Automating simple tasks can reap huge returns in accounting. Start by automating these six finance operations.
If your accounting team is still transferring data between Excel files, you might as well switch to quills and parchment. There is no reason your employees should be wasting their time plugging expense figures into a spreadsheet when it could be done by accounting software.
Technology has advanced since the dawn of VisiCalc and Excel. Enter automation.
Just imagine taking a picture of your receipt and leaving the rest to software–reading it, turning it into data, entering it into the books, and assigning it to the relevant account.
Accounting automation means your employees spend less time making clunky, manual calculations and more time delivering insights into your finances. Research says that 73% of finance leaders believe automation is improving their functional efficiency and giving employees more time for higher value tasks.
Let’s start by digging into what accounting automation is, then we’ll talk about which finance and accounting tasks you can easily automate, and how.
When we say automation, you might imagine sophisticated technologies and physical robots forecasting your sales with predictive software. That’s there, but simply speaking, automation means using technology to perform tasks you used to do manually.
Most accounting operations can be automated using basic technologies, such as:
- Optical character recognition (OCR): Scans and digitizes physical documents like receipts and pulls numbers from them.
- Robotic process automation (RPA): Automates repetitive tasks by mimicking human actions.
With these technologies, powered by AI and machine learning, businesses will be in a place where they don’t need to fiddle with expenses and revenues through manual data entry. In fact, Gartner estimates that implementing RPA can save an accounting team of 40 about 25,000 hours of rework caused by human error every year.
So, where should you begin your journey to automation?
To help, we’ve identified six accounting tasks, three basic and three advanced, that can easily be automated. Consider automating these basic tasks first:
- Expense management
- Bank reconciliation
And basically, anything that’s highly repetitive. These areas will reduce the time you spend transferring numbers from one file to another and cut down on human error.
That said, automating transactional tasks is only table stakes, and doesn’t provide a competitive edge. Once you’re done with the basics, graduate to automating higher-order accounting tasks by introducing automation in:
- Accounts receivable
- Accounts payable
- Tax compliance and financial reporting
In this video review, learn how Danille shifted payroll, billing, creating purchase orders from sales estimates, and several other accounting tasks from Excel to Quickbooks Online Advanced, with no trained accountant on the team and a predominantly remote workforce.
For accountants in small or midsize firms, it’s often a challenge to choose from the plethora of software tools available in the market. When selecting software, make sure you consider it’s compatibility with your existing tools and platforms.
There are two main ways you can add a new software to your existing bunch:
- Directly integrating disparate applications together via what is called “native integration,” such as connecting a payroll management tool with an expense management tool.
- Using a third-party, full-scale automation platform connecting hundreds of accounting and non-accounting apps together to gain better flexibility and performance.
The former may be a cheaper option, but it offers limited functionality.
Here are the six accounting tasks that you can automate, as well as some examples of tools you can use to achieve that feat.
Running after employees to collect receipts is never fun. If you issue corporate credit cards or reimburse employees for expenses, you can save time by eliminating the need for tracking spending via paper receipts.
Automating expense management can help you by:
- Simplifying receipt uploading with snapshots
- Matching data from company credit cards to receipts
- Creating easy approval process
- Forwarding expense data for bookkeeping
Payroll is among the most tedious, and highly automatable, parts of bookkeeping. Sorting through employees’ working hours, tax documents, and employment types is quite time-consuming.
Automating payroll can help you by:
- Calculating the net pay for each employee
- Disbursing paychecks with a click
- Inputting data to the accounting system
Reconciliation is an important part of accounting. It involves matching your accounting records to bank account statements to spot and correct any discrepancies.
Many finance leaders believe that it’s a task requiring human judgment, but in fact, for the most part, it can be automated with little manual intervention. A bank reconciliation tool will check your records in a fraction of the time it takes to do it manually.
Automating bank reconciliation can help you by:
- Matching your books and bank statements
- Flagging any missing or double entries
- Rectifying inconsistencies within cash records
- Detecting fraud in real-time by initiating periodic reconciliations
Accounts receivable (AR) is the lifeblood of small and midsize businesses. Get it wrong, and it will directly impact your revenue streams.
Despite that, this aspect of accounting isn’t given as much care as it deserves. It includes issuing and tracking invoices and working with multiple teams–finance, sales, and customer service. The involvement of so many stakeholders and approval authorities makes this process time-consuming and prone to human error.
Automating AR can help you by:
- Generating accurate invoicing against sales records
- Getting quick approvals
- Issuing prompt reminders to customers for payment
Accounts payable (AP) is what you owe to others. It can be bills, rent, and so on. Delaying your payments can cost you by accruing expensive fees, and not to mention a bad rapport with suppliers.
AP management requires many discrete steps involving multiple business units, which often becomes the cause of delays and bottlenecks for accounting professionals.
Automating AP can help you by:
- Collecting bills in a central repository
- Initiating auto-matching of deliveries received against bills
- Automating approval processes for invoices
- Initiating payment to suppliers
- Recording transactions to your accounting software.
Tax compliance and financial reporting
This is where automating accounting becomes more than transactional.
Tax season is stressful. Calculating tax obligations and preparing financial reports is not only labor-intensive, but also complicated for accountants. Moreover, these reports are difficult for non-accounting stakeholders to understand, thus, requiring accountants in small businesses to diversify as advisors and deliver insights.
Tax compliance and financial reporting software can do wonders for your finance teams by giving them the time and means to identify trends and even forecast results. It will make your tedious processes simple, more accurate, and more efficient.
Automating tax compliance and financial reporting can help you by:
- Updating taxes based on your region and current rates
- Preparing tax returns
- Creating financial statements
- Predicting future revenue
Put your right foot forward on accounting automation by first choosing the tasks you wish to automate and then picking the tool. Here are some things you can do to get the ball rolling:
- Assess your processes to identify automation opportunities. Create your own list of pervasive and time-consuming tasks in your accounting workflow that you should automate. You can start with the tasks mentioned above and carefully examine how each functions within your business context.
- Sign up for free trials. Many software providers offer free trials, so you can test if their products offer you the features you need. This is also a great way to go beyond the most popular options and explore alternative accounting tools, which could be more suited to your business needs.
- Find the right software. If you intend to purchase new software–or are simply dissatisfied with your current tool–Capterra’s top features comparison guide for accounting is a great place to begin. It will help you see how different solutions stack up against each other. As you near a decision point, make sure you choose software that integrates well with your current solutions.