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The Ultimate Guide to Accounting Automation
Running a business is hard work. Most small business owners wear a lot of hats, and one of those hats is usually “accountant.” But what if there was a way to take some of the load off your shoulders?
Enter accounting automation.
Accounting automation is the process of using software to automate specific bookkeeping tasks. This can include anything from tracking expenses and invoicing customers to preparing financial reports.
Doing mundane tasks such as manual data entry can be time-consuming and error-prone even for bookkeepers and accountants. By automating these tasks, you can free up your staff to focus on more important things, like providing quality customer service or developing new products.
What is accounting automation, and why should you care
We live in a digital era, where technology constantly evolves and makes our lives easier. So why not take advantage of that by using accounting automation software?
Rather than spend time on time-consuming accounting tasks, computers are now able to do them for us – and they can do it faster, more accurately, and with less chance of human error.
An automated accounting system can save you time and money and help you focus on other aspects of your business.
Installing accounting automation software is a no-brainer for any business owner who wants to streamline their accounting processes.
What are the benefits of accounting automation?
There are many benefits of accounting automation, including:
Zero chances of error
When you automate the accounting process, the chances of human error are minimal. This is because the software is designed to do the tasks assigned to it, and it will do them accurately every time.
This is in contrast to manual accounting, where even a tiny mistake can cause significant problems down the line.
An automated system helps you keep all your financial transactions in one place. This makes it easy to find information and generate reports, saving you time.
In addition, automation can help you stay compliant with financial regulations. You can ensure that all your transactions are correctly recorded and reported by automating your accounting process.
Improved cash flow
Another benefit of accounting automation is that it can help improve your cash flow. This is because the system can help you track invoices and payments and send reminders to customers who are late in paying their invoices.
This way, you can stay on top of your receivables and ensure that you get paid on time.
When accounting operations are automated, they can be completed much faster than when done manually. The software can enter data and generate reports much quicker than a human can.
Clearly, the most tangible benefit of automation is the amount of time it saves. If someone (or something) else does the manual work you’d typically do, you will have more time on your hands.
This increased efficiency can free up your staff to focus on other tasks, improving your bottom line.
If you’re still not convinced, consider this: automating your accounting process can help you avoid penalties and interest charges from the IRS. That’s because an automated system is more likely to catch errors and prevent them from happening in the first place.
Humans tend to get tired and make mistakes when working on repetitive tasks. This is one of the main reasons why accounting automation can boost productivity.
When tedious and time-consuming tasks are automated, your staff can focus on more important things. This can lead to better work quality and increased efficiency in your business.
It’s usually straightforward to detect fraudulent activities when an automated accounting system is in place. This is because the system can track all transactions and flag any suspicious activity.
This way, you can avoid being a victim of fraud and protect your business from financial losses.
Stringent data protection
Financial data is susceptible, and you need to be sure that it’s well-protected. With an automated accounting system, you can have peace of mind knowing that your data is safe and secure. (1)
This is because the system can encrypt and store data in a secure location. In addition, you can control who has access to the design and what they can see. In any case, you control who has access to your data.
Every coin saved is a coin earned!
When it comes to accounting automation, one of the main benefits is that it can save you money. Automation can help you eliminate manual processes, which can be time-consuming and expensive.
For example, if you’re still using paper invoices, you’re probably spending a lot of money on printing and postage. With office workers using as many as 10k sheets of paper per year, costs quickly add up. (2)
With automation, you can send invoices electronically, which is much cheaper. Plus, you don’t have to buy cabinets to store all those paper invoices!
In addition, automated systems can help you save on labor costs. This is because they can do tasks such as data entry and report generation much faster than a human can.
This means that you can get by with smaller accounting staff or even do without an accountant. Of course, this will depend on the size and complexity of your business, but automating transactional accounting tasks will go a long way in reducing operational costs.
In short, there are many good reasons to automate accounting tasks. If you’re not already using accounting automation software, now is the time to consider it.
How does accounting automation work?
Accounting automation software typically works by integrating with your existing bookkeeping system. This allows the software to automatically pull data from your financial transactions and record them in the appropriate accounting software.
The data is then stored in a central location, where you or your accountant can access it. This makes it easy to track your finances and generate reports.
Take Envoice, for instance; this smart capture invoice automation software integrates with accounting software such as QuickBooks, Xero, and FreshBooks. This cloud-based software helps reduce repetitive tasks. All you need is to snap a receipt or invoice, and Envoice takes care of the data entry.
Envoice can automatically pull data from your invoices and populate the fields in your accounting software. This saves you time and eliminates the need for manual data entry.
What are the features of accounting automation software?
When choosing accounting automation software, there are several features to look for.
First, the software should be able to integrate with your existing accounting software. This will make it easy to transfer data between the two systems. The last thing you want is to set systems that don’t align with each other.
Ease of use
The software should also be easy to use. It should have a user-friendly interface that is intuitive and easy to navigate. Otherwise, you’ll likely spend more time figuring out how to use the software than you will be using it.
Again, the software should be able to automate tasks such as data entry and report generation. This will save you time and improve efficiency in your business. After all, the main goal of accounting automation is to make your life easier, not harder.
Finally, the software should be affordable. You don’t want to spend a fortune on software that you’re not even sure you’ll use. Look for a program that has a free trial period so you can test it out before committing to it.
Like that on Envoice, a monthly payment plan is often a good option as it allows you to pay for the software as you use it.
What types of accounting processes can be automated?
Knowing accounting automation can save you time and improve efficiency, you might be wondering what types of accounting processes can be automated.
Billing and invoicing
One of the most common uses for accounting automation is billing and invoicing. Billings are vital to keeping cash flow moving in your business. With automation, you can set up recurring invoices and payments to avoid worrying about them each month.
