Automated accounting: chances are you've heard this term before, otherwise you wouldn't have ended up here. Maybe you've already had some experience with it, maybe you're just wondering how you can use it and benefit from it. Automated accounting refers to processes that are necessary for accounting, but which are taken over by automated systems instead of humans. However, the term is also somewhat misleading, because accounting automation can also be the partial integration of individual tasks.
Let's put this in perspective:
Some of the basic tasks of accountants include:
Organise and update accounting records as required
Prepare and analyse reports on transactions
Forecasting revenue and analysing profit margins
Monitor the general ledger reconciliation and general ledger
Managing accounts payable and accounts receivable
Regular monitoring of accounting activities
But, how many of these tasks actually require human input?
Which ones are more prone to errors, although they should be error-free?
How many could be done through automation?
What about the myriad subtasks that occur in each of these main areas of work?
Automated accounting basically streamlines the work in accounting. This allows your employees to focus on valuable activities instead of manual routine tasks. In this post, we will show you how automated accounting can help you in your day-to-day business.
Automating bookkeeping has many advantages for accountants and business owners. Here are the most important ones:
1. error-free processes
Even the most thorough, meticulous professional can miss a detail. A wrong amount or a missing decimal place can happen even to the best of us. The likelihood of such small errors increases especially when important data is copied from A to B and C and the correct ones have to be picked out from a multitude of invoices and documents. This is exactly where automated accounting helps: correct data across all processes, departments and applications is essential. Even more important for a process as exact as accounting. Automation can deliver that.
2. faster turnaround
Among the most obvious benefits of automation, time saving is at the top of the list: the less time you have to spend on accounting thanks to automation, the more time you have elsewhere: strategy development, business development, long-term planning.
3. more overview
Instead of searching for documents in a messy folder or database, receipts, invoices and proofs can be automatically stored in a structured way. So you never have to dig through piles of digital paper again.
4. comprehensive analytics
Reporting and evaluations are enormously important. A strategic role for accounting can bring decisive advantages for long-term (financial) planning. However, the preparation and quality of data and reports is crucial for this.
Automation helps avoid the hassle of collecting and collating data. By connecting the right apps, you can automatically package KPIs and numbers into reports, charts and dashboards.
How to get started with automated accounting
Depending on various factors, such as the software you currently use, your business processes, your requirements and, of course, your budget, there are two paths that lead to automated accounting.
1. integrated automation functions in your accounting software
Automation is a term that is also used by many accounting software providers. This is because most of these applications have some built-in automation features.
Applications such as lexoffice, Fastbill or sevDesk offer functions that integrate your online banking with automatic payment reconciliation and thus automate parts of your accounting. Much of this is very practical, but it also quickly reaches its limits, especially when more complex workflows are to be automated.
2. comprehensive automation platforms
Automation platforms like Make or Zapier make it possible to connect hundreds and thousands of different applications, offering more flexibility and scale. This means that processes are adapted to your needs, not the other way around. In concrete terms, this means that your accounting software is connected to other applications, such as emails, CRM, cloud storage or ERP, and data is transferred automatically.
Accounting not only has multiple tasks, but also many responsibilities that can sometimes be overwhelming. To stay on top of things, automation can help with some of them, empowering you to take on a more strategic role.
Here are a few examples of tasks that can be automated.
Accounts receivable and accounts payable
In essence, accounts receivable and accounts payable are about:
Follow-up of outstanding payments
Keep the relevant stakeholders up to date
Reminding everyone to pay on time
These tasks are perfect for automation because they are based on clear conditions and do not require much interpretation or human input.
Examples of automation include:
Extract data from invoices
Storing this data in a database or spreadsheet
Forwarding information to relevant stakeholders for approval
Automatic sending of the first invoice
Sending payment reminders to customers
Deposit the money directly into your bank account
Chasing employees and colleagues to collect receipts is not much fun. There are expense management tools, such as Expensify, that make it easier to collect, share and manage expenses. In it, team members can simply take a photo of their receipt. The tool then extracts the data and forwards it to your accounting software.
