How big data can help businesses achieve compliance in 2021
There's no denying that modern businesses that leverage big data technology have seen revenue boosts and significant cost cuts. According to a business survey report published by BARC, companies using big data saw a profit of 8 percent and a 10 percent reduction in overall costs. Big data can help companies make better financial decisions, improve their operational processes, increase employee compliance, and much more.
For accountants and finance professionals, tasks and activities are incredibly data driven. They deal with data from invoices, expense receipts, purchase orders and employee expense reports on a daily basis.
Expense-related data is valuable for a company as it helps accountants and finance teams to:
- Cross-check and verify expense details and transaction statements with the submitted expense report;
- Make strategic decisions on departments’ budgets and expense policies based on number-driven insights;
- Predict risks such as expense fraud through duplication submissions, overstated bills and holiday expenses;
- Leverage opportunities such as negotiating deals with hotel and flight vendors that your employees prefer.
However, broken internal processes can contribute to unrecorded business expenses, missing documentation and inaccurate insights. All these factors lead to a business making ill-informed business decisions that can prove detrimental to their financial health.
This is where big data and data analytics come into the picture.
The market is already seeing a rise in AI-powered SaaS expense management software. The reason for its prevalence is it streamlines expense reporting for employees while it helps finance teams gain meaning from expense data.
The software also helps finance teams gain insight into top spenders, top violators, category-wise spends, department-wise spends and more. This gives finance and accounting teams enough data to relook department budgets, tweak expense policies, and curb expense fraud right at the source of expense creation.
Challenges with manual data processing
Accounting and financial activities are notoriously document-centric, and the data collated is a goldmine for gathering insights. But the bottom line is, manually managing and processing documents will not cut it. Manually processing data can be tedious, time-consuming, error-prone and provide leeway for fraud and policy violations.
For example, if a company's expense-reporting process is still spreadsheet or paper based, it can discourage employees from reporting their expenses on time due to the inconvenience. Errors can also occur when finance teams manually enter data from worksheets into their accounting software.
Gathering clean data through AI software
Cloud-based expense management software allows employees to submit expenses using everyday apps. This makes expense reporting a one-click process, thereby ensuring employees report their expenses on time.
Employees can provide accurate expense reports through:
- Mobile apps
By using a mobile phone, an employee can submit expense reports from anywhere, anytime. They can do this by simply taking a picture of the receipt with their mobile phone. The software scans and extracts all the crucial information with the help of OCR technology. It then auto-fills an expense report with all the expense details, thereby eliminating any form of manual data entry.. On verification of the expense report details the employee can directly submit the report for approval. This not only saves paper but also saves time and effort.
- Digital platforms
Apart from receipt scanning and reporting through the mobile app, expense software can integrate with other applications to submit reports, receipts and invoices.
For corporate finance, they must comply with federal, state and local rules and regulations and internal company policies. AI-based software can read documents, detect policy-violating claims, and notify users about any errors. This can be valuable for companies that have to be strictly compliant with regulations.
AI-enabled expense management software can empower finance teams by allowing them to configure and enforce company policies, no matter how complex.They can perform policy checks when employees submit an expense report to avoid policy violations. They can also flag mild and moderate policy violations to the employee so that they can resolve them before submitting the expense report, and send the error notification to an employee's supervisor/employer in case of critical violations
By using a robust policy engine to resolve policy violations and identify potential expense fraud in real-time, finance teams can increase their employee compliance and eliminate the need for back and forths.
Curb potential expense fraud with big data
As a company gathers more financial data, it can become impossible for humans to manually identify fraud and errors without assistance. By using expense management software, a company can centralize all their expense data from day one of the expense creation. Additionally, they can also ensure all expenses align with company rules and regulations.
Companies can also reduce the chances of accounting fraud by ensuring all expenses are well documented. Some software comes with a digital audit trail that records all actions taken on any reported expenses so businesses can stay audit-ready at all times.
Unrecorded expenses can create a false impression of a company's financial statements. That's why it’s crucial for employees to submit their costs. Also, last-minute reporting by employees means the finance teams have to race to meet deadlines, and they're left with insufficient time to analyze the data. But with an automated expense management system, finance teams can set up auto-reminders for employees to submit their expenses on time. Doing so gives the finance team ample time to cross-check, verify and analyze the data.
Identify spending trends and patterns
AI-powered expense management software can help the finance team make sense of data in a more timely manner. With the help of big data, finance teams can identify employee spending patterns and point out any noticeable spending trends. Based on spending trends of employees of each level and department, finance can also predict and allocate budgets accordingly.
With an ever-increasing volume of data, it can become impossible to analyze fraudulent activities with traditional systems like a spreadsheet. But with modern analytical tools, big data can help finance teams identify top spenders, violators or categories where the most violations occur. By leveraging technology, corporate finance teams can develop strategic plans and decisions to make the organization more financially productive.
Achieving compliance from the present until the future
The arrival of cognitive technology such as artificial intelligence, machine learning and big data can lead modern professionals to become proactive strategic thinkers. AI software can streamline the processing of big data by taking care of expense reporting, tracking and management.
The current pandemic has shown that the “normal” can be changed, and only those who are quick to adapt and shift to transformative technology can help their workforce stay afloat.
Along with new norms such as remote working and social distancing, we have seen digitization becoming more important. The current pandemic will leave a ripple effect, but technology like big data and AI software can help finance professionals achieve their goals without having to compromise on data quality and quantity. To move ahead and thrive, finance professionals will have to ask themselves if their current system is enough to sustain their workforce.