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A Guide to Automated Accounting: Benefits and Tips

What you’ll learn


  • Accounting automation is the future, and adopting it is the only way to stay competitive
  • Automating accounting practices will help reduce costs, increase efficiency, and improve data protection
  • Finding the right accounting automation software that meets your business needs is vital

Finance operations have much in common across industries and geographies. Maintaining accounting books, creating financial reports, and collecting accounts receivables are often the key tasks of finance and accounting (F&A) teams. The use of software to accomplish traditional accounting tasks has brought better efficiency, accuracy, and compliance to these processes over the years. Those organizations that lag in adopting automation solutions for their F&A processes will see reduced productivity and lower efficiencies. This article will look at the benefits of automated accounting systems and discuss which processes within F&A can be easily transformed.

What is automated accounting?

Automated accounting involves the use of software to automate important finance operations. Accounting operations like accounts reconciliation, updating financial data, and preparing financial statements can be completed without human interaction using accounting software.

Although computerized accounting is not new, emerging technologies such as artificial intelligence (AI) and robotic process automation (RPA)  have vastly expanded the capability of these systems in recent years. Accounting software may accomplish everything from tracking and recording data by using AI. AI helps you eliminate repetitive tasks like data entry and calculations so that analysts can focus on more important things.

Automation solutions help reimagine the entire accounting operations. Modern solutions require minimal human intervention and complete tasks without errors. It lets your team members spend time on more strategic tasks such as budgeting or investment planning.

Want to know what autonomous finance is? Read our blog –  What is Autonomous Finance and Why you need to Get Ready for It

Benefits of automated accounting

Benefits of automated accounting

1. Faster turnaround

Automated accounting solutions help save your accountant’s time and efforts. Your accounting team can now give results quicker and with more accuracy. This opens up the possibility of taking on more clients and expanding your market presence.

2. Data accuracy

Even the most cautious and thorough professionals may miss minor details or enter wrong data occasionally. The error might be as unobvious as misplacing a number or forgetting a decimal.

Data accuracy is critical to financing operations and maintaining a good reputation with clients. Automated accounting helps reduce the possibility of errors and ensures better accuracy.

3. Cost reduction

Accounting automation software helps automate mundane clerical tasks, thus helping you save on costs. Automation can process more records in less time and at a lower cost. You do not require to invest in a large accounting team to complete transactions when using accounting software.

4. Comprehensive analysis

Accountants and AR analysts need relevant and accurate data to track trends, identify fraud, and calculate various metrics that indicate a business’s financial strength.

Data collection and compilation can be made easier with automation. Self-service analytics features in automated accounting solutions allow even non-IT staff to create reports and visualize data easily.

5. Better security

Traditional accounting systems involve a lot of paperwork–large ledger books, journal entry records, and other accounts management papers. The chances of losing some of these papers are high. And since they are not backed up or duplicated, there’s a very slim chance of recovering your work, leading to inefficiencies. Automated accounting systems can help keep your accountants’ desks clean while ensuring that data is organized and stored securely on the cloud or on on-premises data centers.

6. Faster data retrieval

Some of you may recall the pre-digital days when rows of cabinets stored hundreds of paper-based files and books. To get a document or review a file, you had to scout through bundles of records. This is a tedious way to search for information.

With automation solutions, locating and retrieving data is easy. You can search with the file name, owner name, or other meta tags to locate the document. Archiving data is also easier and less expensive with automated accounting systems.

What are the risks associated with automated accounting?

1. Complex software interface

Certain accounting software can be too sophisticated or expensive for some firms. These bulky apps might be tricky to understand and navigate. However, automated accounting solutions allow you to choose from various tiered plans based on your demands.

2. Slow training period

When you transition to automated accounting, you’ll probably need to train everyone on how to use the software. Unfortunately, training time may differ from person to person, causing the solution to be implemented slowly.

3. Technical issues

IT Support: Your operating systems, internet connection, or glitch in software can result in technical troubles. Although the software is made in such ways that the system itself can address any such technical issues—there is still some need for IT support required to resolve the issues.

System Downtime: Sometimes software servers may go down due to some technical issues, hindering database accessibility. System downtime causes hindrance in operations and makes work more hectic in such situations.

4. Data migration and integration complexities

The accounting software sometimes may not be able to read your database correctly or may skip out on some parts causing discrepancies in the newly migrated database. It also is possible that it doesn’t integrate with your ERP or CRM to share data.

5. Regulatory compliance issues

If in case of an error in your accounting software, it may produce a less accurate regulatory report which may lead to legal violations, risking fines, and sanctions

6 accounting tasks to automate immediately

6 accounting tasks that you need to automate immediately

1. Payroll

One of the key functions of finance teams is to manage payrolls and payouts. It requires great attention to detail. Payroll analysts spend hours going through employee tax records and rates to create accurate reports. Automating the payroll function can save your team much time and effort. It also ensures the accuracy of payroll reports, leading to reduced disputes and higher employee satisfaction.

Whether dealing with fixed-pay employees or hourly freelancers, automation solutions help directly deposit funds into employees’ bank accounts, calculate pay, sync with time-tracking software, handle payroll taxes, and generate filings automatically.

2. Purchase management

When companies purchase goods or services, they usually have to deal with a lot of paperwork, from purchase orders to contracts. Purchase order automation ensures that nothing is misplaced and that all needed paperwork is filled out correctly.

