The Most Useful Accounting Automation Software Solutions

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According to one survey, 72% of finance teams waste up to 10 hours per week on automatable accounts payable tasks. Moreover, 28% indicated that completing AP tasks take as much as 20 hours per week. [1]

What do AP teams do that take up this much time?

Like in any other accounting process, delays in AP are due to time-consuming steps like data entry. In a manual environment, finance teams handle data entry, invoice matching, supplier communication, invoice approval, and reconciliation. If you have only one accounting department that handles accounts receivable, cash flow management, and general accounting, the workload becomes heavier. 

But there’s no reason to stick to a laborious and time-consuming process that can be done by accounting automation software accurately and instantly. 

How Manual Labor Hinders Growth

One car dealership with three branches suffered constant delays in the invoice approval process. Invoices used to travel for days and, sometimes, go unnoticed on the approver’s desk or e-mail inbox.

Delayed monthly reports were not uncommon because of this process. Without access to accurate financial reports, decision-makers were slower to react to market changes. This problem continued until they decided to use accounting software that automated expense management.

Adding headcount may ease the problem, but it may not be the most efficient solution. And this is why many companies decide to invest in accounting automation software.

Automated accounting software is becoming a prerequisite to meeting the needs of businesses for accurate information in the shortest possible time. Digital technologies such as cloud computing, mobility, and big data in accounting processes create a competitive advantage.

However, in an era where government agencies are jumping on the automation bandwagon, manual accounting processes make it more challenging for a business to stay relevant and profitable.

What Can the Best Accounting Software Solutions Do?

Based on a survey, 98% of accountants feel stressed every day. [2] With long hours and work volume, it’s not surprising why.

Accounting automation software reduces time spent on menial tasks to improve productivity and work-life balance. Aside from these benefits, the best accounting software solutions can also do the following:

Eliminate Manual Data Entry

Entering data into your accounting software is tedious and time-consuming work. In small companies and accounting practices with no junior employees, accountants still do low-level work like data entry.

Getting rid of these data entry tasks solves many roadblocks toward greater productivity. If technology can take care of entering data directly into the software, your highly skilled employees can focus on complex work that produces more revenue.

For an accounting practice, this means moving away from low-paying compliance work to focus on helping clients strategize to grow their businesses.

Reduce Risks of Duplicates and Human Error

Making data entry mistakes is inevitable, even for professionals. An extra zero, interchanging two numbers, or missing a number is easy to do and overlook.

Unfortunately, even occasional mistakes can hurt your reputation and lead to lost customers and lawsuits. So, companies spend considerable time double-checking information. 

Problems like this are less likely to happen with automation. AI can flag transactions with potential errors, so it’s easier to catch mistakes. With technology in place, you can focus on interpreting data, not on double-checking information.

Provides a Better Overview of the Financial Situation

Accounting software allows decision-makers to have a more reliable picture of your company’s financial health. Reducing the turnaround time for reports enables faster decision-making so your business can seize more opportunities for growth.

Improves Control Over Expenses

Automation improves internal control and compliance with expense policies. Since modern software allows companies to set up rules, all transactions have to meet requirements to get automatic approval. Only transactions that exceed limits have to undergo manual review.

Reduces Unnecessary Communication Overhead by Providing Collaboration Tools 

Collaboration remains inefficient even if 76% of accountants already use collaboration software. Automation and cloud computing could be the solution to poor communication across companies.

Often, employees discuss company transactions over different channels like email or a chat app. Using accounting software that enables collaboration solves the problem by having one place to add all relevant communication. 

Enables Digital, Cloud-based Archiving for Easy Access to Documents

Rifling through endless folders or going through hundreds of spreadsheets kills productivity. Automation eliminates data retrieval challenges. All information is in one location and users can assign keywords to documents. As a result, you can run a search for one document and find the information in seconds. 

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Best Accounting Software for Automation

There is a lot of room for automation in accounting, but the most popular areas to use this technology include the following.

Automatic Data Extraction

Many accounting practices and companies are already using or planning to use Optical Character Recognition. Intelligent data capture leads to a massive increase in accuracy, productivity, and efficiency.

Manually keying information takes longer and often leads to unintentional mistakes due to fatigue, negligence, and distractions. 

