Does a company need to automate or optimize administrative tasks?

Does a company need to automate or optimize administrative tasks?

When you do a task for the first time, it usually takes you a long time to complete it due to lack of experience and practice.

 

If time is scarce and limited as it happens to most people, the normal thing is to find a way to do the same in less time and thus spend the excess time on activities that can add more value to the business.

 

And this is where automation comes into the game, with practice the professional has become used looking for techniques that allow them to automate processes or perform the same task but spending much less time possible, and if the way to automate or perform it is not found in less time you always have the option of outsourcing it.

Regardless the tools used by the employee (ERPs, BIs, spreadsheets …) and having previously carried out a previous analysis of the cost of the investment and its return (in this case, the saving of time costs performing the task and the greater reliability of the information)

 

In less than 3 months the professional employee should have found a method to automate those tasks that consume a lot of time and do not add value to the company.

 

What is the cost of performing non-automated or non-optimized administrative tasks?

 

For example, reporting the future state of the treasury adds value to the company since it can make important decisions that affect its current and future viability, but the time necessary for the preparation of the report does not contribute it, it is a cost that in some cases may exceed the benefit provided by the information.

Therefore, the objective is to minimize the time and maintenance of the report preparation.

 

Let’s imagine an employee who has a company cost of 2,500 Euros per month and dedicates 20 hours a month to preparing the report of the treasury forecasts, this means that he dedicates 12.50 % of its theoretical maximum time that is not effective (since the employee does not dedicate the 8 hours in productive tasks) so possibly the % would be higher, but hey, assuming that we calculate it on its theoretical maximum, the maintenance of this report would suppose a cost of 312.50 Euros per month for the company, or the equivalent of 3,750 Euros per year.

 

But the total cost of the process is not actually 3,750 Euros per year, it is even higher since we normally do not take into account the opportunity cost of performing tasks that add value to the company in exchange for those tasks that do not add value, for So if this employee dedicates 12.50% of his theoretical time to this activity that does not add value to the company, the same time is not being dedicated to tasks that do generate value.

Quantifying tasks that add value is complicated, for that reason the opportunity cost is not taken into account in this type of analysis.

 

After all, it must be assumed that employees work in companies to add value and not to dedicate it to activities or tasks that do not add it.

 

Destruction or transformation of administrative work?

 

Another example. Not many years ago, employees spent a lot of time manually recording accounting entries for everything, entries for sales invoices, entries for supplier invoices, payment entries, expense entries, bank statements reconciliation …

 

Currently, companies have affordable ERPs in the market that automate most of these processes, the possibility of human error is reduced and the control of information is increased, generating more confidence in it, but the best of all is that these mandatory processes for any company that does not generate value by themselves, even though they can be used to generate information that does add value through analysis, control and decision-making.

 

In companies that have automated these processes, the employee has more time to perform tasks that add value to the company.

 

Suppose the case of a manufacturing company, an ERP has been implemented in the administration department that has reduced the time of administrative processes that were previously carried out manually by more than 60%.

 

The remaining time can be dedicated to Financial Control and Management tasks in an automated way, also to help in Lean Manufacturing processes to improve the capacity and efficiency of production processes or, for example, to promote 6-Sigma projects for the reduction of failures or errors in the processes.

 

These tasks, as long as they are effective, add much more value to the company than carrying out the registration of accounting entries manually.

 

Therefore, the automation or optimization of administrative processes does not cause a loss of jobs, on the contrary, the company detaches itself from activities that do not generate value for the end customer, and that resulting time can be allocated to tasks that add value to the customer or tasks that ensure that the company is better managed and therefore can be in a more competitive position than the rest of its competitors.

 

Technology Fear of Change

 

Fear of automation or fear of changing administrative work tasks?

 

There is a lot of fear regarding automation, it is normal, it is the classic fear of change.

Fear of losing control, fear changing controlled tasks by the employee, fear of the new, fear to learn new techniques or skills that generate a real value to the company and this can mean an increase in responsibility and higher expectations, which can generate greater pressure to achieve the expected results.

 

This can be a challenge for some employees and an inconvenience or insecurity for others.

 

At the end of the day, what is important is looking at the global interests of the company so that it becomes increasingly competitive thanks to continuous improvement.

 

More information about Controlling Excel Tools

 

More Videos about Management Accounting

Contact

Leave a Comment