Maintaining precise accounting documentation is a crucial aspect of every small business. They give you a thorough picture of your company’s financial performance, make it easier to identify irregularities, and help you comply with legal obligations.
But unless you work as an accountant, this isn’t the most exciting portion of your day—especially if you balance many tasks and concentrate on growing your business. It can take a lot of time as well.
You will still need to complete specific tasks independently, even if you employ an accountant to manage your accounts once a year. Despite their seeming insignificance, these chores have a significant effect on your potential earnings over time. Here are some ways small business accounting automation can help you save time and streamline your procedures.
What is Accounting Automation, and Why is it Important?
Financial data, data entry, and invoicing are just a few accounting operations like QuickBooks, Xero, and FreshBooks can streamline and automate. These tools
- improve efficiency,
- decrease errors,
- and save time
when handling financial procedures.
The benefits of accounting automation can free up experts’ time to work on more value-added duties by up to 50%. It can cut down on repetitive accounting processes. This time-saving aspect of automation can make you feel more efficient and productive.
9 Accounting Tasks You Need to Automate
1. Invoicing
Keeping books is a chore. According to 40% of business owners, running a company is the worst aspect. But with automation, these tedious tasks can be significantly reduced, providing a sense of relief and lightening the burden.
It can’t be avoided, either. Manual accounting accounts for over 80 annual hours for 40% of small business owners. Receiving payment can be a difficult and time-consuming procedure.
Thankfully, there are several ways to delegate invoicing, mainly monthly recurring invoices and automated accounting reminders for customers who may have failed to pay.
2. Automating Expense Reports
An intelligent cost management application makes uploading and confirming invoices simple. Automating expense reports can transfer processed amounts to accounting for entry into the books, rapidly comparing corporate credit card transactions against actual invoices and approving them without requiring a hundred check-ins from management.
This facilitates management and guarantees that workers receive their compensation on time.
3. Bank Reconciliation
Automation can assist you with real-time inconsistency detection, marking missing or duplicate entries, and matching your company books with bank statements. The earlier you recognize and correct errors, the easier your life will be.
4. Payroll
Payroll is yet another laborious aspect of accounting. It is challenging to automate paycheques that your employees still receive on paper.
However, if you’re using the direct deposit method, many resources are available to help you eliminate payroll from your workload. Once set up, payroll scheduling, shipping, and tracking may quickly become a ‘set it and forget’ activity; you only need to check in again when something changes.
5. Financial Reporting
After each reporting period, you must produce a financial report, including a balance sheet and profit and loss (P&L) statement. These activities take a lot of time, even though they aren’t as urgent as additional bookkeeping chores (such as creating invoices or paying bills).
Your monthly P&L and financial reports can be automatically generated by setting up a recurring job in your accounting automation software, which will spare you from dealing with this hassle.
6. Tax Preparation
It’s advisable to use a tax organizer to stay organized. Accounting process automation can assist you in maintaining precise, thorough records (such as mileage logbooks, bank statements, and receipts) all year. This is essential to know when working with your accountant (as well as knowing what you can deduct when filing your taxes).
You can track your annual spending and upload receipts using Xero. When it comes time to file taxes, it will be simpler to locate these charges because the accounting software automatically registers them.
7. Accounts Payable and Accounts Receivable
Companies incur costs, which must be covered for the firm to continue. Regretfully, when companies expand, so do their costs and the amount of work necessary to collect those costs. Accounts payable becomes a full-time job without automation.
This implies that a company must pay an AP clerk to process expenses in addition to the money it currently has to pay them, or else their controller’s time would be taken away. As a result, the price per invoice rises significantly.
Bills can be paid immediately and completely hands-free with automation. Even if your company still pays with checks (42% of B2B transactions do so), automating automation systems such as Company One can handle check payments and forward them directly to your supplier. Better still? With DirectPay, you may expedite and further take advantage of the automation of the accounting process.
Your company can retain outstanding vendor relationships without the burden of manual data entry and paying invoices.
8. Cash Flow Management
Monitoring cash flow may be one of the most critical aspects of managing a profitable company. Time savings and avoiding human error are two benefits of automating this process.
Automation can link your company’s credit cards and financial accounts to your dashboard with QuickBooks Online, immediately converting all incoming and outgoing transactions into cash flow statements. This feature can help you keep your small business’s financial health up to date, making you feel more secure and in control.
9. Inventory Management
Accurate inventory management is crucial if you sell tangible goods. Linking your inventory control software with your financial statements can automatically update your inventory logs each time you receive or sell an item.
Xero integrates inventory and expense management functions in a single piece of software. Additionally, you will be able to project future revenue and sales.
Conclusion
Time is frequently the most scarce resource for business owners. If you know when to use automation most effectively, it may be a handy tool for your small business. What is the easiest method for determining which tasks are suitable for automation? Watch out for:
- Repetitive tasks
- Jobs that don’t call for direct communication or human interaction
- Functions that don’t require a lot of brain effort
Whatever you choose to automate in your company, remember that no task should ever be entirely out of your sight or mind. Make a note to check in from time to time to make sure everything is operating smoothly. It would be terrible if something went wrong while you were blissfully ignorant.
Beyond that, if you approach automation with the appropriate plan, you can free up more time to focus on what matters—assisting your company in growing.
