One-third of UK Businesses Fail to Pay Invoices on Time. In a study from intelligent document processing company Klippa, “The State of Automation in Finance,” 36.5% of UK respondents reported that fewer than 75% of their invoices are paid within the agreed payment terms.
Is scaling your startup still a good idea in this situation? Can the financial department “handle” this pressure? The answer is yes! If you make use of finance automation technologies, of course.
Stay with us as we explore how automation can help manage and maintain your startup’s financial growth.
The Importance of Financial Management in Scaling Up
Good financial practices are essential in any startup, especially if scaling is one of its goals. Effective financial management is crucial for the longevity of your business and for gaining the trust of future investors who are often critical to your startup’s growth. Having a solid financial base gives you the confidence to handle the normal challenges of this kind of expansion.
Challenges like tracking expenses accurately, implementing effective cash flow management, and establishing investment strategies for growth are just a few examples of what needs to be overcome when considering growing your business. But what happens when they aren’t?
Failing to address these challenges properly can negatively impact a startup’s ability to scale by reducing operational efficiency, impeding strategic investment, and decreasing stakeholders’ trust. Luckily, financial automation is here to help.
What is Financial Automation?
Financial automation uses technology to automate processes that otherwise were done manually. Since less human interaction is needed, it’s more accurate and reliable. This is especially relevant for accounting, invoice processing, and cash flow management, which usually involve significant manual input.
In paving the way for more advanced applications of financial automation, Optical Character Recognition (OCR) is one of the technologies used frequently. OCR extracts text from images or scanned documents and then transforms it into a format that is readable by your computer.
Coupled with Artificial Intelligence (AI), OCR has the power to save time and costs by reducing manual processing through automatization. This has multiple applications for your startup, but two of the most important relate to invoice processing and customer data entry.
For invoice processing, OCR can help your business by extracting key data from invoices, while AI can classify and validate this data against any accounting system. The result is efficient financial processes, saved time and reduced errors.
For customer data entry, AI-powered OCR automates the collection of data from documents and structures it so it can be easily entered into your CRM. The result is reduced manual data entry efforts and faster customer onboarding.
Benefits of Financial Automation for Startups
There are infinite benefits that you can get using finance automation in your business processes, but the most important are:
- Scalability and flexibility: As your startup grows, so does the amount of work. By automating your processes, larger translation volumes, more vendors, and additional clients are no longer a problem.
- Lower overhead costs: Unnecessary expenses and reliance on manual labor are reduced. This translates to fewer wages and benefits to be paid and more streamlined operations in your business.
- Efficiency for the processing tasks: Because of automated data processes, there is no need for manual data entry and manipulation.
Businesses from sectors like health, marketing, or finance realize the benefits of automation and decide to adopt such software.
For example, BAS Consultancy, a consulting firm specializing in financial services from the Netherlands, automated its expense claim and invoice processing procedures. The result? Savings of 70% in time and costs.
“It allows colleagues to focus on important tasks because the workload and manual tasks have been significantly reduced. The ROI is at least 60 to 80%,” says Ronald Vader, the CFO of BAS consultancy.
Key Areas of Financial Automation for Startups
In the hectic environment of startups, financial automation is a necessary tool for driving growth and increasing efficiency across several areas.
Accounting operations are the best place where automation is impactful, generating results quickly. Repetitive tasks such as closings, ledger entries, and reconciliations become smoother and less stressful with the help of accounting automation software. Rest assured – one of the most important parts of your business is now strong and error-free.
Simultaneously, automating the invoice process also has a bundle of benefits. From invoice scanning to extracting and filling data, automated invoice software usage leads to invoices being processed faster, errors considerably reduced, and delays and late payment fees avoided.
Are you also looking to gain a competitive edge in the market? Since automated reminders and payment processing can improve your startup’s response time, that is possible!
Equally important, another area to be automated is cash flow management. To have adequate liquidity to meet your business objectives, you must effectively streamline the tracking, forecasting, and management of your cash inflows and outflows.
By automating these processes, your startup will enjoy better forecasting and visibility. After all, cash inflows and outflows are monitored in real-time, and financial reports are consistent and compliant with regulatory requirements. Also, time and money are saved by minimizing errors and avoiding manual labor.
The bottom line is that, whether you’re a startup or an enterprise, adopting cash flow automation tools can make a real difference in how your business operates.
Implementing Financial Automation in Your Startup
Assessing the financial processes of your startup is a prerequisite for implementing financial automation. A good first step in identifying processes that are ready to be automated is to find tasks that are time-consuming, repetitive, and have multiple steps. Complex processes, which are prone to errors and have the potential to be standardized, are perfect candidates.
The next step is to choose the right automation tools. This is not easy since there are different automation tools. To make it easier, we advise you to search for software that seamlessly integrates with your existing systems, aligns with your financial requirements and needs, and is well-established in the industry.
To get your money’s worth, you should be looking for software that is:
- User-friendly: Ease of use and accommodating team members of all skill levels should be a priority.
- Security-oriented: The security of the financial data is imperative, and threats against it should be quickly mitigated.
- Scalable: As you grow, the software should be ready to handle higher workloads without sacrificing quality or affordability.
Conclusion
Undeniably, financial inefficiencies in financial practices are an obstacle to scaling efficiently. Financial automation is the natural solution for successful growth, promising to lower overhead costs, boost efficiency, and reduce time and expenses by 70%.
Act now! The plan is easy: review your financial workflow, determine what can be automated, and invest in the right automation tools. It will be like the challenges of financial management never existed before, and your business will finally be on the right path to achieving long-term success and scalability.
