When people think of accounting and bookkeeping, they usually visualize a lot of manual mathematical calculations and clerical tasks.
Most people view it as countless hours spent by an individual with their head buried in books or spreadsheets on their computer screens. It is time spent crunching numbers and trying to figure out the missing links between figures in different categories in an attempt to balance it all out. It is no easy task.
Accounting, however, is perhaps one of the most important pillars of the business industry. Tracking business preceded even writing and for any enterprise to be successful, you must conduct efficient bookkeeping.
Nowadays, thanks to advancing 21st-century technology, there are computer software and applications to make work easier. One of the most recent, talked about topic in the business accounting fraternity is accounting automation.
This matter means a great deal of change and different things to different people. Let’s explore some the transformation it will bring about and the individuals affected by this move.
Definition and Necessity of Accounting Automation Invention
Judging from the short historical explanation of accounting above, it is clear how important it is to be careful in accounting.
One of the greatest challenges in older methods of bookkeeping is human error. This is also one of the core reasons for automation. It is now among the most highly automated office functions and for good reason.
Automation means employing artificial intelligence software and robotic systems to mechanize various business processes. Accounting is just one of the many business processes that can be automated and there is a myriad of other AI applications in other sectors.
Using this software helps maintain updated accounting records, ease data entry for payables and receivables with minimal error and expedite the process. In effect, the configuration in the software helps keep financial records in line with established accounting principles.
Another necessity for the incorporation of artificial intelligence in accounting is the growing market and client demand or the enterprising industry. Competition, customers, growth in transaction volumes among other factors are now pushing businesses to the limits of innovation and novel strategies.
External demands bring about internal pressure for operational efficiency, improvement of profit margins, cost-effectiveness and proper resource management. The environment pushes for a sustainable solution in the financial and accounting department and accounting automation is a practical solution.
What Accounting Automation Means For Certified Public Accountants
Speaking of automation elicits a variety of reactions from different people.
Some of the thoughts around the same include loss of jobs, layoffs, some sort of “machine revolution” and the coming of an age of “robotic takeover”, thanks to some of the popular Hollywood films. It is therefore not surprising that some financial workers would see accounting automation as the enemy.
However, that is an incorrect way to look at it. Mechanization in the financial sector does not take away the roles of the finance department. Rather, it is a revolution or modernization of the traditional role of the CPA and other professions in the financial sector.
Automation takes care of the caution-filled, tedious work that accountants previously did manually entering, crunching and reconciling numbers.
It greatly minimizes the man-hours put into the work and the errors that come with being human. It allows the accountant time to take care of the more important duties of a chief financial officer.
One can work on enhancing profits and increasing cash flow, advising the CEO, strategizing and budgeting for the expansion of the business and upgrading KPI’s among other crucial roles.
Moreover, using an accounting software does not mean that the business has no need for people who understand and can explain and analyze the numbers. So another transformative role that accounting automation brings to the table is that finance professionals go beyond being mere number crunchers.
They become the managers and custodians of this information. The industry requires people with an understanding of the information processed by the software to organize, manage and interpret the system’s output.
Using software, therefore, increases in the efficiency among accounting professionals rather than taking over their roles and replacing them. It helps financial officers gather and interpret the information in a faster and more accurate way.
The result is a better analytics and reporting for the business and faster, more strategic financial decisions.
Research by ACCA says that accounting automation will continue to make an impact in the industry over the next couple of years. The time has come to throw the old school of thought out the window and get with the times.
CPAs, company financial teams and especially accounting firms should, therefore, find ways to integrate their roles with this move so as to ensure job security.
The Benefits of Automation in Accounting
It is obvious that automated accounting is already advantageous since it is a solution to some of the problems discussed. It is also clear that contrary to some beliefs, it does not really threaten the human financial talent in the industry.
So besides these benefits, here are some other advantages of accounting automation.
It is Big on Saving Time
There is no surprise here. Accounting automation makes entering credit, debits, client and other financial data quick and easy. Traditionally, one would have to use different books and then try to interpret how different pieces of information link to one another.
However, automated processes in most systems will allow one to enter the transaction in only one field.
The software will then perform the duty of processing the information and relating it to all other pertinent records in the system.
It performs these roles with minimal error. It generates an appropriately structured report, posting with the correct date and time stamps that contain all relevant entries and related data.
Efficient software and cloud accounting automate most of the transactions and can eliminate data entry completely. The future of artificial intelligence and such systems could save accountants the trouble of even data configuration.
The Systems are Adaptable
Quality accounting automation software available is often flexible enough to suit the requirements of your business.
Besides the standard formats which they use as a reference point, they have a variety of templates to suit your business’ ledgers.
They customize features and can produce reports tailored to one’s specificity.
When purchasing a software, be careful to note the features that suit your industry so as to get what you would like from a particular package.
Integration of Financial Institution and Payment
Another advantage that comes with automated bookkeeping software is that one can link it to the bank, Fintechs, and other decentralized methods of payment or financial institutions.
The software normally has a built-in interface that allows the client to make and the vendor to receive payment. It then automatically reconciles this information with appropriate accounts as are in the accounting books.
Organization and Storage
The computerized and cloud software enables the company’s financial department in its organization. Accuracy in the entry, processing, and storage of the data makes it significantly easier to know where to find certain information.
Storage is a crucial part of the process.
Accounting automation assures the storage of once entered data indefinitely into the system.
Regular, automatic backups and part and parcel of the package prevent loss of crucial information. Updated archiving makes retrieval straightforward.
Proper Analytics and Reports
Besides easing organization and quickening calculations, automation allows for easy presentation and distribution of accurate financial information.
The reports are made available to anyone who may need them both internally and externally. It simplifies the performance of audits and records reconciliation.
Moreover, it provides a more accurate analysis of trends, identification of variances and predictability. Accountants can, therefore, perform their jobs with less effort, more precision and make faster financial decisions because they have better access to clear financial reports and information.
Accounting automation comes with encryption and highly advanced security features. The systems guarantee the maximum protection of your data and records.
Accounting Software is The Future
There are still activities that overwhelm the financial team, even with such advancements in technology.
However, with automation, the future is bright.
Innovations in smart billing, auto-reconciliation and management of monetary applications among other areas continue to improve day by day.
There is already a variety of quality accounting software on the market today.
The most popular include Zoho Books, Xero, QuickBooks, Microsoft Dynamics and Sage Business Cloud. Carefully shop around to find out what exactly suits your business before you make a purchase.
Let your financial team become better business advisors, strategic planners and information custodians.
Empower and train them on how to use accounting automation to ease and enhance the quality of their work.
This change is inevitable. With all these advantages, any business is sure to benefit from accounting automation.
For more advice on all things finances and accounting and strategies through which to make enhance business, reach out to us. For more information on accounting software, visit our website or contact us.