Many people dream about starting or running a business. But only accountants fantasize about running a company’s back office.
Yet when it comes to modernizing your business, accounting automation may be the best place to start realizing your vision for your company’s true potential.
When you automate accounting tasks, the benefits in efficiency ripple throughout the organization. You also lay the foundation for modernizing other aspects of your company. This creates opportunities for digitally transforming your entire business, from end to end.
Why start with accounting automation?
Even if you don’t love to hear about posting debits and credits, accounting processes form the core of your business. At the most basic level, your business succeeds on the essential rhythm of money in, money out. Accounting processes, you might say, form the heartbeat of your company.
How you create and monitor that beat affects multiple other rhythms in the organization. Accounting automation is powerful because accounting processes intersect with processes in almost every other area of business, from marketing and sales to operations and human resources. Here are just a few examples:
- Your process for invoicing customers may affect the sales team if they rely on timely sales reports to plan their monthly or quarterly activities.
- Your process for tracking expenses may affect your ability to maintain the right level of inventory.
- Your process for paying employees may affect processes for onboarding (and offboarding) employees.
Automating your accounting tasks may not sound as glamorous as investing in digital marketing or using an AI-enabled app to identify prospects on social media.
However, maximizing efficiency in your accounting department through automation liberates you and your team from labor-intensive, routine work. That means less time spent inputting data and more time invested in higher-order work, such as skill-building, business development, and strategic planning.
How much time are you losing to outdated processes?
Accounting automation saves money in the long-term.
In a 2015 survey of SMBs in the US, 40% of respondents said that bookkeeping and taxes were “the worst part of owning a business.” Four out of 10 of those surveyed also estimated that they spent upwards of 80 hours a year just on tax preparation. More than a quarter of them said they spent 36 to 60 hours a year taking care of payroll tasks.[1]
Without figuring in day-to-day bookkeeping, many business leaders are already spending up to 140 hours a year on accounting tasks. You don’t have to be a CPA to do that math. That’s 3.5 weeks of full-time work. How much of your life are you spending performing accounting tasks that can be automated with a software package or online platform? If you’re spending any amount of time using pen and paper or an Excel spreadsheet to track your finances, that’s time (and money) that accounting automation could be saving you.
What aspects of accounting could you automate?
The first digital accounting solutions were really just spreadsheets on steroids. Not so today.
Modern applications can now automate a wide range of accounting activities. Here are just some of the duties you could offload onto a digital accounting automation solution:
- Collect data from bank accounts and credit cards
- Reconcile accounts
- Send recurring invoices
- Send reminders for late invoices
- Enable customers to pay invoices online
- Process recurring credit card payments
- Process payroll
- Submit payroll taxes
- Generate financial reports, such as Profit & Loss statements, on a regular schedule
- Schedule bill payments
- Issue tax forms to employees and contractors
- Store receipts
That’s just the basics, which any entry-level accounting automation application should cover (for example, Wave, QuickBooks, or FreshBooks).
If you want to get more sophisticated, you might consider integrated solutions that link automated accounting tasks to other aspects of the business. For instance, you might adopt a time-tracking tool (such as Harvest) that enables you to issue quotes, confirm the customer’s approval, and issue invoices.
Integration is a key word when it comes to choosing the digital solutions you use for different accounting (automated or not) and finance processes. If you’re ever required to undergo an audit, you’ll need the ability to gather all your data into one place, and tools that link easily with one another making it easy to do that. If like many small businesses, you’ve been gathering various tools as you grow, you might want to leverage a tool such as Tray, which interconnects POS systems, expense management systems, bookkeeping solutions, and so on.
Accounting automation can help all of your favorite tools work together.Ultimately, you’ll want to connect all of your tools to your automated accounting platform so you achieve seamless, hands-free data flow.
What possibilities could accounting automation open up for your business?
Automating accounting tasks does more than just free up time and reduce the stress that comes with overwork. It also improves accuracy and creates consistency across your team or organization.
Beyond these immediate benefits, accounting automation establishes a mindset and way of working that will revolutionize the way you run your company.
Automating your accounting requires you to think differently about how things get done. Before you can implement a digital solution, you must first examine your existing processes and make sure you have just one, approved way of performing each task.
Does Soo-Kim have one way of sending invoices and Rick has another? Did you run sales reports the same way in February as you did in June? Do all your invoices contain the same information? These are the kinds of questions you’ll need to confront before you can take your accounting into the digital realm.
Because accounting processes are repetitive and frequent, they tend to be more structured than some other business processes, such as onboarding new clients. They, therefore, offer the perfect starting point for systemizing the way your company operates.
Once you get into the habit of viewing accounting workflows series of step-by-step procedures, you can apply that lens across your organization. Soon, you’ll be seeing possibilities to improve efficiency in every functional area. You’ll find yourself asking new questions, such as “How could we simplify the recruitment process?” or “Is there a way to shorten the lag time between ordering and receiving inventory?”
Asking smart questions like these puts you on a direct path towards accounting automation andbecoming a fully digital business, one in which efficiency and enhanced customer service go hand in hand. Questioning how you’re managing your accounting processes today could be your first step in that direction.
[1] CISION PR Newswire. (2015, January 18). New infographic: The burden of small business accounting, taxes and payroll. https://www.prnewswire.com/news-releases/new-infographic-the-burden-of-small-business-accounting-taxes-and-payroll-300026479.html
