Accounting is becoming an automated job.
It’s no longer a question of if or when. The future of accounting is undeniably automatic. But that doesn’t mean it’s a bad thing.
Think about it this way. The accounting process has never really been updated before. Aside from switching from paper to a computer, it hasn’t gone anywhere else.
It’s about time automated accounting came about.
So let’s take a look at how the automated accounting process will work and what changes it will bring along with it.
It’s Impossible to Automate the Entire Role
The job of an accountant is a lot more involved than just adding and subtracting. This will make it impossible to automate the entire thing.
So don’t worry.
Automation doesn’t mean a computer will be replacing accountants. Businesses still need accountants to run, develop and grow in a cost-effective and efficient manner.
So What Does Accounting Automation Do?
Automation can’t replace the entire accounting job, but it can make the rest of it easier.
The smaller, repetitive tasks suck up a lot of accountant’s time. So when that time is cleared up with automation technology, they can spend their time focusing on the move valuable parts of the job.
What does that include?
Here are a few examples of how automating accounting can make a big difference in the accounting job.
1. Accountants Will Have More Time for Strategic Activities
An accountant’s main job shouldn’t be doing math. A computer can do math. What a computer can’t do is review the math and use the results to financially advise the business.
Most accountants spend their time working as number-crunchers. When this happens, the business doesn’t get the true value of accounting. Instead, they should be building strong relationships with business leaders, challenging business strategies, overseeing the financial reporting/accounting and offering solutions to financial problems.
But accountants don’t usually have time for all this.
Automating the accounting process lets accountants focus on the more complex parts of the job. An accountant’s insights are valuable and can potentially save the business some money and keep it out of financial dangers.
2. Accountant’s Productivity Will Increase
No matter how big or small your accounting team, automation can free up their time spent on repetitive number crunching. In other words, they can start working on other things, which will increase their efficiency and productivity.
Automated systems make managing these bookkeeping jobs a simple process.
An accountant can scan receipts, file appropriate information and approve purchase orders with various finance software and computing technology. The job is finished faster and with a higher level of quality than before.
3. Accountants Will Become More Accurate
Even though we all try, no one can ever be perfect in their work. In a way, human nature is one of the most important reasons accounting automation is important.
Every accountant makes small mistakes. They might round a number wrong, add a 10 instead of an 11 or write a number down incorrectly. Though these types of mistakes may not happen often, no one can avoid them.
But artificial intelligence and other necessary technology can’t be distracted the same way as humans. This significantly reduces the risk of making these small mistakes and lowers the room for error.
When an accountant starts using automation, their work won’t just be more productive, it’ll also be more efficient.
4. Accountants Can focus on Data Insights
An automated accounting process means accountants spend less time working on non-value add tasks. Instead of focusing their attention on routine jobs, they can turn their attention to analytical thinking.
Remember, no technology can replace the insights of an experienced accountant. Automation will help, but you need an accounting professional to bring the value of the gathered data to the table.
Automating the smaller tasks allows them to do this.
Some Other Changes to Expect with Automated Accounting
Automating the accounting process will bring about a new set of changes to the accounting world. These changes will help streamline the job so it can be as effective and efficient as possible.
Here are a couple of the other changes you can expect when you start automating accounting.
Outsourced Accounting Can Reach More Customers
Because the routine parts of the accounting job will be faster and easier, outsourced accounting companies will be able to reach more clients without upgrading their staff.
That, in turn, means more businesses can have access to quality accounting services.
A practice that uses manual methods can run well, but it can’t compare to the efficiency of automation.
The Industry Standard Will Become Value-Based Pricing
Automation reduces the time it takes to finish work for a client, which makes it difficult to charge hourly. Instead, practices are switching to value-based pricing methods.
This is a good thing.
Hourly pay doesn’t encourage productivity, innovation or efficiency. It also caps your potential income. You can only work a certain number of hours a year. At some point, it becomes impossible to earn any more money than you’re already making.
With value-based pricing, you’re paid for the results you provide, not the amount of time you spent working. You also don’t have to worry about going over the client’s budget or make them worry about any hidden fees.
Value-based pricing is a good thing, and it’ll force accounting practices to get out of their hourly models.
The Best Way to Start
Automating the accounting process is a great opportunity for businesses to embrace long-term benefits. But the switch can also seem daunting.
If you’re ready to get into the automated world, take a look at these four starting points.
1. Accounts Payable Process and Accounts Receivable
There’s a wide gap between the business on the top and the bottom when it comes to invoice management. And the efficiency of even this one task plays a big part in the business’s overall productivity.
Here’s a table that outlines the difference:
Every time an invoice shows up in your accounts payable department, you must approve the person who ordered the goods because you pay the invoice. And you want to do this as quickly as possible. When you’re fast, businesses can get early payment discounts, which can save as much as 3% in some cases.
But this is difficult to do with manual processes.
It’s not uncommon for paper invoices to wait for weeks before they’re approved. Sometimes they go missing altogether. When the process is digital and automated, invoices can move through the department in an efficient way. If a problem comes up, accountants will notice them and address them right away.
2. Documenting Audits
There are several problems with manual audit documentation.
For example, if an auditor asks to see all the invoices from last year, you’d have to show them a year’s worth of paper documents.
Most accounting documents also contain sensitive information you don’t want just anyone to have access to. Should other people look at this data, you’ll want to know who accessed them and when.
For these reasons, audit documentation should be one of the first things you digitalize and automatize. When it comes to your business, poor record keeping isn’t an option.
3. Purchasing and Procurement
This process involves translating business requirements into supplier requirements, ordering the services and supplies needed to run the business, and managing relationships with the suppliers.
This takes a lot of documentation, so getting it all on the computer will make it efficient and organized.
Imagine how these tasks would be made simpler with automation:
- Requesting quotation documents, approval documents and inspection sheets
- Manufacturing documents, bills of lading, proof of delivery, freight bills, supplier data, invoices and anything else that’s required for your business needs
- Forecasting regulatory information, sheets, product research documents and supplier information
- Documenting inspection reports, testing reports, defect reports, defect resolution workflows and materials data supplier quality data
- Working on orders, purchase orders, correspondence with a supplier, contracts and estimates.
All of these processes require a lot of documentation, paperwork and systems. Automating these processes will eliminate paperwork and allow you to manage these tasks efficiently and effectively.
What to Know About Automated Accounting
Automating the accounting process isn’t a bad thing. It doesn’t render accountants obsolete. Instead, it reduces the time they have to spend on routine tasks, increases their efficiency and productivity, and allows them to focus on giving financial strategies and solutions to business problems.
With automated accounting, an accountant will be able to deliver the true value they can offer as a financial expert.
Are you looking for bookkeeping services for your business? Head over to our services page and find out how we can help you.