Tools with OCR capabilities are often available as smartphone apps, making it even more convenient and affordable to convert information from paper documents into a digital format. Companies hesitant to rely entirely on technology can add human validation to achieve an even higher accuracy rate.

Cloud Accounting Software

The accounting industry and the cloud are becoming inseparable following the digital shift. Hosting accounting systems on the cloud proved to be a necessary investment, as it provides different levels of access to financial information anytime, anywhere.

A report reveals that a third of accountants plan to use cloud computing technology in the next 12 months. Within the next two years, two-thirds plan to follow suit. Common reasons cited by accounting and finance professionals include reduced errors, process and task standardization, and ease of collaboration. For accounting departments, the best cloud-based accounting software should be: 

• Smart and constantly developing accounting software 
• Easy to customize to the company’s needs
• Able to support add-ons (modular architecture)
• Capable of matching your business needs and having all the needed add-ons

Today, the most popular small business accounting software includes Sage business cloud accounting, QuickBooks, and Xero. On average, QuickBooks estimates that the average business can save 42 hours per month by using the software.[5]

Accounts Receivable Automation Solutions

Automated sales invoicing is another technology that can ease some burden off accounting teams. Using automation software, your business can transition to electronic invoicing and reduce the time and effort spent preparing and sending invoices to your clients.

With a sales invoicing management system, you can:

• Keep client information in one place
• Send invoices via email
• Track and code your sales
• Push sales data directly into your accounting software
• Send reminders to overdue accounts

Sales invoicing automation eliminates several steps and saves resources like paper, postage, and human hours. Automated AR also improves collections and cash flow management. 

Automated Invoice Processing and Approval

As cited above, manual invoice processing is a pain point for accounts payable teams. 

Approval hierarchies often involve people with many other tasks that AP teams have to send constant reminders to avoid paying late or hurting a relationship with suppliers.

Using online accounting software for automation improves the process by:

• Improving visibility into all invoices
• Allowing companies to set up multi-tier approvals and designate substitute approvers
• Providing one place for users and approvers to check pending tasks related to invoices
• Notifying approvers if any invoices require their approval
• Customizing rules to approve certain transactions automatically

Accounts payable automation allows a business to achieve operational efficiency and speed up invoice approval.

Expense Management

Expense reporting is another area where accounting automation software can help. Creating expense reports takes about 20 minutes to complete and costs $58 per report. [3] Preparing expense reports takes up valuable time, but that’s not the only problem. 

According to the Global Business Travel Association, 19% of expense reports contain errors that cost about $52 to correct.

Another issue lies with losing receipts and delays in submitting expense reports. Chasing after employees to hand over their expense claims and follow up on missing invoices can be frustrating since it delays the preparation of financial reports.  

With software for expense tracking, companies encourage faster liquidation of expenses by making expense reports easier to complete. 

Smart systems like Envoice use an app that allows users to take a photo of an invoice and submit it directly for approval. Aside from automatic data extraction, the tool also allows companies to set up business rules to automatically approve some transactions. Moreover, digital archiving features provide a convenient and secure way to store records of past transactions.

Integrated Accounting Features

Integrating online accounting software with other tools is another area where automation solves persistent problems. Interconnecting functional areas such as your bank accounts, payment apps, inventory management software, and expense reporting tool streamlines the accounting process and eliminates data entry while improving efficiency and accuracy. 

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Integration pushes data from one system, like an expense management system, into your enterprise resource planning systems or online accounting system. With integration, companies can maintain data consistency and automatically update all connected systems.

For instance, your company uses Envoice for expense tracking and Quickbooks as your accounting software. If you submit an expense for Supplies through the Envoice app, the information you entered will be sent to the integrated app, Quickbooks, as well. Linking accounts to your accounting system gives you a complete picture of your financial health almost in real-time.

Tax Preparation

Tax filing automation is one function that reduces the administrative burden on accountants. Tax automation software like Turbo Tax and Cash App Taxes reduces the time spent filling tax forms.

With automation in place, the forms automatically calculate local and federal taxes. Information provided during the initial setup should automatically populate in your tax forms. Providers also offer the option to submit returns and pay taxes using the tool.

Payroll Services

Preparing payroll is another automatable task that could reduce the workload for accountants. Calculating wages, government-mandated contributions, payroll taxes, and optional deductions take a lot of time away from other projects when done manually.

