What if we tell you, “Nearly 75% of accounting tasks can be automated, potentially driving the accounting software industry to reach $12 billion by 2026.”
What would you do? – would you embrace accounting automation as a powerful tool to streamline your financial processes, or do you see it as a potential threat to your job security?
Accounting automation is a transformative solution that not only speeds up processes but drastically reduces the risk of human error.
It has evolved as an influential tool for optimizing financial procedures, offering a helping hand to accountants rather than replacing them, and ensuring accuracy and efficiency while saving valuable time and resources.
With cutting-edge innovations in real-time reporting, workflow automation, and cloud-based collaboration, accounting automation software has become more accurate and accessible to all stakeholders.
In this blog post, we’ll explore the benefits of adopting an automated accounting system, how it can help your business, and the top accounting automation trends reshaping the financial landscape.
We’ll also explore the benefits of an automated accounting process and the tasks that can be automated first. Let’s get started!
What Is Accounting Automation?
Accounting automation is a computerized accounting software solution that lets finance teams streamline their processes by automating manual tasks.
Using advanced technology, accounting process automation (APA) replaces time-consuming and error-prone tasks, such as manual record-keeping and spreadsheet management, with a more efficient and accurate digital approach.
This transformation enables businesses to enhance various financial operations, including monthly reporting, expenses, financial close, supplier invoicing, and payments.
How Does Automated Accounting Work?
Automated accounting is like having a reliable ally that handles repetitive tasks, freeing up your valuable time for more crucial matters. The software works hand in hand with accountants to simplify their lives and improve efficiency.
Once accounting tasks are automated, the software becomes a rapid data scanner, swiftly analyzing information far quicker than human capabilities.
And the best part? Your numbers get updated in real-time, thanks to seamless integration with expense management systems like Quickbooks, Sage, and many more.
With this powerful partnership between technology and accountants, mundane tasks have become a thing of the past. Instead, you can focus on addressing critical issues and leveraging your expertise to propel your financial operations forward.
What Is A Manual Accounting System And Its Challenges?
If you’ve ever dealt with conventional manual accounting techniques, you know the struggles all too well.
The mountains of paperwork, the potential for errors, and the stress of meeting tight deadlines can be a business nightmare.
Let’s delve into the challenges of manual accounting and why finding solutions becomes crucial.
Manual accounting relies heavily on tedious organization and line-by-line data entry.
The workload can be overwhelming, leaving accounting teams stressed and overworked.
Deadlines loom, and the pressure to meet them can lead to delayed processes and strained efficiency.
2. Prone To Errors:
Human errors are inevitable in manual accounting processes. Mistakes like entering incorrect information or transposing figures can occur frequently.
Without automated checks and balances, identifying and fixing errors becomes time-consuming for accountants.
3. Difficulty In Compliance:
Compliance with ever-changing regulatory requirements and tax laws can be a challenge with manual accounting. Non-compliance may lead to penalties and reputational damage for businesses.
4. Lack Of Security:
Securing paper-based accounting records is a tough job. Even with metal safes, the risk of a security breach is high.
In the digital age, cloud-based data is also vulnerable to cyber-attacks, risking data corruption or leakage.
5. Lack Of Accessibility:
Manual accounting makes it difficult to share important data with those who need it, whether paper-based reports or digital spreadsheets; permissions and access issues hinder smooth data distribution.
As businesses grow and financial transactions become more complex, these drawbacks become increasingly problematic.
That’s where automation revolutionizes the accounting landscape, streamlining processes and ensuring accuracy and security.
How Accounting Automation Can Help Businesses
Embracing accounting automation is like welcoming a reliable ally that revolutionizes how businesses manage their finances.
This transformative technology offers a plethora of benefits that streamline processes, enhance accuracy, and boost productivity. Let’s explore how accounting automation can be a game-changer for companies today:
1. Real-Time Synchronization Across Platforms:
Gone are the days of waiting for data updates and struggling with multiple versions of financial records. Cloud-based accounting software guarantees that any new information added to the system is swiftly updated on the cloud and seamlessly synchronized across all devices and platforms.
Whether you’re on a mobile app or a desktop computer, every user accessing the account receives real-time updates in perfect harmony.
This level of accessibility fosters seamless remote teamwork, allowing finance professionals to collaborate effectively regardless of their physical location.
2. Improved Data Access:
Accounting Process Automation (APA) puts an end to the tedious search for documents in stacks of paperwork or endless spreadsheets.
With automated and centralized record-keeping, finding crucial financial information becomes as simple as entering relevant search terms in the APA solution.
