Automation is everywhere.
Think about it: you can lock your front door without being home. Your thermostat turns off the HVAC system to conserve energy when it senses you’re away. Cars come with driver-assist capabilities to send out warning signals if you inadvertently glide out of your lane. Cars even have self-driving capabilities.
While automation and artificial intelligence (AI) quickly became a standard in personal lives, the same wasn’t always true in the offices of entrepreneurial organizations. Accounting functions that take advantage of robotic process automation (RPA), technology that automates business processes, are filling in gaps created by labor shortages, budget restraints and more.
In accounting, the benefits of RPA are innumerable. Automated accounting optimizes workflows, reduces errors and improves cash flow. What’s more, with accurate financial data acquired through automated processes, companies are better equipped to drive significant insights for decision-making and long-term stability. Let’s dig in:
What is automated accounting?
Automated accounting leverages AI and machine learning to perform traditional accounting processes, such as recording transactions to compile into financial statements. It takes repeated tasks – which, if done manually, are tedious and time-consuming – and performs them at the click of a button, allowing finance professionals to focus their time on the core business. Automated accounting is a game-changer for the finance function.
1. Automated accounting improves data accuracy
Automated accounting ensures a high level of accuracy in data-entry functions. This reduces the chances of error, especially when recording transactions. Transactional processes, such as billing and payments, can be processed at a click of a button without the need for rechecking data. With the right accounting programs, organizations can ensure data accuracy and consistently close their books on time. This, in turn, keeps financial statements up-to-date and audit-ready to improve regulatory compliance.
Automation also expedites data retrieval. For instance, a chart of accounts and trial balances can be categorized and named for easy data retrieval. This helps organizations operate more efficiently while collecting valuable financial insights.
2. It expedites payment processes to improve cash flow
Automation takes over error-prone tasks, like accounts receivable. Organizations can rapidly generate and send invoices, reconcile invoices, and send reminders to customers for timely payments. Additionally, automated accounting systems update data in real time, which improves the accuracy of invoices, helping businesses get paid faster and streamline cash flow.
3. Automation reduces cost
Unforeseen expenses, such as an increase in Cost of Goods Sold (COGS), can eat into profits and impact growth plans. Cost control is essential to minimize revenue leaks and optimize budget to actual performance. Automation helps create efficiencies in day-to-day financial processes, including data entry, transaction categorization, reconciliation and gathering insights. This can improve cash-flow management and simplify tax filing, too.
4. It enhances decision-making
Accounting automation can unify data rapidly. This, in turn, helps organizations understand trends, exceptions and insights to facilitate real-time decision-making. Through unified data insights, accounting professionals can quickly build easy-to-read, detailed reports and dashboards based on new revenue streams and changes in business strategy.
5. Accounting automation improves data security
As companies deal with confidential information, securing data is critical. Manual accounting activities often require the use of spreadsheets, which can hinder security and increase the risk of data breaches related to information delivered in Excel via email or through less-secure means. Automated accounting reduces manual intervention, in turn, cutting chances of mishandling data.
6. Automation provides easy access to data
Automated accounting with cloud-based software makes data storage easy and accessible. Employees can work and save files directly to the cloud. This helps access critical files, such as financial statements, reports or invoices anytime, anywhere.
7. It simplifies tax filing
Many business owners struggle to file their taxes. Automated accounting helps easily track sales tax, receipts for business expenses and mileage. Access to this key data helps companies maximize deductions and streamline the tax-filing process.
8. Accounting automation enhances team collaboration
Using automation software will free team members’ time away from routine bookkeeping activities, allowing them to work with other teams – such as sales, marketing, operations – for production planning and budgeting. This improves overall organizational productivity and efficiency.
Why automate accounting?
As businesses grow, accounting processes become more and more complex. Maintaining financial transparency and objectivity is critical for smooth business operations so that leaders can focus on scaling up faster. Accounting teams that leverage technology can swiftly move from manual accounting work to automated accounting systems. This minimizes the tedious task of managing outdated accounting systems and helps build a sound, reliable and clean data infrastructure.
The outcome: improved control over accounts, better data and, therefore, greater strategic business decisions.
How we can help
The move to automated accounting requires a change in your business’s processes and systems. At Sikich, our financial and accounting advisory services team can help build and manage the right processes and systems to enable the adoption of automation tools. Doing so will ensure that your financial data is clean and accurate, allowing you to make well-informed business decisions.
To learn more about our finance and accounting services, contact our team:
