Finance automation: What it is, how it works, and why it benefits businesses

Key takeaways

• Finance automation simplifies tasks like invoicing and payroll, saving time and reducing the risk of errors.

• By eliminating manual tasks, finance automation allows teams to focus on more strategic and value-adding activities, improving efficiency and business outcomes.

• Automated systems help ensure that financial transactions and reports comply with regulatory requirements, thereby minimizing legal risks. They also come with robust security features to protect sensitive financial data.

• Modern fintechs like Airwallex streamline financial operations for businesses, encompassing invoicing and payments, spend management, and financial reporting, all on a single platform.

Despite the rise of financial automation tools, spreadsheets continue to dominate day-to-day financial operations. According to the Association for Financial Professionals (AFP), 96% of FP&A professionals use spreadsheets for planning, and 93% use them for financial reporting on a daily or weekly basis. While automation adoption is growing, many finance teams – both in Canada and globally – continue to rely on manual tools, limiting their ability to operate efficiently at scale.

Now imagine how much time you could save with a system that automatically generates and sends invoices, tracks payments, and ensures payroll is accurate and timely – without switching tools or manually reconciling your accounts.

Let’s take a look at what finance automation is, how it works, and how it can benefit growing businesses.

What is finance automation?

Finance automation uses technology to optimize financial processes. It can also streamline accounting processes, such as accounts payable and receivable, to improve efficiency. It handles a wide range of finance-related tasks, including invoicing, payment processing, and spend management. All of this reduces the chances of errors and saves time.

Examples of finance automation

Here are a few examples of the different ways you can automate your finances:

• Automate invoicing systems to generate and send invoices to your clients, and collect and reconcile payments against the corresponding invoices. You can also integrate accounting systems to automate financial reporting and banking information.

• Manage employee expenses with customizable approval workflows, real-time payment tracking, and reporting.

• Automatically log and categorize business expenses for clearer visibility of spend and improved financial planning.

• Pay bills automatically to make sure you never miss a payment and incur penalties, damage your credit scores, or disrupt your business operations.

• Create custom application programming interfaces (APIs) to manage rule-based payouts, programmatically control card issuance, or configure real-time or fixed exchange rates for automatic currency conversions.

• Use built-in security features to ensure transactions are processed securely, in accordance with local compliance requirements.

What finance processes can be automated?

You might not be able to automate every financial process, but it’s helpful to know which ones are easy wins. Automating business processes can enhance efficiency, minimize errors, and facilitate digital transformation within your finance operations.

Financial automation specifically targets time-consuming manual tasks and processes, such as onboarding, expense reporting, and approval routing.

Invoice processing

Using an automated invoicing system enables you to generate and send invoices to clients without manually creating them. Automating purchase order creation and management can further streamline this process by reducing manual entry and ensuring accurate order matching. You’ll save time on billing, collect payments sooner, and speed up your cash flow.

By reconciling incoming payments against their corresponding invoices, you’ll have a clearer picture of all your transactions, which can help you with your financial planning.

Payment processing

Using a payment gateway is one way to automate your online payment processing. It allows customers to pay you directly on your website at the point of purchase, enabling you to collect payments faster. Automating payment processing also supports your cash management by improving overall liquidity.

Some payment gateways can handle multiple currencies and diverse local payment methods, including credit cards, digital wallets such as Google Pay, and buy-now, pay-later (BNPL) options like Affirm or Klarna. A payment processor then processes and records your transactions into your account, with automatic reconciliation. Some providers will let you configure specific settlement options, allowing you to settle payments in their original currencies or auto-convert funds to your preferred currency.

Expense management

If you’re paying bills one by one, following up on email expense approvals, and manually controlling business spend, you could benefit from automation. With automated spend management software, you can pay multiple bills automatically, issue physical and instant virtual corporate cards to manage employee spend with preset spend limits, get up-to-date tracking of spend statuses, and generate comprehensive spend reports. 

Automation can also help you process expense reports. Technologies like optical character recognition (OCR) can automatically scan and extract data from invoices, reducing errors and saving time for both employees and finance teams who would otherwise have to input information manually.

On top of that, automation tools can draw on historical data from past expenses to improve future budgeting and reimbursement processes.

Financial reporting

Real-time financial reports and interactive dashboards offer immediate insights into your company’s financial health, so your team can make informed decisions quickly, without having to extract and reconcile data from different sources manually. Automating reporting and analysis ensures that financial information is both timely and reliable. These tools can generate customized reports that meet specific business needs and regulatory requirements, allowing different stakeholders to obtain the information they need.

You can also use automated reporting tools to enhance decision-making and reduce manual effort. It can help you make more informed decisions about where to invest, what expenses to cut, and which growth opportunities to pursue.

Custom automations with APIs

APIs let your business integrate with a wide range of third-party applications, from programmatic payouts to multi-currency management and card issuing. You can use them to tailor solutions to your specific business needs. For example, you can utilize an API to manage currency conversions, providing access to real-time interbank rates and enabling automatic updates. You can also configure them to control card issuing for specific transactions and security protocols programmatically, for a limited number of transactions within a defined period. Specifying these parameters helps reduce the risk of fraud and gives you control over vendor payments and employee expenses.

Security and compliance

Many finance automation software solutions, including payment service providers, offer built-in security and compliance tools to help businesses adhere to financial regulations. This feature can save you time by keeping your business up-to-date with the latest security mandates, reducing the risk of legal issues.

These tools should also align with Canadian compliance frameworks such as PIPEDA and FINTRAC regulations, depending on your industry and data practices. For example, payment providers with advanced encryption and security measures – such as tokenization and multi-factor authentication – can help protect customer data and reduce the risk of fraud. AI-powered systems can further detect irregular activities.

Artificial intelligence in finance automation

More automation tools are using artificial intelligence (AI) to perform increasingly complex financial processes. For example, AI can now quickly analyze vast amounts of financial data, uncover patterns, expedite data entry and reconciliation, and deliver insights to help you make more informed business decisions. Along with machine learning capabilities, they can also improve your financial forecasting and detect anomalies in financial transactions.

See an example of how we’re using AI to process card disputes faster.

How to set up finance automation

If you’re looking to automate your finances, you’re in good company – businesses around the world are doing the same. According to our data:

• 51% of Hong Kong companies are seeking a solution to handle their international payment operations.

• 46% of UK companies are seeking a platform that automates financial operations.

• 35% of companies in Australia are interested in automating their financial operations.

• 47% of companies in Singapore expressed interest in adopting a solution that automates their financial operations.

To stay ahead of the competition, here’s how you can get started:

Step 1: Identify what you’re going to automate

The prime tasks for automation are those that are frequent, repetitive, and prone to human error. Common examples include invoice processing, reconciliation, and financial reporting. To get started, thoroughly audit your current workflows. Once you have a list of these tasks, prioritize them based on their frequency and the impact they have on your operations.

Step 2: Choose what tools you’re going to use

Select financial automation software that seamlessly integrates with your existing systems and can effectively address most, if not all, of your automation requirements. Our platform, Airwallex, can automate diverse processes across the payment lifecycle, from invoicing and payment acceptance to expense management and reconciliation. Research different options, read reviews, and speak with other businesses that have implemented similar solutions.

Step 3: Set your rules and conditions

Establish clear guidelines and protocols for how you’ll automate your financial operations. For example, you should specify the approval thresholds for automated payments, the criteria for identifying discrepancies in reconciliation, and the procedures for generating financial reports. Document these guidelines and share them with all relevant stakeholders to help set expectations, ensure that everyone understands how the automations work, and what their roles are in the new process. Then, set up a system for handling exceptions and errors, so you can quickly resolve errors without disrupting the workflow.

Step 4: Offer comprehensive staff training

No matter how advanced the software is, your team will need to know how to use it to realize its benefits. Offer comprehensive training through in-house workshops, online resources, user manuals, and quick-reference guides. Designate an owner for the tool, and encourage questions and feedback to pinpoint areas where your team may require extra support.

Step 5: Conduct regular reviews and refine your processes

Automation can make your life easier, but it’s not a set-it-and-forget-it solution. Automation systems require ongoing monitoring and adjustments; therefore, schedule regular reviews to assess their performance. Look for any error patterns or inefficiencies to improve your processes continually. This could involve updating the software, refining the guidelines, or providing additional training to your team. 

The main benefits of finance automation

Automating your processes can completely change how you manage your financial operations, reduce errors, and save time. Here are the main benefits:

Faster cash flow

When you automate invoicing and payment processing, you can get paid faster and speed up your cash flow, which you can sooner invest back into your business. If you operate globally, this automation can be especially helpful when collecting and reconciling cross-border payments across different currencies and payment methods. And when it comes to sending payment reminders, automating the process can also save time on manual follow-ups and reduce the risk of late payments.

Smoother business operations with fewer late payments

You’ll never miss a bill payment or employee reimbursement with automated approval and payment workflows. That means your business can continue to run without hiccups with recurring expenses covered, whether for vendor invoices, utility bills, subscriptions, or loan repayments. You’ll also be less likely to incur late penalties and harm your business credit standing. Employees can continue to submit business expenses with confidence, knowing that their expenses are within company policy and will be reimbursed promptly.

Timely and error-free financial reports with real-time insights

When you automate your reports, you can consolidate data, like revenue, expenses, and profit margins, from multiple sources. Since software integrations can access data directly without it passing through multiple systems and stakeholders, they reduce the risk of data distortion. Your finance team will be able to make faster and more accurate data-driven decisions, spot trends, and tackle issues before they escalate. For instance, real-time analytics can identify unusual spending patterns or revenue dips, allowing your team to investigate and resolve them proactively. More accurate reports can also help you build trust among stakeholders who rely on accurate information to make informed decisions.

