Been there, done that? In this article, we’ll help you take your first step into the brave new world of accounting automation. Our starting point is automated bookkeeping: by automating this time-consuming process, you’ll see a substantial productivity boost and get an almost immediate return on your investment.
So whether you’re an accounting professional or directing a busy firm, read on to find out how you can innovate your practice and win back time for more creative and value-added tasks.
What is automated bookkeeping?
You already know bookkeeping as the entry point of your accounting cycle, when you record and organize your financial data.
Done manually, bookkeeping involves repetitive and tedious tasks such as data collection, sorting, scanning, registering, categorizing, and storing. With automated bookkeeping, you delegate part or all of the process to a computer with dedicated software.
It’s best to choose the scope of bookkeeping automation depending on your client’s transaction volumes. If you’re doing accounts for small or medium-sized companies with low levels of transactions, you could already benefit from replacing Excel with basic accounting software.
This software can significantly boost your productivity just by triggering specific actions based on your input. For example, when you approve an invoice, an accounting app can automatically generate a journal entry. Just imagine an Excel spreadsheet being able to do that!
When it comes to higher transaction volumes and accounting for big clients, accounting software can help you leverage machine learning and AI. These technologies are able to replace human input and automate operations from A to Z. Getting back to our invoice example, ML-powered software could already pre-approve invoices, based on your past decisions.
A final automation option that’s largely used by enterprise companies is robotic process automation (RPA). Many big companies have a complex IT ecosystem in place, which makes it hard to handle all the moving parts and automate end-to-end processes. RPA fills in the gaps and automates repetitive tasks with software bots that interact with IT systems on your behalf.
Common tasks suitable for software bots include directing invoices to an accountant who approves them, setting up reminders to pay, and matching purchase orders to invoices and flagging mismatches.
Which bookkeeping tasks can you automate?
Although automated bookkeeping is already a must-have for many accounting apps, it’s still not being used to its fullest. Based on our conversations with accounting professionals in Singapore and Hong Kong, two popular use cases for bookkeeping automation are
- Automating data feeds from banking or point of sale systems
- Automating document recognition and data entry
What can accounting software do for you? There are many tasks where automation can be a true game-changer. Let’s take a look at them.
Accounting apps powered by machine learning can assign regular transactions to the appropriate accounts. Once you’ve categorized a transaction several times manually, the algorithm learns where to place it and completes the process automatically. This is especially useful for a high volume of transactions, as the process saves a lot of time compared to manual entry.
Managing data feeds from banks and POS
Accounting apps can also help you allocate transactions from data feeds into the appropriate accounts. As a result, your cash reports stay accurate and up to date. All you need to do is make sure that your accounting system integrates with the necessary banking or POS system. If it doesn’t, third-party integration apps like Zapier or Amaka can help you out.
If you’re doing payroll, you’ll know how demanding it is, with many hours spent calculating and checking the various totals. One error can cost a fortune, as it not only affects an employee but could jeopardize your compliance or put you at risk before the tax authorities.
Fortunately, you can automate nearly all parts of the payroll process, including logging employee hours and recording payments, taxes, and payslips. And the gains are substantial: the American Payroll Association (APA) suggests that payroll automation can reduce processing costs by as much as 80%!
Receipt and invoice processing
With the right accounting software, automating credit card receipt and employee expense processing is also a no-brainer.
All you have to do is snap or scan a receipt and upload it to your app. The system then reads and processes the image, retrieves the data, and generates all the necessary entries automatically. Some systems also have a mobile app that you can use to scan and upload images.
💡The technology behind document recognition is called Optical Character Recognition (OCR). OCR converts handwritten or digital text into pieces of data that can be processed by a computer. In other words, it can extract data from a scanned document or image and convert it into computer-readable text for further processing. For example, OCR can retrieve and present line items from purchase orders, invoices, and receipts for a quick three-way match.
