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The Complete Guide to Accounting Automation: Benefits & Tips

You might have heard about accounting automation, and probably wondered whether it could help your practice or not.  

Depending on who you ask, automation is either a major threat or the next big thing in accounting.

But what is accounting automation anyway? 

Simply put, accounting automation is the sum of automated processes necessary to remove human intervention from accounting tasks. However, “accounting automation” is more often than not used to refer to the partial automation of accounting tasks.

Let’s put this in perspective.

As listed on the human resources platform Workable, the responsibilities of a Certified Public Accountant (CPA) include the following tasks:

  • Organizing and updating accounting records as needed
  • Preparing and analyzing reports on transactions
  • Forecasting revenue and analyzing profit margins
  • Overseeing ledger reconciliation and the general ledger
  • Managing accounts payable/receivable
  • Monitoring bookkeeping activities regularly

How many of these tasks truly need human input? 

Which ones are more prone to human error?

How many could be completed by automation? 

What about the countless subtasks involved in each of these major work areas?

At its very core, accounting automation streamlines accounting work. That way, employees can focus on valuable activities instead of routine, manual tasks. 

In this article, we will show you how accounting automation can help your practice. 

But before, let’s address the elephant in the room.

Is automation a threat to accounting professionals?

While automation replaces human tasks, accounting automation doesn’t mean we are getting rid of Phil in accounting

From movies to books and politicians’ speeches, the perceived threats and fears around automation are well-known. But are accounting jobs particularly threatened by automation technology?

Historical data seems to tell otherwise. 

In the past couple hundred years, we saw the introduction of revolutionary accounting technology operating in the same line automation does. Examples include the invention of the adding machine in the 1880s, or the launch of Microsoft Excel in 1987. 

Did these technologies facilitate the work of accounting professionals, or took away their jobs? 

We are gonna let the data do the talking here. 

According to the CPA Journal archives, there were 69,000 accountants in the US in 1960. In 2020, that figure had grown to 658,267 certified public accountants. That’s nearly 10x more!

Looking at the context, we think that accounting automation is the next logical step towards more efficient accounting. 

So why is automation triggering such an emotional response?

Before rushing to conclusions, it might be good to revisit the notions of neo-luddism and technological unemployment. Both of these can help understand the fear of being made redundant by machines. 

To conclude, let’s not forget one of the most important aspects of accounting: contextual interpretation. This is something humans excel at, and not an easily automatable skill, as it’s not repetitive. 

In other words, professional decisions in the field of accounting will still require a human in place. Repetitive tasks like moving data around will not. 

What are the benefits of this? Let’s take a look. 

6 benefits of accounting automation

Automating accounting tasks brings multiple benefits to accountants and business owners. Here are the most important ones.

1. More accurate records

Even the most thorough, meticulous professional can overlook a detail. Misplacing an amount or missing a decimal can happen to the best of us. But not to an automated accounting solution.

Data integrity is paramount for operations, and also to keep a good reputation among clients. The promise of 100% accurate records can only be fulfilled by technology, and the benefits are immediate.

2. Faster turnaround 

Among the most obvious benefits from automation, time savings come on top. Automation allows accounting firms to deliver results faster. This provides the opportunity to take on more clients, or even more work from the usual clients.

3. Increased security

Automation can help protect data from breaches, cyberattacks, and other types of unauthorized access. 

The ability to automatically store important data and retrieve it whenever it’s needed is another advantage. If you’ve ever had to search for a document in an untidy database, you know what we’re talking about.

4. Comprehensive analytics

As the role of the CPA moves towards a strategic advisor one, access to the necessary reports and data becomes critical. 

Automation helps avoid the pain of gathering and compiling data. By connecting the right apps together, anyone can automatically package KPIs and figures into reports, charts, and dashboards.


cash-flow-xero-automation-screenshotImage Credit: QuickBooks

5. Employee wellbeing and development 

Automating accounting is not just about increasing productivity. It’s also a matter of keeping up with the times and taking care of your team. 