Accounting, taxes and monthly financial statements
There are several challenges in correctly posting receipts:
Identifying and correcting errors
Transferring data from one app to another
Find missing invoices and receipts
Removing duplicate documents and items
Identification of unknown payments
There are often already native functions in your accounting software that support you in this. However, these can be extended by automated accounting: Relevant receipts can be automatically filed in the correct folder from your email inbox and transferred from there to the accounting software.
Reporting and cash flow forecasts
The secondary goal of accounting is to provide insights to drive strategic business decisions. To do this, it is hugely important to collect, process and present data. Financial information should be available clearly and concisely, but this can be very time-consuming. Aggregating large amounts of data into reports requires time, a resource that most accounting teams can ill afford to spare.
However, the necessary data is usually already available: In the accounting software. They only need to be retrieved and structured. This is exactly what can be done by connecting different applications. For example, relevant KPIs can be automatically posted on a dashboard.
Modern accounting software also offers reporting functions to forecast trends and challenges and even results.
The transition to automated accounting can be seen as the next step after digitalisation, similar to the transition from paper to Excel. The manual, repetitive steps of accounting can thus be automated and enable accounting to take on a more strategic role: Expert:ers are needed to analyse, interpret and gain insights from data to make better business decisions. This is exactly what automated accounting promotes.
So why not use existing technology to make the work easier and more effective?
Cloud Integration, iPaaS, SaaS, BPA… Ough, hard to keep track of all these terms. They are currently used frequently (and increasingly) in the context of automation, and it is sometimes difficult to make a clear distinction and distinction. We have already written blog posts on the terms iPaaS, SaaS and BPA, but we’ll take them up again here to make the difference.
But let’s start with cloud integration, because that’s the central umbrella term in which we embed all the other technologies in this blog post.
To illustrate these advantages, an example is suitable that we know well from our everyday work as an automation agency:
The central data to be used here is the data of a major customer. This can be the simplest information, such as the address. This address is required in numerous but completely different processes in the company: on the one hand, for correct invoicing in accounting. On the other hand, in the CRM system, where all the data of the large customer is also stored. But the address is also important in sales, for example, when employees go to the sales meeting on site.
Now the customer announces that the address of the company has changed after a move. This information will reach you by e-mail. There are now two options:
01. The e-mail is forwarded to all affected departments, accounting, sales, customer service, marketing… All persons open their corresponding program, CRM, accounting software, marketing tools (such as newsletter marketing) and change the data already stored there of the customer. This means that in multiple applications, different people do exactly the same thing: change one address. 02. But there is also an alternative: By connecting your applications, thus by integrizing them, the customer’s e-mail, or rather the information it contains about the address change, is automatically passed on to all affected applications: CRM, accounting, marketing, ERP. This does not require any clicks, because the cloud integration detects a trigger, i.e. address change, and thus automatically starts the process.
What sounds unimpressive in a single process becomes more effective when such a process occurs several times a day or weekly. Because there is a lot of data that is available in different applications and should always be correct. If these applications are cloud applications they are suitable for cloud integration.
But cloud integration doesn’t just happen. There are now a variety of applications that enable and implement this. Such tools usually allow us to link the relevant cloud applications on a central platform and define clear rules on when, how, where, how much data should be passed on and what happens to them.
IPaaS, SaaS, BPA, ABC – who can still see through it?
To realize cloud integration, there are various applications and technologies that are sometimes used interchangeably.
Cloud integration cannot be done without SaaS, iPaaS and BPA
Cloud integration is rather an umbrella term that includes numerous technologies, such as SaaS, iPaaS and BPA, and this is also absolutely necessary. Cloud integration is a concept that is made possible by appropriate technologies.
However, all terms share the commonality that they are cloud-based and thus offer enormous potential for growth and scaling. In addition, they are often cheaper to implement and maintain because changed requirements are easy to implement.
As an independent automation agency, we implement cloud integration according to your requirements. We use a variety of SaaS tools and iPaas (strictly speaking BPA) software. Together we find individual solutions that are flexible and scalable.