Automated bookkeeping is the process of keeping track of financial transactions with the help of computerized accounting systems that use robotic process automation (RPA), machine learning (ML), or artificial intelligence (AI). In other words, automated bookkeeping imitates the human data entry process with the help of technology tools.
Businesses that use automated bookkeeping tools are able to minimize manual errors and reduce the time spent on data entry.
Some well-known automated bookkeeping solutions include NetSuite, Freshbooks, and Zoho Books.
If your company uses traditional bookkeeping methods such as manual data entry and spreadsheets to record financial transactions, then you might be facing some of the challenges discussed below:
There are several advantages of using automated bookkeeping. We discuss some of them in this section.
Manual bookkeeping methods are error-prone, often leading to the need for rework and multiple rounds of reviews. Automated bookkeeping, on the other hand, keeps track of the business’s transactional data and analyzes them, on-demand, to create several reports and financial statements like balance sheets, cash flow statements, and income statements.
Let’s take a look at the top 4 use cases of automated bookkeeping:
Automated bookkeeping solutions use RPA to leverage user experience while performing tasks without any human intervention. Bookkeeping solutions can also integrate with the ERP systems to help enter the right data at the right place.
Automated bookkeeping solutions have the ability to create custom commands on accounts payable software. So, whenever an invoice is generated, the accounting software marks the invoice as ‘utility’, and the invoice amount is marked as ‘expense.’ After the verification is completed, the accounts payable department tags them as ‘approved.’
Automated bookkeeping software automatically extracts the date of invoice generation and every customer data record. On the date of maturity, the customers will receive a notification from the payment gateway, reminding them to pay before the deadline.
Automated bookkeeping solutions can help the HR and finance teams track every employee’s working hours and calculate the pay accurately. They also integrate with leave and tax management solutions that monitor the leave days of employees and tax rates applicable for the different countries/states.
Automated bookkeeping is a small part of finance automation as a whole. Bookkeeping is one of the easiest finance & accounting processes to automate, giving a high return on investments (ROI) within a short period.
It’s the stepping stone to move forward in the future because it will replace the traditional methods of accounting, thus making finance teams more efficient. This advancement in technology can eliminate repetitive accounting tasks, allowing bookkeepers to focus more on strategic activities such as forecasting and analysis.
HighRadius’ Autonomous Accounting solution for record-to-report function supports automated financial close and account reconciliation. It identifies and resolves variances from general ledger accounts and ensures data accuracy and faster closing. Know more about our solutions here.
Answer: You can automate your incoming transactions by linking your payment processor accounts to the accounting application. This creates a built-in integration that helps in tracking the income automatically.
Answer: One of the major drawbacks of automated bookkeeping is the high level of maintenance required. While the data can be pulled very easily, there is a high chance that it will be miscategorized without proper notes.
Answer: It is important to keep track of your business’s expenses as it helps in maintaining healthy cash flow, along with tracking tax deductions, budget overruns, and key cost centers.
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