Accounting Automation Definition

Does your bookkeeping and accounting practice spend more time focusing on data entry tasks than you would like? There is a way to get around this, namely by automating accounting.

The research shows that nearly two-thirds of accountants plan to automate tasks in the next three years, primarily to address the challenges of time-consuming manual data entry.

Time-consuming repetitive tasks such as data entry and numbers are by far the most reasonable options for automation, and surveys have shown that they are the most likely to be automated.

Accounting practices spend, on average, three times as much during tax season on manual data entry as compared to automated accounting. Automation of routine tasks is a very efficient thing in accounting, and will be the newest way of managing financial data in the future.

Read this article to learn more about accounting automation and how you can use it in calculating your business finances:

What is accounting automation?

Let’s take a moment to know what accounting automation is. Automation in accounting and bookkeeping means two things:

1. Automation of data entry to generate financial reports
2. Automatic account reconciliation.

Data entry is a very possible area for automation. The use of approaches related to machine learning such as optical character recognition (OCR) for example can greatly improve the speed and accuracy of data entry.

For smaller practices, it can be helpful to migrate to cloud accounting technology that provides access to consolidated data in a secure environment and can support business improvements more easily.

Why should you do accounting automation?

Whether it’s doodling transactions in a paper ledger or entering data into accounting software, most accountants know how long it takes for data entry. They also know which way is best, manual bookkeeping is very prone to errors.

Mistakes aren’t just annoying. Sometimes mistakes can be very detrimental and of course mistakes will have a direct impact on decreasing client satisfaction. If there’s one thing clients expect from an accountant, it’s 100% accuracy. Don’t forget about tax digitization, which makes it easier for taxpayers to calculate and report taxes.

Moving to automation is not an option, but a must. Manual input and reconciliation is a very time-consuming and error-prone thing. But more than that, entering data is a trivial and repetitive task that requires very little skill but can cost even the most trained staff members in practice – especially in small, resource-constrained companies.

Automation allows accountants to transition to the skills value curve. For example, you will have more time to understand the business and opportunities for improvement in your clients or to focus on standard interpretations for special or complex situations.

At this point, the lack of automation costs you profits.

Simply put, you’re wasting the potential of getting a higher hourly fee for more complex work. Similarly, a lack of automation can hinder a growth plan in practice because you are prevented from taking on new, different types of work for clients.

The lack of automation can even lead to disappointment from staff who hate repetitive work. Millennials are tech-savvy enough to understand that automation technology can be applied to repetitive tasks.

Benefits of accounting automation

1. Efficiency

As with all technological changes, the cost savings that typically drive the use of automation are measured in terms of the efficiency of time spent by finance staff. Automation has been described as being like recruiting new staff members, but one that doesn’t require vacations or desk time.

You will feel the savings of days and even weeks

2. Increased Productivity

Nobody enjoys doing repetitive manual entries and reconciliations, it’s a tedious job. If staff are freed to use their skills and experience in more diverse situations, they will be more productive in their roles.

3. Work Anywhere and Anytime

Automation can make your employees work outside office hours. Many software that has accounting automation features also have cloud computing features. This means that as long as your device is connected to the internet, you can easily monitor your business finances, and your employees can do their job anywhere and anytime.

4. Growth for Your Business and You

Perhaps the biggest major benefit of automation is that it frees you up. With a lot of repetitive work summarized and optimized, you can expand your roles and practices to become a business owner who can do other, more crucial things in the business.

Automating Bookkeeping in Business

It’s natural for you to lack confidence when introducing new technology and have concerns about changing existing work processes.

But this technology is usually complements the existing one, making it very simple. You will likely find a data entry automation solution in the accounting software of your choice.

Here are some tips to get started with automation.

1. Start small:

A good tip is to try accounting software on your personal bookkeeping, to get an idea of ​​the capacity and what you can apply to your business in the future. Don’t forget to try the mobile app too, if you have one, to get an idea of ​​how the software integrates and works in tandem with your accounting solution.

2. Make a plan:

As mentioned, stage one may be using accounting software that has automation features in your personal account. Stage two might be to introduce it to your own business account and test it in a wider context. The third stage might then be to launch it and introduce it to the client.

3. Structure your plan:

Remember that a successful rollout plan has two components: an owner acting in charge, and setting targets against which progress can be measured and which acts as a trigger for other phases of the plan.

How do you know when it’s time to offer automation to a client, for example? Well, one suggestion that might be useful is that you should have some time to introduce the automation used in your business practices without causing confusion among the staff.

4. Take advantage of support:

The vendor behind the automation solution will have a support staff ready to answer questions about how to integrate the software in an existing solution, but also how to best introduce it to your employee’s overtime. There are a lot of experiences out there, so make sure you take advantage of them.

5. Set expectations and be prepared:

These technologies generally only succeed when they are well integrated with people skills, organizational processes and alignment with the business model. There’s no point in automating data entry if you haven’t thought about the time and cost of training your employees. So, of course, you have to pay for the accounting automation steps you take.

Conclusion about automatic data entry
Data entry in accounting was a 19th-century task that in many practices was handled in a 20th century way. However, we are now in the 21st century. Technology leaps forward and solutions previously thought of as science fiction are available here and now.