Business owners have a lot to focus on, and a lot of internal projects get put aside in the chase for revenue and growth. Therefore, it’s sometimes hard to find time to work on the business. Accounting automation is sometimes put off.
Here’s why your startup or small business should invest in automation within the accounting function:
- It saves time. Reducing repetitive tasks that can be handled by AI frees up founders and executives time to focus on strategic tasks.
- It’s accessible. Small business accounting systems like QuickBooks Online and Xero have pioneered in automating processes in every area of their software – you just have to know how to use them. Apps and integrations allow for further automation in movement of data.
- It’s quick to set up. With the help of finance professionals or accountants trained in process design, automation and software implementation, a small business can get an automation project completed within a few days or weeks.
- It helps give you real time insights. Real time bookkeeping is made possible by machine learning and artificial intelligence. The faster your bookkeeping is completed, the more up-to-date are your reports and analysis, and the better informed are your decisions.
- It reduces errors. Accounting professionals are prone to human error too. Automated tools speed up their work and reduce the chance of mistakes.
Small companies should start automating as soon as accounting policies are considered. In the very earliest stages of business there are often too few transactions to bother automating, and not enough experience in the business to conduct any meaningful analysis. Here are some triggers that might indicate you’re ready for automation:
- Your monthly bookkeeping takes more than an hour to complete
- You have a lot of similar transactions
- You notice inconsistencies in how expenses are categorized or classified
- Your bank reconciliations aren’t working smoothly
- You begin working with a bookkeeper or external accounting firms
- You start building a finance team
Automated bank feeds and bank reconciliations
Getting started: Quickbooks and Xero both have the ability to automatically download transactions from your bank accounts. Bank rules allow the software to recognize transactions and suggest expenses/bills to match them to, or automatically push them into expenses. You can start off slowly, by creating one automation rule at a time as you notice repetitive transactions coming in.
Watch out: bank rules can create duplicate transactions if they fail to match with expenses/revenues that you’ve already booked. This is particularly problematic with partial payments and currency conversions.
Automating accounts payable
Getting started: Documentation collection solutions like bill.com, Hubdoc and Receiptbank allow users to photograph/scan/email/upload receipts and invoices. This is an ideal way to get vendor bills into your accounting system for the next AP run. These systems use AI and machine vision to ‘read’ documents and parse out the relevant information. Automation rules and AI assign them to the relevant vendor and expense account. Implementing a cash flow management solution – even a simple one like entreflow’s own cash flow tool – helps you plan payments.
Advanced: use email forwarding rules to send vendor docs to your document management tools. Also, connect your bank accounts to download monthly statements.
Watch out: it’s easy to create duplicate entries for vendor bills if vendors make mistakes or send confusing documentation. You have to watch the AI
Expense reports automations
Whether you have employees authorized to use a company credit card, or employees submitting expense reports for reimbursement, you will always find this a sticking point for your month end. Employees don’t uniformly understand or have the attention to detail required for accounting.
Expense management solutions like expensify and procurify give the accounting team control over expenses. In all cases, the systems can read receipts via optical character recognition (OCR) technology and can be trained to automatically assign expenses to the relevant expense accounts in the accounting software. It’s all integrated so the process happens with little manual intervention – turning the accountants focus to stewardship over financial data rather than simple manual entry.
Watch out: implementing an expense management software without understanding or defining your policies and practices around expenses and reimbursements will be bound for failure. Additionally, you must make sure to train all employees.
Getting started: if you want a system that will calculate all the deductions for you, transfer the cash, provide paystubs to employees directly and allow tax slips to be generated then look no further than Payment Evolution, Payworks and Quickbooks payroll.
Watch out: if you have lots of employees working hourly or requiring bonuses or commissions, you’ll need additional software like T-Sheets or Harvest to keep track of time, and you’ll probably need a payroll professional to run the software for you.
Automating payments and collections
Getting started: try out plooto, stripe, recurly or similar solutions for collecting payment from customers. Quickbooks Online payments has a solution for collecting payments on invoices or monthly automated billing.
Watch out: Things can get pretty hairy at high volumes of transactions, particularly if the integration glitches or you didn’t set up the integration properly. Get help here.
Automating invoicing, orders and operations management
Getting started: if you use a system for operations management – e.g. an ecommerce solution for order management and inventory (e.g. DEAR inventory), a service management system for work orders (e.g. Jobber), a small business ERP – you can integrate this with your accounting software to avoid duplicate work.
Watch out: inventory movement, refunds, and all the complexities of operations can easily break down data integrity, especially if you didn’t set up the integration properly. Get professional help before you set this up.
Entreflow offers accounting software implementation services specifically designed for small businesses, startups and growth-mode companies. It is vital that whomever approaches automation understands (1) the built-in automation tools available (2) the ecosystem of integrated apps that work with the accounting software (3) other time saving tools like zapier and google workspace tools (4) how to design accounting policies and accounting processes that are worth automating and (5) the cost/benefit of building an automation.