Accounting is a demanding profession with employees prone to burnout, and here automaton can help too. 

When automating the most mind-numbing tasks, accountants are essentially pushing burnout away. 

6. Reduced costs

This is another obvious benefit, and it only takes simple math to demonstrate how much money automation can save. 

Let’s do a quick example. An accountant in the US earns $25 an hour on average. Now, imagine that this person spends two hours a week organizing and updating accounting records. That’s about $2600 a year, billed to a client, or else paid by an employer. 

This task could easily be automated using tools like Integromat. The resulting automation would be able to process more records, in less time, and for less than half the cost. 

This might not sound like a huge amount, but this is just the tip of the iceberg.

How to get started with accounting automation

Depending on factors like your current app stack, business needs, and budget, there are three paths leading towards automated accounting. 

1. Native automation features in your accounting software

The accounting software you’re using probably features some automation capabilities. 

For example, platforms like QuickBooks offer plenty of native integrations. These allow you to automate more than just one accounting process.  

Some of these features are convenient. However, they might prove limited if you need to automate advanced workflows or have custom requirements.

2. Dedicated accounting automation solutions

There are many niche software solutions to automate several accounting tasks. Some examples include:

  • InvoiceSherpa: Automated accounts receivable and invoice reminder software 
  • Wagepoint: Payroll management for small businesses
  • Expensify: Expense management system for personal and business use

While these tools are usually effective, they can become cumbersome as you add up. Additionally, they might not integrate with the rest of your stack, leading to workflow bottlenecks.

3. Full-scale automation platforms

By letting you connect hundreds of different apps together, automation platforms like Integromat offer more flexibility and firepower. 

You get the freedom to customize your processes according to your needs, and not the other way around. 

On the flip side, you’ll have to learn the nooks and crannies of working with a powerful automation tool. 

In any case, your choice has to fit the tasks you want to automate. The rest is confetti.

Let’s now look at a few examples of accounting tasks you can automate to optimize your business. 

What accounting tasks can be automated?

An accountant’s job is made of diverse tasks and responsibilities, which at times can be overwhelming to keep track of. Automation can help with some of them and empower CPAs to transition towards a more strategic role. 

Let’s go over some of these tasks you can automate today.

Accounts Receivable & Payable (AP/AR)

For those who are getting the hang of accounting and bookkeeping, here's a quick reminder: 

  • Accounts Payable (AP) is what your business owes to vendors for anything purchased on credits. Examples are bills, rent and so on
  • Accounts Receivable (AR) is the money owed by customers who have been extended credit terms to purchase from you 

Both have a direct impact on your business. Moreover, both are needed to calculate your cash flow and prepare the cash flow statement.

Mismanaging AP can result in expensive fees and a bad reputation with vendors. On the other hand, companies failing to manage AR obviously run the risk of not getting paid. 

In essence, AP/AR is about: 

  • Tracking pending payments
  • Keeping the relevant stakeholders in the loop
  • Reminding everyone to pay on time 

These tasks are ripe for automation, as they rely on clear conditions and don't require much interpretation or human input.

Examples of automation you can implement today in AR/AP include:

Accounts Payable: 

  • Extracting data from invoices
  • Storing that data in a database or a spreadsheet
  • Forwarding information to relevant stakeholders for sign-off
  • Processing payments

Accounts Receivable 

  • Automatically sending out the initial invoice
  • Sending late payment reminders to clients
  • Collecting payments 
  • Depositing the money directly into your bank account

It has been reported that AP professionals who automate invoice capture and payments save an average of 1 hour per day. We covered this and other solutions in our recent article, “8 Easy Ways to Automate Your Invoices”.

Payroll

Imagine a HR manager or an accountant being paid to manage payroll. This professional probably spends quite a bit of time sorting through employees’ hours, tax documents and rates. 

