If you’re overseeing a finance team or handling accounting for various clients, you would know how manual tasks eat into your team’s bandwidth. On average, people spend 51% of their workday on low-value tasks. However, it doesn’t have to be that way. There’s a lot of room for improvement through accounting automation.
Large accounting firms and professionals have already caught on. At least 94% of large and 90% of small firms are turning to technology to achieve better tax filings. What’s more, over 60% of large firms said technology was boosting their staff’s engagement and morale, which are two factors necessary for retention. That means accounting automation can offer benefits beyond eliminating manual work.
Here’s everything you need to know about it.
Accounting automation is the process of using software to automate and streamline routine tasks in the accounting process. These tasks include data entry, reconciliation, invoice processing, and report generation.
Automating accounting uses machine learning (ML), artificial intelligence (AI), and robotic process automation (RPA) to automate recurring, low-value tasks like data entry while improving the efficiency of more complex tasks in the accounting process, such as payment reconciliation and financial reporting.
This frees up your team’s bandwidth, so they can focus more on mining data insights to fuel business growth.
But what if you don’t use automation in accounting and finance?
Well, you remain stuck with the manual, tedious ways of doing business. The manual way is not only time-consuming and prone to human errors, but it also wedges a gap in the speed and efficiency of the accounting process and reporting.
It carries with it a high risk of non-compliance, data security compromises, and process inefficiencies. All of this can prove more expensive over time than automation.
You can automate specific parts of the accounting process. For example, if you’re in the ecommerce space, a tried-and-tested accounting automation software can help you automate and streamline invoicing, forecast inventory-level fluctuations, calculate fees (e.g., shipping, merchant fees, etc.) on every sale, report tax information, and other related tasks.
Let’s look at some of the key accounting tasks you can automate.
You don’t have to chip away hours typing rows and rows of data from one spreadsheet to another. Accounting involves tracking bank statements, invoices, expense reports, credit, and receipts, but you don’t have to do it manually. You can automate this data entry process to eliminate manual labor, lower calculation errors, and save time for accountants to take on more value-driving tasks.
Automation in accounting allows you to pull and record financial data from multiple sources with precision. Unlike manual bookkeeping, the information is gathered and stored in real-time, ensuring the books are always updated and current.
This also simplifies information retrieval, reconciliation, and tax compliance during the closing season.
Using accounting automation software, you can automate accounts payable (AP) and accounts receivable (AR). This involves generating and processing accurate invoices to avoid overheads and eliminate the risk of fraudulent invoices slipping through.
It also prevents unwanted delays in collecting and initiating supplier payments, helping you maintain a credible business reputation.
Accounting automation tools allow you to track and verify employee expenses against company policies. They can also streamline the expense management process, simplifying receipt uploads, matching receipts to bank statements, getting approvals, and bookkeeping expenses, that too, in a fraction of the time it takes in a manual setup.
Automated financial forecasting and reporting bring data, analytics, and insights to your fingertips. You can access deeper operational insights in real time and generate reports on the go with minimal human intervention. These tools also provide a snapshot of your financial health, highlighting the company’s profitability and cash flow needs.
As a result, you can make speedy and well-informed business decisions based on concrete proof instead of guesswork.
The following benefits will prove convincing if you’re still on the fence about accounting automation.
With accounting automation, you can accurately capture and pull financial records from multiple channels and resources, keeping your books up to the minute.
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Epic Mens, an online menswear retailer, for instance, chose financial accounting automation after noticing a mismatch between accounting and inventory data, which was hampering the growth in order volume. Using Webgility, they increased order volume by 42%, as sales records could effortlessly sync with inventory data. |
Like Epic Mens, if you’re operating a multichannel business, accounting automation can help fill the gaps caused by human delays and errors. A manual workflow is manageable for small businesses handling a few hundred transactions. However, as businesses scale and grow, manually entering and verifying thousands of transactions across multiple locations and channels becomes impractical.
This is where accounting automation shines through, providing the advantages of speed, security, and accuracy in data management.