While manual entries require creation, submission and approval for each invoice, accounting automation can automate all these processes. This will save you a lot of time and help you avoid late payments.
Imagine a scenario where, as a bookkeeper, you fail to submit an invoice on time. This could lead to a loss of revenue for your business. But with automation, you can set up reminders so that you never miss a deadline again.
Invoicing isn’t the only billing process that can be automated. You can also set up automatic payments for your bills. You’ll never have to worry about paying a bill late again.
Another everyday use for accounting automation is expense management. It includes tracking expenses, categorizing them, and adding them to your accounting software. While employees, in most cases, can use their monies to make small purchases on behalf of the company, they will still need to submit receipts for reimbursement.
The whole expense management process can sometimes get messy as employees have to wait for their reimbursement. With accounting automation, employees can take photos of their receipts and submit them electronically. This way, they can be reimbursed quickly and without any hassle.
No more missed reimbursements, lost receipts or delayed approvals!
Automation can help you keep track of employee hours, calculate payroll taxes, and generate pay stubs. This way, you can focus on running your business rather than getting bogged down in payroll details.
There will be instances that require human intervention, such as when an employee requests vacation days, but payroll can be automated for the most part.
Usually, accounting automation is used for bookkeeping purposes. But it can also be used for auditing, which includes reviewing financial statements, recording transactions, and preparing reports.
Auditing can be time-consuming, but you can speed things up with automation. Automation can help you track changes, identify errors, generate reports quickly and detect fraud.
For accountants, the enormous time-saver comes during financial closing. If your team has been using its tools correctly, there shouldn’t be anything to reconcile or audit.
Major accounting firms use accounting automation to streamline their auditing process, seeing great results.
How do you transition into accounting automation?
You might be wondering how you can transition your business into using accounting automation. Although there is no one-size-fits-all answer, there are a few things you can do to make the transition as smooth as possible.
Bring your whole team on board
The finance team is not the only one affected by accounting automation. Every department in your company will feel the impact of automation in some way or another. Everyone is involved, from the accounts payable department to the accounts receivable department to marketing.
That’s why it’s essential to bring everyone on board. This way, you can get feedback and input from all departments on how they want the transition to go. The most crucial aspect here is pulling the whole team in the same direction.
Invest in the right tools
There is a ton of accounting automation software on the market. And they all have different features and pricing plans. You must do your research and invest in the right tool for your business.
The last thing you want is to end up with a tool that doesn’t fit your needs. Most modern accounting software offers a free trial period. This is a great way to test a tool before committing to it.
But, even if you have to pay for the software, it will be worth it in the long run as it will save you time and money.
Get expert help
If you’re unsure how to get started with accounting automation, it’s good to get expert help. There are plenty of accounting firms that offer consulting services.
They can help you assess your needs, find the right software, and transition your business into using automation. Talk to business leaders in your industry, do your research, and find an expert that you can trust.
Don’t try to do everything at once
When you’re first starting with accounting automation, it’s important not to try to do too much at once. Automation is a significant change, and it can be overwhelming.
Start small and gradually automate transactional accounting tasks as you go. Doing so will avoid any significant disruptions implementing new processes can bring.
Identify your goals
Before automating your accounting processes, it’s essential to identify your goals. What do you want to achieve with automation? Do you want to save time? Save money? Improve accuracy? Once you know your goals, you can start looking for ways to achieve them.
Remember that different businesses have different needs. There is no one-size-fits-all solution when it comes to accounting automation.
Look for reviews
Knowing the road ahead involves asking people who have already made the journey. Once you’ve identified your goals, start looking for reviews of accounting automation software.
There are plenty of online forums and websites where you can read honest reviews from real users. This is a great way to understand what works and what doesn’t. Most automated accounting software will also have their reviews on their websites.
Check out the competition
When looking for accounting automation software, it’s good to check out the competition. See what they’re using and how they’re using it. This can give you some great ideas on automating your accounting processes.
You can also learn a lot from their mistakes. By seeing what doesn’t work for them, you can avoid making the same mistakes in your own business.
Get started today
The sooner you start to automate accounting processes, the sooner you’ll see results. Lagging behind the competition is not an option in the fast-paced business world.
It could be why you haven’t launched into new markets or haven’t been able to scale your business. Automation can help you take your business to the next level.
The transition to accounting automation can have a significant impact on your business. It can save you time and money and help you focus on running your company. If you’re thinking about making the switch, don’t wait; take the bull by its horns!
Hiring more staff vs. accounting automation:
As your business grows, you’ll eventually reach a point where you need to decide between hiring more staff or accounting automation. Both have their pros and cons, so it’s crucial to weigh your options carefully before deciding.
On the one hand, hiring more staff will give you a more hands-on-deck to get work done. On the other hand, accounting automation will save you time and money in the long run.
While getting more staff looks enticing, training can be expensive and time-consuming. You can set it up once with accounting automation and reap the benefits for years to come.
Plus, an automated accounting system is cheaper to maintain, doesn’t have sick days, and can work 24/seven. In the end, it’s up to you to decide what’s best for your business. But, if you’re looking to save time and money, accounting automation is the way to go.
With the sole aim of reducing accounting costs, automating your bookkeeping processes is a no-brainer. It’s essential to research and find the right software for your business needs.
In 1987, Microsoft created Excel. Curiously, it was initially built for Apple computers, but a PC version quickly followed. More than 30 years later, Excel (or software just like it) is still the one program most accounting professionals could never live without.
In the same light, most business owners would also never want to go back to paper ledgers and pencil-pushing bookkeepers. Automation has made accounting too easy and efficient to return to those dark ages.
So, if you’re still using an antiquated accounting system, it’s time to upgrade. Your business (and your bottom line) will thank you for it.