Within seconds, accounting professionals can access the files they need, boosting efficiency and reducing the time spent on administrative tasks.
3. Reduced Operating Costs:
Manual accounting processes are not only time-consuming but also resource-intensive.
The manual handling of tasks like invoicing and transaction processing can increase business operational costs. With automation in place, these processes experience a significant boost in speed and cost-efficiency.
Notably, high-performing businesses have observed a remarkable decrease in invoicing costs, slashing the expense per invoice from $9 to a mere $2.
This significant cost reduction allows companies to allocate resources strategically, fostering growth and innovation.
4. Helps Avoid A Cash Flow Crisis:
For business owners, managing cash flow effectively is paramount to their success. Automated accounting plays a crucial role in this aspect by providing real-time insights into financial status and cash flow.
Instead of manually sifting through piles of transactions, business owners can now get a comprehensive view of their financial health at a glance.
This kind of visibility empowers them to make informed decisions promptly, anticipate financial challenges, and seize growth opportunities confidently.
5. Detailed Analytics And Data Insights:
Accounting automation not only streamlines data collection but also brings deeper insights into financial data. With ordinary tasks automated, financial managers and accountants can focus on interpreting the data, identifying trends, and making data-driven decisions. Automated reporting also presents data from unique angles that human analysis might overlook, giving businesses a competitive edge in strategic planning.
6. Cloud Access And Capabilities:
The convenience of cloud-based accounting software cannot be overstated. Finance professionals can easily access crucial financial data and collaborate, whether traveling, commuting, or working from home.
Automated accounting systems provide secure cloud platforms for accounts payable (AP), ensuring data accessibility around the clock.
The web-based and mobile applications allow you to access your financial data anytime, anywhere, without being tied to a specific location or device.
7. Streamlined Document Approvals:
Automation simplifies approval by automatically uploading and sharing documents like purchase orders and supplier contracts with relevant stakeholders.
This streamlining eliminates bottlenecks and enhances communication and collaboration among team members.
8. Maintain Records And Trials For Tax Audit:
Accurate and comprehensive record-keeping is essential for compliance and auditing purposes. Automated accounting software generates detailed reports that fulfill auditing requirements, saving significant time and effort.
This level of record maintenance also ensures a smooth and hassle-free tax preparation process, reducing the stress and potential errors associated with manual record-keeping.
9. Ensures Compliance And Governance:
In addition to streamlining processes, accounting automation software ensures compliance with regional regulatory requirements and tax rates.
The automated pre-population of tax returns and financial statements eliminates human errors and increases accuracy, easing the burden on accounting teams responsible for monitoring compliance.
10. Improved Security:
With cyber threats becoming more prevalent, data security is a top business priority.
Accounting automation software employs advanced encryption and security measures to protect sensitive company records and financial data.
These security features safeguard businesses from potential data breaches, ensuring confidentiality and peace of mind.
What Are Accounting Trends?
Accounting trends are developments driven by changing landscapes, technology, and market forces that shape the modern accounting profession.
With 82% of accountants acknowledging companies’ increasing demands and 87% stating clients expect better services, the industry is witnessing rapid changes.
The adoption of cloud and AI technology is at the forefront of accounting trends. Cloud-based accounting software brings flexibility, enabling accountants to collaborate seamlessly from anywhere. Automation and artificial intelligence further streamline tasks, saving valuable time.
Why Is It Essential To Adopt The Latest Accounting Trends?
Incorporating the latest accounting trends ensures businesses remain relevant, efficient, and secure in today’s dynamic market. Let’s explore the benefits and importance of staying updated with the new accounting trends:
- Excellent Customer Service: New technologies automate repetitive tasks, enhancing work efficiency and enabling businesses to provide outstanding customer service.
- Financial Performance Improvement: Data analytics and forecasting tools aid in proactive decision-making, boosting profitability and financial performance.
- Strong Security: Advanced accounting trends offer robust security measures, protecting sensitive data from cyber threats and breaches.
- Efficiency of Operations: Advanced accounting software streamlines processes, eliminates errors, and maintains well-organized data, enhancing overall operational efficiency.
Top 5 Accounting Trends To Watch For In 2023
As we progress into 2023, the accounting industry is undergoing a remarkable transformation driven by cutting-edge technologies and automation.
These accounting trends are reshaping how businesses manage their financial processes and unlocking new opportunities for growth and efficiency. Let’s dive into the top accounting trends to watch out for this year:
1. Technology And Automation:
Automation is revolutionizing the accounting landscape, enabling businesses to streamline repetitive tasks such as approval workflows, bank reconciliation, revenue recognition, etc.