Accounting automation software offers purchase management features that help successfully automate repetitive, low-value processes such as purchase order creation, payment processing, etc. You can shorten the procure-to-pay cycle, save personnel expenses, and eliminate errors by automating your purchasing process.

3. Finance management

Tax season, like monthly financial close, is a particularly stressful and labor-intensive period for businesses.

90% of people feel pressured to complete their finances as soon as possible

Tasks pile up quickly as everyone races to collect the open accounts. The following are some of the common challenges encountered during this period:

  • Error detection, verification, and correction
  • Maintaining compliance with tax deductions
  • Retrieving missing invoices and receipts lost during the transfer of data from one system to another
  • Identifying anonymous payments

You can automate these processes using native functionality in your program or automation platforms.

4. Expense management

Collecting expense receipts from co-workers is often as difficult as tracking delinquent customers for payments. Some of them may have lost their receipts while others might have incomplete ones. Automation software makes it easier to collect, transfer, and monitor expenses. Corporate credit cards can also be added to the expense tracking software to capture expenses and receipts automatically. Employees can scan their receipts and upload them on the portal. The program then extracts the information and sends it to your accounting software, making it easier for your finance team to close the accounts easily.

85% of people forge expense reports to get more refunds

5. Accounts payable(AP) and accounts receivable(AR)

Accounts payable and accounts receivable significantly affect your company’s cash flow. They are both an integral component of your cash flow statement.

Mismanaged AP results in high costs for the business and a bad reputation with vendors. Companies that fail to manage their AR, on the other hand, run the danger of not getting paid on time, leading to working capital challenges.

To optimize accounts receivables, you should track pending payments, remind customers to pay on time, and identify high-risk customers as a top collections priority. An accounts receivable software can automate these and other steps involved in your AR operations and significantly decrease the load on your finance team.

Here’re some steps within your AP and AR processes that software helps automate.

Account Payable Accounts Receivable
Extracting data from invoices Automatically sending out the invoice
Forwarding information to relevant clients for review Sending payment reminders to clients
Processing payments Collecting payments
Check out this blog to learn more about Benefits of Automating Your Accounts Receivables.

87% of businesses have automated their AR

6. Cash visibility and forecasting

Accounting professionals hold the keys to crucial company information and help shape the business’ strategic decisions. As a result, their ability to collect and present data to the leadership teams is vital. Cash visibility is another important factor that businesses need to take into account when making strategic investment decisions.

F&A teams should use modern accounting software solutions to forecast cash flows, generate trend reports quickly, and track key metrics such as aging accounts, sales forecasts, and expenses. Software solutions can compile data from multiple sources quickly, thus helping you prepare well-rounded reports.

The transition from traditional to automated accounting software

Switching from manual to automated accounting is inevitable as businesses go digital. Here’re a few tips to help you successfully implement automated accounting software solutions.

  1. Look for the best accounting automation software that fits your business needs and is within your budget. Use our software evaluation template to decide which accounts receivable software to invest in.
  2. Choose accounting software that provides you with customized invoice templates, and integrates well with your ERPs, banks, and so on.
  3. Provide your team with proper training and the necessary time to get familiar with the software.
  4. Schedule a transition period and notify all staff members affected by the change—most notably the CFO, your accountant, and the finance department.

Lay the proper IT architecture and cultural foundation within your organization to enable all employees to transition to automated accounting practices and workflows. Rectify any glitches in the new system with the help of your IT partner or service provider.

You’ll be able to see a marked improvement in your accounting process efficiency and a high ROI once you implement modern accounting systems.

How can HighRadius help?

HighRadius’ AR automation software is a good choice if you are looking to automate your accounts receivable operations.

Our automation software includes a set of AI-powered solutions designed to support AR processing for mid-sized companies across industries. Automate and fast-track key accounts receivable functions with pre-loaded industry best practices and ready-to-use templates.

FAQs

1. What is the approach of an automated accounting system?

Automation software is responsible for automatically completing tasks such as bookkeeping and accounting. The software automatically identifies discrepancies in data and decreases the amount of data that has to be entered manually by identifying entries from invoices, forms, and bank statements using AI.

2. Can accounting be fully automated?

Automation helps teams focus on more important tasks by eliminating mundane processes such as data entry bookkeeping. However, there is always a need for the human touch to drive actions based on insights generated.

3. How is AI used in accounting?

Modern automation software solutions are AI-enabled. What that essentially does is that it processes documents such as payslips, invoices, and bank statements automatically. AI also helps provide quicker and easier information on financials such as trial balance, income statements, profit & loss statements, and so on. Here are 3 Use Cases of AI in Finance for Mid-Market Companies

4. What is the impact of automation in accounting?

Automation software helps you save time, avoid costly errors, and keep all important documents at your fingertips. It also enables better cash flow management and cash visibility, better month-end closure efficiency, and helps increase data accuracy.

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The HighRadius RadiusOne AR Suite is a complete accounts receivable’s solution designed for mid-sized businesses to put their order-to-cash on auto-pilot with AI-powered solutions. It leverages automation to fast-track key accounts receivable functions including eInvoicing & Collections, Cash Reconciliation, and Credit Risk Management powered by RadiusOne AR Apps to improve productivity, maximize working capital, and enable faster cash conversion. Affordable, quick to deploy, and functionality-rich: it is pre-loaded with industry-specific best-practices and ready-to-plug with popular ERPs such as NetSuite and Sage Intacct. The HighRadius RadiusOne AR Suite is designed to automate labor-intensive processes while streamlining credit and collections activities for faster AR processing, better cash flow and improved profitability.

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