You can automate your accounts payable even further by using RPA: imagine a bot that can detect invoices sent as email attachments and direct them to your accounting software to be read, processed, and categorized. It could do the same for purchase orders and other supporting documentation.
The top benefits of automated bookkeeping for accounting professionals and firms
Bookkeeping automation comes with a host of advantages in terms of productivity, client and employee experience, and compliance. Here are the main ones:
1: An enhanced customer and accountant experience
Employer and customer experience are like the yin and yang of a profitable bottom line: closely intertwined, they form the backbone of all your services.
Still, it’s no fun having to handle an uneven workload with long hours at the end of each month, not to mention the dreaded tax season. According to the Journal of Accountancy, two-thirds of professional employees sometimes feel burned out.
Automated bookkeeping provides a solution, as it frees you up from such tedious and discouraging operations as data entry and processing. Empowered by more value-added and creative tasks, you or your accountants are less likely to burn out or leave. This converts into higher levels of service and happier customers.
Data transparency and availability are two more advantages that can boost your level of service. With automated bookkeeping, your data will always be accurate and up to date, so you can process and share it with your client whenever and wherever they want it.
2: Higher productivity and revenue with lower costs
It should be clear by now that bookkeeping automation reduces your operational costs by cutting the number of employee hours spent on low value-added tasks. But that’s not all: when you’re more productive, you achieve more in less time and regain focus for more important things. For an accounting practice, this could mean:
- Being able to handle more clients and increase revenue per accountant
- Being able to relocate employees to more profitable services like advisory, which will also increase revenue per employee
- Being able to provide more services to current clients and increase your average check
- Being able to focus on looking for new clients instead of operational fire-fighting
3: Better data security and compliance
“Excel is completely unreliable.”
That’s what we constantly hear from accountants, and we couldn’t agree more. Fortunately, with automated bookkeeping and dedicated software in place, you can be sure that your client data is safe and secure whatever the storm. Even better, cloud apps store data in the cloud, so it will never be damaged by a power shortage or malware.
👉 Read more about the perks of cloud accounting against desktop solutions in our recent blog post.
Steps to bookkeeping automation for accounting professionals and firms
Once in place, accounting software can bring you a wide range of productivity benefits. Here are the main steps you’ll need to take to get there.
If you choose a desktop app, it will need to be installed, maintained, and updated. You can simplify this step by choosing a cloud app that’s taken care of by the provider, so technically, all you need is a machine with internet access.
If you have your data in Excel, congratulations, as most accounting software can parse an .xls file without much trouble. You’ll still need to deal with glitches though, which is why some software vendors, including Eleven, provide white-glove migration and onboarding services to support you.
If you go for software with machine learning and AI, it will need your significant input in the beginning, as the algorithm needs to learn from your repetitive tasks and decisions.
Remember too that there will always be cases of ambiguity when you’ll have to get involved. For instance, an aging debtor listing may require certain levels of detail that the system can’t produce alone. You’ll need to adjust the report to the level of detail that is required.
Bear in mind that your clients might not be ready to digitize their processes alongside you. For instance, they may not be willing to scan or photograph their documents at the beginning. Be ready to explain the benefits they’ll get from automation and help them adapt.
Most cloud apps, including popular vendors like Xero and Quickbooks, are designed for SMEs and have a pay-per-entity pricing model. This makes adoption quite pricey, not to mention that you’ll usually have to keep track of several subscriptions. Alternatively, you could opt for Eleven accounting software and remain free to account all you want: we have a flat per-accountant price without transaction limits or paywalled features.
Automated bookkeeping is here to stay, and running your practice on Excel sheets means you’re missing out on a host of advantages. Done properly, bookkeeping automation doesn’t just reduce your costs and raise productivity: it also drives your financial success through an improved customer and accountant experience.
Still, it pays to choose an accounting app wisely. With Eleven, you can account without limits and without paying a fortune on subscriptions.
Book a demo today to see Eleven in action!