Embracing automation has proven to be a game-changer, with companies reporting substantial ROI after automating significant portions of their accounting functions.
As more businesses recognize the benefits, adopting automated accounting processes is rising.
2. Cloud-Based Accounting:
Merging accounting services with IT support and cloud technology has become a game-changer for businesses.
Cloud-based accounting systems offer easy accessibility from anywhere at any time, facilitating collaborative work and data sharing.
A report by accounting software company Sage reveals that 67% of accountants endorse the introduction of cloud-based solutions, enhancing work quality and efficiency.
3. Accounting Software:
The competition among accounting software solutions is fierce, with cloud-based platforms leading the charge.
Businesses increasingly opt for cloud-based accounting software due to its user-friendly functions, advanced features, and robust solutions.
4. Role Of Artificial Intelligence (AI)
The impact of AI, machine learning (ML), and robotic process automation (RPA) in accounting cannot be overlooked.
AI technologies transform mundane, repetitive tasks into automated processes, allowing accountants to focus on high-impact decision-making.
From analyzing lease contracts to predicting cash flow and identifying fraudulent transactions, AI and ML are reshaping the accounting landscape.
5. Automated Data Entry:
Accounting automation transforms data entry processes, streamlining tasks such as importing bank statements, tracking expenses, and creating invoices.
This technological advancement empowers businesses to optimize their financial management efficiently and effortlessly.
Additionally, expense management companies implement automated workflows to scan and categorize receipts, further enhancing accounting processes seamlessly.
10 Accounting Tasks Your Business Can Automate Now
Embracing accounting automation can significantly enhance your business efficiency and financial management. Here are ten accounting tasks that your company can start automating today:
1. Accounts Payable: Automating AP simplifies payment processes and ensures timely vendor bill payments. With automation, you can track invoice due dates efficiently and minimize the risk of fraudulent invoices slipping through the cracks.
2. Expense Management: Automating expense management streamlines financial data collection, storage, and analysis. This provides both micro and macro-level insights, making it easier to plan employee expenses and make accurate quarterly predictions.
3. Accounts Receivable: Automation in AR helps manage cash flow, improves invoice accuracy, and reduces processing costs. Businesses can achieve greater efficiency by automating various aspects of the AR process, from scheduling invoices to handling past-due payments.
4. Payroll: Managing payroll accurately is vital for any company. Automating payroll processes ensures timely employee payment, including reimbursements and salary slips. It also simplifies tax calculations, relieving compliance teams of manual efforts.
5. Month-End Financial Closes: The month-end financial close can be stressful for finance teams. Automating this process alleviates pressure on accountants, allowing them to deliver faster and more accurate results without compromising quality.
6. Procurement: Automating procurement processes like purchase order management reduces time and cost. This streamlines the procurement process without compromising integrity and supplier relationships.
7. Financial Modeling & Cash Flow Forecasting: Accounting software now offers advanced cash flow forecasting and financial modeling capabilities. Financial managers can optimize spending and make informed decisions with accurate predictions for up to three months.
8. Expense Reports: Automating expense reports eliminates the need for manual paperwork handling. Employees can digitally fill out and share their expenses with accounting, reducing administrative burden and paper usage.
9. Review Books Month-End Before Closing: Reviewing books and verifying ledger entries can be time-consuming for accountants. Automation can assist by efficiently managing invoices and expenses, allowing accountants to focus on essential tasks.
10. General Ledger (GL) & Chart of Accounts: Automating the general ledger is a foundational step for efficient bookkeeping. It is a central hub for all financial processes, transactions, and reporting, ensuring accuracy and seamless integration with other automated systems.
By automating these essential accounting tasks, your business can streamline operations, improve accuracy, and free up valuable time for your accounting team to focus on strategic initiatives.
6 Steps To Automating Your Accounting Processes
Automating accounting processes is a game-changer for businesses, but it’s important to remember that there’s no one-size-fits-all solution.
A systematic approach is crucial to achieve successful automation, beginning with a thorough understanding of the tasks best suited for automation.
Let’s explore the six essential steps that will guide you toward effectively automating your accounting processes.
Step 1: Assess Current Accounting Processes
Before diving into automation, assess your current accounting processes. Identify repetitive and time-consuming tasks, as these are the best candidates for automation.
Remember, the goal is to enhance efficiency, not replace your accounting team entirely. Choose tasks that can benefit from increased speed and accuracy through automation.
Step 2: Evaluate Existing Technologies
Examine the accounting technologies and software applications your business already uses.
