecasts – gathering data from several systems and applications, checking for consistency based on limits, constructing and sharing reports with relevant stakeholder for review or decision-making.
  • Payment and bank statement processes – where manual file uploads and downloads are still required using EBS systems or letters. Bots will reduce the effort, maintain confidentiality, and leave a digital audit trail that manual payment file handling does not have.
  • Supply chain finance processes – managing activities regarding reporting, collecting and processing files needed from SCF-partners, gathering and sending invoices.
  • Trade finance processes – gathering and creating the files/templates required for trade finance processes (POs, invoices, forms) to send to banks.
  • Reporting (KPIs, metrics) – gathering data from several systems to automatically create reports and dashboards.
  • Control or monthly activities – perform month-end activities or check month-end accounting based on tolerances, limit check consistency and validity of month-end activities.
  • Monitor covenant and counterparty limits (providing warning before covenant breach) – gathering data from several systems, reporting of exposure, defined ratios, and alert any limit breaches.
  • Project-based RPA (IFRS 16 migration) – any company aiming to engage in, for instance, a regulatory driven project can automatically extract, evaluate, and control large data volumes, plus ease system migration by using robotics.

Guiding principles for a successful RPA implementation

Don’t expect bots to simply take over your business processes and magically fix all issues with legacy systems. Involving bots will request less labour from employees, though patching bots to old inefficient processes is not advised.

The more structured a process and data, the faster and more cost-effectively digital automation can be applied. If the process and data are less structured, it will be more expensive and time-consuming to automate. So, before starting your RPA journey it is wise to first assess whether the processes and related IT are fit for automation. By building a business case with positive ROI you have a measure to hold on to during each phase of the project.

Involvement of the right solution providers is key. The market for RPA solutions has a variety of matured developers and fintech start-ups that offer varying products. We advise to carefully select the solution provider that best suits the scope of your processes.
It’s also important to bear in mind:

  • Create a proof of concept (PoC) that clearly demonstrates the gains of implementing RPA.
  • Closely involve IT throughout the project as RPA interacts with your system landscape.
  • Initiate change management and a communication for the organization to embrace instead of repel the new way of working.
  • Collaborate with sector experts to redesign inefficient processes before automating.
  • Build in-house knowledge to address small issues and further leverage RPA potential as robots are now integrated with day-to-day operations

Business process optimization to business process automation

What may seem futuristic to some has already become reality for others. The idea that RPA is only justified for large-cap corporates is misguided. Nowadays it is already feasible to implement RPA tools in mid-cap companies, thereby managing more repetitive processes automatically. Once again, we recommend going for the low-hanging fruits first, and start out-with some straightforward processes that quickly yield a positive ROI. By building on the experience gained, organizations create a snowball-effect that will lead to more sophisticated automation projects year on year. Robotics is not a buzz word anymore. Is your treasury ready?