THE STATE OF AUTOMATION IN FINANCE 2024
Klippa conducted research on the adoption of automation within finance departments from the UK, Germany, and the Netherlands. What financial workflows should be automated? Should finance professionals worry about their jobs?
59% of finance professionals overwhelmed by reporting & analysis
A staggering 58.9% of finance pros cited reporting and analysis as their biggest time-killers. Accurate financial reporting, thorough analysis, and detailed financial statements are considered crucial, but they are also huge time sinks.
Coming in second place, with 33.7%, are budgeting and forecasting, tied with taxes and everything tax-related.
Majority of finance departments have automated payroll
Nearly 60% of finance departments use automation in the area of payroll processing. This area stands out as the most automated, significantly reducing the time and effort traditionally required.
However, the automation revolution hasn’t reached all corners of the finance department. Automation for reporting and analysis is below 50%, while tax-related responsibilities lag even further behind at just 35.9%. These areas remain some of the most time-consuming challenges faced by finance professionals.
Finance professionals demand increased automation investments
In a powerful endorsement for technological advancement, 73.1% of financial professionals are calling for their companies to increase investments in automation to cut down on manual tasks. This clear consensus underscores a strong demand for more efficient processes to improve the way they operate.
Only 6.1% are not on board with the push for greater investments. They have varying reasons, such as satisfaction with existing processes, budget limitations, or doubts about the benefits of further automation.
Financials hesitate to implement more automation due to lack of knowledge & expertise
The most significant barrier to implementing more automation in financial tasks is the lack of internal knowledge or expertise, cited by 27.6% of respondents. Reluctance to change is another major challenge, with 23.6% of survey participants highlighting this issue. Resistance can stem from various factors, including fear of the unknown, comfort with existing processes, and doubts about the benefits of automation.
German financials point to taxes as biggest time waster
In Germany, taxes are strikingly more time-consuming (22.9%), especially in comparison with the UK (10.7%). German finance professionals consider tax-related responsibilities more than twice as time-consuming as their UK counterparts.
The German tax system is generally considered to be quite complex, involving numerous regulations that businesses must navigate. The many tax requirements apparently lead financials to see them as their biggest time killer.
One third of UK businesses fail to pay invoices on time
More than a third of UK businesses are failing to pay their invoices on time. 36.5% of UK financials indicate that less than 75% of their invoices are paid within the agreed payment terms.
Compared to the other countries surveyed, the UK ranks at the bottom in this area. Germany has the highest percentage of on-time payments with 80.1%, followed by the Netherlands (72.8%).
Measures such as implementing automated invoicing systems, offering multiple payment options, and regular follow-ups can help to improve the score.
Dutch financials lead the charge: 76.5% demand boost in automation investment
Finance professionals in the Netherlands are at the forefront of advocating for greater automation, with 76.5% of respondents supporting increased investment in technology.
Germany follows closely behind, with 75% of finance professionals expressing support for more automation. The UK, while also showing a majority favoring increased automation at 68.2%, is behind its European counterparts in this regard.
More than half of finance departments still haven’t automated accounts payable
Despite the growing trend of automation across various finance areas, over 50% of finance departments remain stuck in manual accounts payable (AP) processes. This portion of the industry is missing out on the efficiency gains and error reduction that automation can bring.
Other finance areas like payroll processing and reporting and analysis make more use of automation. They are most often cited as being at least partially automated.
Duplicate & fraudulent invoices are the norm rather than the exception
Whether they are deliberate actions to commit fraud or just simple mistakes, the fact is that duplicate invoices are commonplace. 41.4% of financials encounter up to 10 double invoices per month. Another 44% of organizations face higher frequencies of duplicates. Only 14.6% of respondents cited encountering no double invoices at all.
In terms of fraudulent invoices, nearly half of all respondents (46.7%) detect up to 10 fraudulent invoices, and 32.5% report none. In conclusion, proper fraud and error prevention methods are not a luxury but a necessity for finance departments.
About the research
Our dataset includes responses from 246 finance professionals from the Netherlands (32.9%), Germany (32.5%) and the UK (34.6%). The most common roles occupied by respondents are Finance Manager (16.3%), CFO (9.8%), while Financial Controller and Financial Analyst are tied at 4.5% of the total.
We compare insights shared by employees from finance departments of all sizes, from sole proprietorships to corporates appointing over 100 financial FTEs.
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