Determine whether these systems can seamlessly integrate with automation tools or if they require additional integration.
Cloud-based APA solutions are popular for unifying accounting and finance systems on a single platform.
Step 3: Appoint A Project Owner
Even with automation, a human touch is necessary to oversee the process. Designate a project owner who will be responsible for monitoring the APA workflows.
This individual will ensure that everything runs smoothly and address any issues that may arise. For example, the project owner can quickly resolve inaccuracies in payroll rules to avoid late payments.
Step 4: Document Current Workflows
Take a detailed look at your current workflows and document them thoroughly. This step is critical in identifying areas for improvement and streamlining processes.
Break down each workflow into smaller components, making it easier to pinpoint where automation can bring the most significant benefits.
Step 5: Automate Based On Updated Workflows
With your workflows analyzed and streamlined, it’s time to automate. For each workflow, define the trigger, action, and desired outcome at a granular level.
This clarity ensures consistent and successful results when automation is applied.
Step 6: Thoroughly Test The Automated Workflow
The final step is to test the automated workflow thoroughly. Ensure that it functions as intended and delivers consistent results.
It’s natural to undergo a few iterations during testing, especially when transitioning from manual to automated processes.
However, once you’ve fine-tuned your automation, your accounting tasks will become significantly smoother and more efficient.
What Accounting And Bookkeeping Automation Software Should You Use?
Selecting the right accounting automation tools is crucial for any business, but it can be daunting with so many options.
To make an informed decision, you must consider the features that align with your specific needs and can streamline your work processes.
Let’s explore some key factors to consider when choosing accounting and bookkeeping automation software:
Automated accounting operations are the key to boosting efficiency and productivity. Look for software to automate repetitive tasks such as generating transaction reports or processing invoices.
Automating these tasks lets your accountants focus on more strategic and value-added activities.
2. Core Accounting Modules:
Ensure the software covers all fundamental accounting modules, including invoice processing, expense tracking, financial reporting, and a user-friendly dashboard.
Responsive customer service is also essential to address any issues promptly.
3. Cloud Access And Capabilities:
Opt for cloud-based solutions that allow remote access to your accounting data from anywhere, anytime.
4. Multi-User Access:
As your business grows, you’ll need a system accommodating multiple users with varying permission levels.
Not everyone should have access to sensitive financial data, so the ability to assign different user roles is crucial for data security.
5. Business Intelligence:
Financial data analysis is vital for gaining insights into your business operations.
Look for accounting software that offers predefined reports and customizable options beyond standard profit and loss statements.
This allows you to identify trends, track timely payments, and analyze departmental contributions.
6. A Proven Track Record:
Research reputable accounting software providers with a proven track record in the industry. Read reviews and testimonials to gauge user experiences.
Recognitions and awards within the accounting industry indicate the software’s capabilities and reliability.
7. Ability To Scale:
Select software that can grow with your business and adapt to changing needs. It should handle increased client demands, more invoices, and support projects requiring detailed billing.
8. User-Friendly Interface:
The complexity of software should be on the backend, not the user interface. Choose intuitive and easy-to-navigate software, allowing every employee to use it effortlessly.
A user-friendly dashboard, helpful prompts, and mobile applications for remote work are essential features.
Can Accounting Automation Replace Human Accountants?
One crucial distinction to make is that accounting automation doesn’t seek to replace human accountants but instead acts as a valuable assistant.
Eliminating manual aspects (manual data entry) of their job allows accountants to focus on higher-value tasks, like analysis and interpretation, improving overall productivity and effectiveness.
With accounting automation software on their side, accounting teams can work hand in hand with technology to optimize processes and achieve greater accuracy and efficiency, ultimately driving better business outcomes.
It’s a partnership between human expertise and cutting-edge software that’s revolutionizing the world of finance.
Regardless of how advanced machines become in automating transactional accounting tasks, they can never match the enduring value of an accountant and their judgment.
The Bottom Line
In conclusion, accounting automation is revolutionizing how businesses handle their financial processes. By adopting the latest automation trends, companies can streamline routine tasks, reduce human errors, and improve efficiency.
From automating accounts payable and receivable to utilizing artificial intelligence for data analysis and forecasting, automation empowers accountants to focus on more strategic tasks and provide better insights for decision-making.
Embracing accounting automation enhances productivity and ensures compliance and data security. Cloud-based solutions offer remote accessibility, promoting collaboration among team members and enabling businesses to scale up effectively.
As technology evolves, staying ahead of the curve and integrating automation into accounting practices will be vital for businesses to remain competitive in the ever-changing financial landscape.