These are the kind of routines that can be automated. Whether you’re handling workers with fixed pay rates or freelancers paid by the hour, automation can help:

  • Sync with time-tracking applications to calculate wages
  • Automatically handle payroll taxes and generate filings 
  • Transfer money directly to employees’ bank accounts

Here, automation can yield major benefits for your firm, as payroll management makes up for 25% of accounting service offerings.


wagepoint-screenshot-altImage Credit: Wagepoint

Expense management

Running after collaborators and coworkers to collect receipts is never fun. 

Expense management tools such as Expensify make it easier to gather, forward and manage expenses. 

Employees can simply take a picture of their receipt. After that, the tool extracts the data and forwards it to your accounting software. 

Fun fact: A survey found that 85% admitted to lying on an expense report to get reimbursed with more money. 

Expense tracking can’t hurt.


exapnsify-screenshot-exampleImage Credit: Expensify

Bookkeeping, taxes and monthly financial closing

Tax season is a very stressful and often laborious time for companies, as is monthly financial closing. 

A recent survey showed that 90% of respondents were under pressure to close their monthly financials quicker

As everyone rushes to gather everything, tasks quickly add up. Common issues include:

  • Identifying and correcting mistakes
  • Keeping up with tax reductions
  • Transferring data from one app to another
  • Retrieving missing invoices and receipts
  • Removing duplicate documents and items 
  • Identifying unknown payments 

You can automate these tasks using native features in your software or automation platforms.

For example, if you are a QuickBooks user, features like bank reconciliation are your friend. 

Alternatively, platforms like Integromat can help you automate processes that are unique to your organization. 

For example, you could automatically duplicate invoices and store them to Google Drive, making them easy to retrieve come tax season.


quick-books-google-drive-automation

Reporting and cash flow forecasting

Accounting professionals are expected to serve as advisors, delivering insights and driving strategic business decisions. As a consequence, their ability to gather and present data in a compelling way is more important than ever. 

Managers and clients expect financial information to be presented in a clear and concise way, but it’s easier said than done. 

Compiling large amounts of data into reports takes time, a resource most accounting teams can’t spare.

However, since data is usually available within accounting systems, you can easily set up automated workflows to fetch it for you. 

This can be done by connecting tools in your stack. For example, this Integromat template allows you to automatically create and compile KPIs on dashboards.

Modern accounting software also provides reporting features to identify trends, block out challenges and even forecast results. 

Platforms like Xero feature short-term cash flow planning automations. You can project bank balances, and also get suggestions to help improve cash flow projection accuracy.


cash-flow-automation-xero-altImage Credit: FutureFirm

What accountants and technologists think about automation

We’ve covered the benefits of accounting automation and some of the tasks you can start tackling today. What do accountants and business owners think, though? 

Let’s see:

Contrary to popular belief, not all accounting professionals see automation as a threat, as illustrated by this quote from Salika Suksuwan:


It’s a rather simplistic view of accountants’ role if we were to think that the profession will be taken over by machines. 

Automation brings greater opportunities for the profession as it helps reduce transactional and routine tasks such as data entry, bookkeeping and compliance work, and allows accounting and finance professionals to focus more on value-added services. 

These include advising clients and providing strategic insights on critical financial transactions.” 

- Salika Suksuwan, Human Capital Leader of PwC Malaysia (Source: PwC)


Change is inevitable, and the accounting community is well aware of it. 

A study by the ACCA identified automation among the main drivers for change in the accountant profession

Among the surveyed, 55% expect intelligent automated accounting systems to be most impactful the external factor.

Ultimately, the value of automation boils down to its implementation, and how it is used. To quote the founder of Microsoft: 


The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” 

- Bill Gates (source)

Conclusion

The transition towards automated accounting can be seen as a natural step, similar to the one from paper to spreadsheets. 

For perspective, put yourself in the shoes of a client. Would you trust an accountant using moth-eaten paper logs over another one keeping books on Excel?

On a different note, lower-skilled accounting roles may be at risk of being automated. However, it’s important to remember that the value of accountants doesn’t lie in their ability to crunch numbers. 

Accounting professionals are needed to analyze, interpret and garner insights from data in order to help drive better business decisions

For everything else, why not leverage technology to make work easier and more effective?

The answer is yours to choose. 

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