Accounting automation are computerised processes that help in streamlining the accounting workflows and manual tasks, leading to more precise results in a faster and more efficient way

What are the challenges in manual accounting?

Depending on the scale of your business, you might need to transition from a manual accounting system to automate the workflows within your organisation.

One understands the importance of data-driven decisions, efficient and accurate figures in the financial reports of his business. This is where efficiency for a proper accounting system comes into picture.

If you are an accountant following a traditional system of accounting, this is how a normal day of your work would look like:

• Posting manual entries for each transactions
• Requesting approvals and documents from your clients
• Manual reconciliations at multiple levels
• Setting up payments for different parties on a daily basis
• Handling the reporting requirements manually
• Taking care of compliances single-handedly
• Seeking clarifications from the client for each concern you might have

There are still clients who want their books maintained as shown below.

For an accountant, it’s a painful and time-consuming process without a doubt

It is not only repetitive and mundane but also comes with a range of concerns in the long run -

• Time-consuming
• Security concerns
• Prone to errors
• Restricted accessibility
• Challenges in tracking progress
• Barriers to scalability

How can automation of an accounting process help?

Reduced errors

Involving a computerised process for accounting automation minimises a lot of human errors that would happen otherwise. A large chunk of an accountant’s time is spent in finding and assessing errors.This is then followed by another process to rectify the error.. These can be automated to make one’s life as an accountant easier. 

Understanding cash flow better

With an automated system, one can easily get all the metrics he needs about his business. How?

Let’s understand this with the help of Ron who runs clinical laboratories. Ron used to manually handle his accounting, spending hours each week sorting through receipts, invoices, and bank statements. However, he decided to switch to an automated accounting system. This helped him with these:

• Real-Time Updates: With automated accounting, Ron's financial data is updated in real-time. He no longer has to wait for the end of the month to see how or where his money is going. This allows him to have a better view of his cash flow that is accurate and up-to-date.
• Expense Tracking: The system automatically categorises the transactions, making it easier for Ron to see how his money is being spent. He can quickly identify areas where he might be overspending and make decisions. It helps him understand if he needs to reduce spending in a particular area or plan his purchases..
• Invoicing and Receivables: Automated invoicing means Ron can send out invoices promptly and track when they are paid. This helps him predict when he'll receive payments and plan his cash flow accordingly. He can also understand his receivables better and reach out to his customers when needed.
• Forecasting: The accounting software can generate forecasts based on past financial data. Ron can use these forecasts to anticipate future cash flow needs and plan accordingly. For example, if he sees a slow period coming up, he can take steps to reduce expenses or increase marketing efforts to boost sales.

Overall, by automating his accounting processes, Ron gains a clearer, more real-time understanding of his cash flow, allowing him to make better-informed decisions for his business's financial health.

Time-saving

This is how Ron’s life looks like today with an automated accounting system in place.

• Automatic bank feeds fetched and categorization of transactions
• Timely vendor payments
• Better understanding of his customer receipts
• In-depth view of his cash profits month on month
• Easier analysis of his major spends through a month as and when needed
• Access all the reports at his convenience at a place and time of his choice

Cloud Accessibility

Shared and accessed in real-time: This can help in easily accessing all the documents, reports easily from anywhere without any challenges. With the advancement in technology, even storage capabilities are not a concern today for faster retrieval of any data.

Can accounting automation replace professionals?

The simple answer to this is no. AI and automation cannot replace professionals completely. Professionals can use AI to help streamline a huge part of their daily tasks but AI cannot replace them completely in the near future. Read more on this thought here