Compliance with local regulations

Regulatory requirements constantly change, and keeping up with them can be challenging. Many software providers offer built-in compliance tools and best practices to meet regulatory standards. For example, a payment software provider should adhere to the highest international security standards, including the PCI DSS (Payment Card Industry Data Security Standard), as well as local regulatory requirements. These stringent standards ensure that your financial operations comply with regulatory laws wherever you operate, reduce the risk of legal issues, and save you from the need to manage security and compliance independently.

More time to focus on growth

Time is money, and automation saves you plenty of both. Your finance team can wave goodbye to repetitive tasks like cross-referencing payments across multiple accounts, setting up employee spend approvals, and manually dispatching invoices. Instead, they can rely on automated reconciliation that matches transactions across accounts instantly, and streamlined approval workflows for employee expenses. With these automations, they can focus on more strategic tasks, like financial planning and analysis.

Risks of finance automation

While the benefits of finance automation are largely positive, it is worth noting some of the challenges that can come with implementing new systems.

Implementation and adoption difficulties

Setting up new systems can be complex, especially if your processes are on legacy systems or require migration. This process often requires significant IT investment and expertise, which can be a barrier for smaller businesses. Fortunately, there are many providers available that prioritize customer support, offering user-friendly interfaces and flexible implementation options to help you make the transition easier.

Potential changes to staffing needs

With all your routine and repetitive tasks out of the way, your staffing needs might change. It’s important to manage this transition carefully. Consider providing training and opportunities for your team to upskill and refocus teams on more strategic tasks. This approach helps retain valuable employees and keeps them engaged and productive.

Data breaches

Automation can move much of your manual, paper-based workflows into the digital space, while giving third-party providers access to customer data. To mitigate the risk of a security breach, partner with a finance automation provider with strong security controls. They should adhere to the highest international security standards, including PCI DSS, SOC 1 (Service Organization Control 1), and SOC 2 (Service Organization Control 2) compliance, as well as any local regulatory requirements.

Data errors due to incorrect configurations

Even with the most advanced systems, automation can still result in systematic errors if it’s incorrectly set up. Ensure you regularly check your systems, set up alerts for anomalies or data outliers, and establish a process for user feedback whenever issues arise. Striking a balance between automation and human oversight can help you identify and rectify errors before they escalate.

The future of finance automation

Advancements in technology, including blockchain, robotic process automation (RPA), and artificial intelligence (AI) will continue to shape the future of finance. In time, you’ll likely see even more complex and sophisticated finance automation across financial planning, budgeting, and forecasting.

Today, cloud-based automation software is becoming increasingly popular, offering finance teams more flexibility. Robotic process automation will further automate repetitive tasks, while blockchain technology promises enhanced security and transparency for financial transactions.

We’re now witnessing the rise of agentic AI. This refers to AI systems that can make decisions independently, making it possible to envision a future where financial operations may become fully autonomous.

Automate all of your finances with one integration

Picture a situation where, finally, your company’s invoices are automatically generated and sent, payments are processed with real-time alerts for any issues, and business expenses are categorized and reported in detail. With manual tasks taken care of, you spend your afternoon focusing on strategic planning and high-level decision-making.

The good news is that you may be just a few minutes away from accessing this reality. With one integration with Airwallex, you can automate your payments, invoices, expense management, financial reporting, and more.

Here’s what you’ll be able to do with us:

• Generate and send invoices automatically

• Collect payments from multiple sources and currencies, with automatic reconciliation (payment acceptance capabilities coming soon to Canada)

• Track and categorize expenses automatically

• Automate bill payments and control employee spend, with automatic approval workflows

• Get real-time access to financial data and generate custom reports

• Create custom automations with APIs, such as programmatic payouts and card issuing

• Stay compliant with built-in compliance tools, and protect financial data with advanced encryption and security measures

This way, you can cut the mundane tasks and focus on growing your business.

Frequently asked questions

How much does finance automation software cost?

The price of software can vary depending on the features and the vendor. Many finance automation solutions offer scalable pricing models to fit businesses of different sizes and needs. And remember, the long-term savings and efficiency gains often make the initial investment well worth it. See Airwallex’s pricing plans.

Is finance automation suitable for small businesses?

Small businesses can benefit greatly from automation. Without legacy tools and a large backlog of data, it can also be easier for small businesses to set up automation tools from the start. Finance automation can help you manage cash flow, track expenses, and generate financial reports with minimal effort, freeing up time for more strategic tasks. Airwallex is both user-friendly and integrates easily with existing systems, so even small businesses without technical expertise can get started.

What are the key considerations when choosing finance automation software?

When choosing finance automation software, consider your specific needs, such as automated invoicing, expense tracking, and financial reporting. Ensure the solution can grow with your business and has a user-friendly interface with robust customer support. Check that the platform integrates with your existing tools to avoid data silos and create a unified financial ecosystem.

How can I ensure data security with finance automation?

Select a platform that adheres to industry standards, such as PCI DSS, SOC 1, and SOC 2. Look for features like end-to-end encryption, multi-factor authentication for payments, and regular security audits. It’s equally important to implement strong internal controls, such as access restrictions and data backup protocols. By combining robust software security with proactive internal measures, you can effectively protect your financial data.