Payroll software saves you about 10 minutes per employee and reduces set-up errors [4]. An automated payroll system makes it easier for employees to submit timesheets and access payslips online.

Aside from these functions, companies also use automation in inventory management, cash flow management, and customer relationship management systems.

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Is Accounting Automation Software More Cost-Effective Than Human Labor?

Accounting professionals often take a vigilant stance before using any automation software for accounting. While new technology is exciting, some prefer tried and tested solutions, especially when companies are on a tight budget. 

Consult your team and perform a cost-benefit analysis that accounts for all hard and soft costs between two options – hiring people and investing in automation. 

How Much Does Labor Cost?

Cutting down manual labor is imperative for companies looking to scale up and boost productivity, especially for small business owners. For every additional employee, 

But first, how expensive is it to pay for labor?

Every year, you have to spend on the following: 

• Wages
• Employee benefits and insurance
• Payroll taxes
• Safety equipment
• Cost

Talent shortage and inflation will drive labor prices up, so costs are likely to increase annually. Given these challenges, companies are investing in automation to keep operating expenses down without affecting business operations.

Now, let’s take a look at automation.

Accounting Automation Vs. Adding People

AI and automation have to exist alongside human workers. Companies will still need to hire people, but accounting automation can eliminate unnecessary spending on people who do manual and repetitive tasks. 

Let’s look at how much faster companies can do manual processes like invoice processing with automation.

On average, an efficient employee can process about 12 minutes per invoice or 5 invoices in one hour. In a month, an employee who works 8 hours a day, 5 days a week, can process 800 invoices.

If your business receives 1,500 invoices, you need to have two employees to keep up with the workload.  

Accounting software allows you to cut the time spent per invoice to two minutes. In an hour, an employee can process as many as 30 invoices. One person can process a maximum of 4,800 invoices in one month– eliminating the need for another employee.

If each employee received €1,500 a month as compensation, hiring two people could cost €3,000 a month. What about a company that decides to automate?

How Much Does Automation Cost?

For illustration, we will use the prices from Envoice, one of the best accounting automation software for expense management. The higher tier costs €10 per month for the first 30 invoices and €0.15 for each additional invoice. 

If you need to process 1,500 invoices a month, you will spend €10 inclusive of 30 invoices plus (€0.15 multiplied by 1,470 invoices). This adds up to €220.50 – lower than what the business would pay for an employee. However, this scenario assumes you are using an affordable system for expense automation.

When Does Accounting Automation Make Financial Sense?

Cost is a primary consideration when choosing the best accounting automation software for small businesses. 

If the monthly cost of automation is almost the same as hiring an employee, companies may hesitate to make the change. However, products like Envoice make accounting automation software more affordable for all businesses, even small companies. So, it all boils down to finding a cost-effective product that can serve the needs of your business.

Revolutionize Accounting With Affordable Automation 

Competitive advantage is among the top reasons for embracing automation. According to one survey, 88% of small and medium business owners kept up with larger enterprises by automating processes, reducing time spent on admin tasks, reducing errors, and improving customer service.

Employees are equally happy to use technology- as one in five workers believe automation improves accuracy and efficiency. 

Innovation in the accounting software market is reducing the barriers of entry to automation, making it possible even for small business owners to access enterprise-grade accounting automation software at an affordable price. Rather than cost, reluctance to automate often stems from fear and skepticism of new technology.  

Using accounting software for automation may appear risky, but it produces ROI quickly while boosting morale and productivity. It is also becoming a norm for practices looking to expand and grow, and hesitating to embrace technology may be more costly. 

Why not take the first step to automate your expense reporting process today?

Schedule a free demo with Envoice and experience how automation can put an end to your accounting pain points.   

[1]https://www.cpapracticeadvisor.com/2020/08/03/finance-departments-spending-520-hours-per-year-on-manual-ap-tasks/39599/ 

[2]https://www.accountancyage.com/2020/03/31/98-of-accountants-stressed-even-before-the-coronavirus-outbreak/

[3] https://www.gbta.org/how-much-do-expense-reports-really-cost-a-company/

[4] https://www.xero.com/blog/2020/03/8-ways-to-save-time-for-your-business/

[5] https://quickbooks.intuit.com/qbambassadors/