January 20th, 2022
By Nikki Kuepper, Accounting Supervisor
Nowadays, everyone under the sun is pushing to automate their back-office processes. Before rushing headlong into the world of automation, stop and evaluate whether it is the most efficient means for managing your processes, especially when it comes to accounting. But automation is always superior to manual processing, right? Not always. Let’s
dive into examples showing how accounting automation can actually slow your department down considerably, and ways you can prevent your automation from causing issues.
Since its launch in 2015, our outsourced accounting team has worked on 10 different core systems and countless daily and monthly processes, each with its own quirks and anomalies. This can be incredibly challenging, and every minute saved using automation is a minute available for another process. Most of the time, automation is great, but we have seen at least two instances in which automation, added by two different core processors, actually slowed a process, hobbling the accounting department.
ACH File Posting
In the first case, the core system was scheduled to post the ACH Files automatically, once in the morning and once in the afternoon, to comply with NACHA’s Same Day Settlement requirements. While the automation worked beautifully in the morning, the afternoon automation was always late, causing significant posting delays. We investigated and thus determined the ACH automation was being sabotaged by another automated process (the credit union’s Billpay file) which was attempting to import at the same time.
To resolve this issue, we removed the automated afternoon ACH file post. Instead of automating the jobs to run at specific times, the individual responsible for processing ACH simply imported the afternoon file manually (5 minutes process time) allowing for continued automated Billpay file posting. This adjustment to the automation saved the credit union and our accounting staff over an hour in processing time!
Share Draft Files
In the second case, the core system was designed to run a sweep every 15 minutes to search for a share draft file to post. Fifteen minutes is traditionally not a large amount of time to wait for a file to import. However, for a credit union settling share drafts directly with the Fed, four share draft files a day at 15-minute processing means it will be at least an hour before Accounting can even begin reviewing and processing exceptions…now that is a timeline worth writing home about.
Our resolution to this issue was to simply bring in the individual files and post them individually when ready. The amount of time saved was considerable in comparison to the automated version of the process. We took the processing time from an hour and a half to an average of 25 minutes.
What to consider when looking at automation as a solution for your credit union’s needs?
1. Communicate with the department responsible for the process to identify any quirks and anomalies (like receiving four files a day).
2. When your team is establishing the automated processes, make sure to have all the key players in the room.
3. Communicate with your vendors (someone who understands programming, not the sales rep) to identify exactly how this process is working. In the case with the share draft file above, the vendor informed us they could not increase the sweep time to 5 minutes due to their own system constraints.
4. Make sure to identify what benefits you expect from the automation, and how success will be measured.
5. Reconvene with the appropriate department to communicate vendor and automation processing to determine if this automation would benefit or hinder the processing.
6. Determine if other processes might impact the success of the automation that is being added.
7. In the case of utilizing an outsourced processing firm, determine if security restrictions to system drives hinder the ability to automate the process.
Once your automated processes are implemented, remember: Never just set it and forget it. Look at the process after it is deployed, and at periodic intervals thereafter, to ensure the automation has achieved your intended goals. By maintaining this periodic review, you can be sure your credit union’s processes are functioning with integrity and efficiency.
Automation is indeed the goal for most organizations as “time is money.” Automation can assist with efficiencies, create cost savings, and reduce error rates in many areas of your credit union. However, it is important to fully evaluate the automated process before, during, and after the automation decisions are made. By following the steps above and being mindful of the processes, you can achieve your institution’s most important goal, superior member service!