Tips for Automating Accounting Processes
The accounting department is one of a company's most essential areas but can also be one of the most perplexing. Measuring and analyzing a business's financial situation can take time and money.
Any company's accounting department cannot afford to make errors because of the importance of their work. However, accounting errors can cost a company a lot of money and other resources like time and brand value due to the error correction.
For example, Bank of America revealed an accounting error in their capital reserves calculations totaling $4 billion in 2014. Although this error did not result in a loss for the business, it led to an additional filing request from the Federal Reserve Board, which alarmed Wall Street investors.
By the end of the day, Bank of America's stock price had dropped by 6%, giving the bank a value loss of $8 billion.
This example demonstrates that everyone is susceptible to accounting errors; even the biggest banks in the world are not exempted from them. It also illustrates how accounting errors may cost a corporation far more than just monetary loss.
For this reason, you must make every effort to limit the losses brought on by accounting errors. The issues that accountants and accounting departments deal with are more complex than just accounting errors.
One of the chores that business owners hate the most is accounting. Are you currently utilizing an accounting system that makes you feel stuck? Do you need to hire more staff to improve your accounting department's efficiency? Thankfully, automating your accounting process is simple, thanks to some of your online accounting automation software technologies.
10 Best Tips for Automating Accounting Processes
As a business owner, you have a lot of responsibilities. As a result, you're constantly looking for time-saving opportunities. If you're looking to automate accounting processes in 2022, here are 10 valuable tips you can follow to save time and elevate your transactions and billing process.
1. Identify Your Accounting Processes
It would be best to figure out which accounting processes can easily be automated. Not all of your accounting tasks are built for automation, so look for processes that:
- You or your finance team is repetitively performing
- don't need a lot of human contacts or personal connection
- Don't exert a lot of cerebral or creative effort.
Make a list of all the procedures that satisfy those requirements, then choose one, to begin with. For instance, you could want to automate the reminder emails that your team currently sends to customers regarding past-due invoices.
2. Online Invoice Tracking
Automate the payment of your invoices online. With online invoicing, you can track your bills and get timely payments. Use online invoice solutions like ZarMoney to send and receive payments more quickly and easily. It enables your customers to make an immediate payment using their credit cards, MasterCard, or visa.
The invoice system connects direct mailings, payment options, and pre-set templates for efficient billing.
3. Uploading PDF Documents
Avoid entering data using manual processes. Instead, convert the documents to a digital format, such as a pdf or word.docx. This makes data management simple and eliminates the chance of data loss.
Cloud storage allows you to securely store an infinite number of files and rapidly share them internally and outside with just one click. In addition, accounting automation makes it simple to edit and transmit numerous copies of your documents to your clients.
4. Automated Invoice Approval
Companies carry a lot around, making it challenging to keep track of every document in and out of the organization. This frequently slows down the approval of invoices, which axiomatically slows down the payment process.
Instead, automate your system for invoice validation by introducing a few electronic payment rules utilizing task management software. This will ensure quicker payments and improve the effectiveness of your automated accounting system.
5. Link Online Internet Banking
Ditch manual processes of data entries for business transactions and use online bank feeds to do the job independently. Link your bank accounts and credit cards to your accounting software like ZarMoney.
This helps you eliminate the need for tedious manual management and monitoring of comings-goings in the bank with a single button that allows you to match your business and your bank's transactions. Additionally, this accounting software makes automated taxation, leaving you carefree and safe about your money transactions.
Linking payments online saves time and makes the transaction process efficient.
6. Automated Data Validation and Verification
It can take a lot of time to check the purchase orders, invoices, and supplier information against the stock codes each time you enter a new invoice. Instead, choose automated verification solutions to secure your clients' data and automatically validate the source. In addition, you don't have to enter data manually because the automated software uploads photographs and data on its own.
7. Reporting Sales Tax
You will be subject to severe fines if you submit erroneous sales tax reports. Automate your sales tax reporting process to stay clear of this issue. This protects you from the financial costs associated with mistakes and huge risky scoops of penalties.
You can use various tools to help you automate; choose your accounting automation tool or software based on your company's needs. For example, ZarMoney is a payment processing software that automatically calculates taxes on your behalf and prepares tax filing reports for your business. You can override this feature and do it manually if you prefer it this way.
8. Automated Management Reporting
A catch-22 arises when analyzing large amounts of data, cross-checking the facts, and manually producing the analytics and summary reports. Simple data analysis and reports consume a lot of effort and time to create.
To avoid the problem, you may generate automatic reports with just a few clicks if you turn to automated software solutions. Provide the relevant, accurate data straight from the cloud storage and quickly create reports in minutes and complex data analysis.
9. Consolidation Reporting
Particularly for fortune 500 firms, consolidating reports can be tiresome and time-consuming. However, this is different despite having a similar appearance to management reporting. By saving time for monthly accounts and annual statutory reporting, a consolidating report system, or creating a multi-company consolidation ERP system makes, the consolidation a relief.
10. Smart Stock Purchasing
How amazing would it be if an accounting system like ZarMoney helped you decide which stock to buy, which purchase may bring abundance, and which stock might be a problem? Better stock purchasing choices are made due to the ERP systems' analysis of the business's historical inventory data.
Provide accurate dedicated inventory add-ons to accounting and ERP systems. As a result, you'll have a clearer picture of where to invest and how to proceed. Additionally, it prevents holding up a hefty amount of cash due to having too many or too few stock plans.
1- What accounting functions can be automated?
We have identified five core accounting functions that are easy to automate and make a real difference to your business.
- Invoicing Processing
- Payment Collection
- Monthly Financial Reporting
- Payroll Management
- Cash Flow Forecasting
2- Why is automation important in accounting?
For all e-commerce and retail businesses, digitizing and adjusting to an ordered automated accounting system is essential. In addition, any business must deal with unforeseen costs and conversion rates. Therefore, it's important to use automated accounting processes to stabilize cash flow and speed up the billing process.
Hence, an automated accounting system can save time and money and help you focus on other aspects of your business.
3- What are the steps involved in the automated accounting process?
Accounting automation involves setting up a series of tasks (called workflows) and using technology to take care of those predefined steps meaning that the accounting process can happen entirely without you.
However, five simple steps are involved in accounting automation: identify your accounting processes, evaluate your technology, assign a stakeholder, set up a workflow, and test your workflow.
Automation has made accounting too easy and efficient to return business owners from the dark ages of paper ledgers and pencil-pushing accounting practices. However, most business owners and finance professionals recognize the importance of a successful and efficient accounting process.
You will be on the path to higher financial success by utilizing these ten methods for automating accounting processes. Additionally, you'll have more time to expand your business because you'll be liberated.