Manual bookkeeping is not only tedious but also costly. One study, for example, showed that small business owners spend 10-15 hours on bookkeeping per month. Given these long hours employees spend processing and storing the financial data into accounting systems, the billable hours tend to pile up, adding to the overall cost.
In contrast, accounting automation does the same job in minutes and more precisely. When the staff spends less time on bookkeeping (or related tasks), there are fewer billable hours, which leads to higher cost savings in the long run.
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For example, Skinny Mixes, a manufacturer of specialty beverages, items, and gifts, used Webgility to connect its Shopify store to QuickBooks and automate bookkeeping. This saved the company significant hours, which it then spent testing marketing campaigns and doubling its online revenue. |
If you’re curious, try Webgility’s ROI calculator to understand how much you can save with accounting and bookkeeping automation.
Manual accounting methods involve a higher risk of human errors, such as filing incorrect information or making a calculation error. These are closely followed by the risks of data security threats, duplicate financial information, record mismatch, delayed invoice processing, and inefficient operations—all of which result in a significant loss of time and resources.
Accounting automation, on the other hand, eliminates the need for manual work. It uses ML and AI to store financial data securely and improve the accuracy and efficiency of tasks like bookkeeping, expense management, and financial reporting that are prone to manmade errors.
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Product Bahn, an emergency food and gear company, found itself struggling with manual data entry while operating seven different shopping carts online. A sudden spike in orders would throw their small team into hours and hours of chaos. After using Webgility to automate data entry from their stores to QuickBooks, not only did it reduce order loading time (from 1–2 hours to 2–3 minutes), it also eliminated errors that were common when manually entering the order information. |
By automating data entry in this way, you can replace low-value workload with more cognitively challenging work. It can also speed up the error detection and review process, ensuring the accounting system functions like a well-oiled machine.
Payment reconciliation is a crucial step in the accounting cycle. It compares and verifies accounting records against bank statements. However, mistakes are bound to happen when data is manually sorted and validated.
This is where automation helps to optimize and improve the reconciliation process. From comparing two sets of data to validating records, accounting automation can ensure the data is accurate and consistent with the bank statements.
Your team no longer has to spend hours combing through large datasets, as these tools can take on the task with precision and speed.
Traditionally, a lot of time gets wasted when reconciled payments are reviewed manually and often by multiple people. This only adds to the busy work.
Besides, when your financial records are accurately and speedily reconciled, your financial reports are also generated well in time. This keeps you prepared for auditing and streamlines the month-end closing process.
Handling tax compliance is nothing short of a nightmare. You need to follow different tax laws and regulations for different states and jurisdictions to compile and file the returns properly. This naturally creates a space where the chances of errors are far too many.
From miscalculating tax rates to missing deadlines due to a lack of timely validated records, there are multiple ways one can mess up.
Accounting automation streamlines the reporting and filing of taxes by ensuring your data is synced and validated in real-time. Like with Webgility, you can automatically keep your books current and record sales tax by adding it as a line item in QuickBooks.
This paves the way for effective sales tax compliance, which can help you:
While accounting automation is rife with benefits, it’s not without challenges. Here are a couple to consider.
Fortunately, with the right accounting automation software, such challenges are easily dusted off.
If you’re in the ecommerce business and considering automation of the accounting process, then Webgility’s accounting automation tools will prove beneficial in more ways than one. Here’s what you can expect.
Impact created by Webgility’s accounting automation software:
About 70% of customers who rely on Webgility to automate accounting save up to 10 hours wasted on manual tasks per week. It can eliminate manual entry, reconcile books, and generate reports in a few minutes. Here’s how.
Webgility also integrates with over 50 business apps and tools, including Amazon, Quickbooks, Shopify, Clover POS, and more. As a result, you can build and automate workflows systematically without compromising data accuracy or consistency.
It also comes equipped with AI assistance. While still in the beta stage, its ability to spot trends and guide decisions is something to look forward to. Here’s a little sneak peek.
Get started for free with Webgility and start enjoying the fruits of automation.