Unless you’ve got a supercomputer somewhere in your brain, bookkeeping is a business function you can’t get away from. Without hard-working accountants, you won’t know how much money you’re making and what spending activities comprise most of your overhead. In addition, staying compliant with tax and payroll laws would get messy. And that’s one mess you don’t want to be in, no matter the time of year.
Of course, there’s more to managing the books, including inventory levels and invoices. Automation is a feature of many accounting tools, and it’s designed to lift some of the burden from your team. The software can reduce errors and cut your bookkeeping time in half. Let’s look at some examples.
Processing Invoices
As a business, you’re purchasing items while billing clients for the finished products you sell. You’ve got invoices coming in and going out. Internally, you may have other processes involving paperwork like purchase orders and receipts. This additional paperwork must match with an invoice somewhere.
Although your team probably won’t get away with abandoning invoicing altogether, automating the process is a huge timesaver. Automatic matching of purchase orders and receipts with incoming invoices is a task accounting software can easily do. So is generating invoices for customers, regardless of job or order size.
The team can even automate reminders for past-due and nearly due receivables. Once a bill is paid, the software will automatically record a credit or debit. It’s a way to cut down on redundant and repetitive data entry tasks. Plus, the team won’t have to wait as long to run reports reflecting account balances. You’ll get a more accurate idea of where account receivables and payables stand.
Increase Payroll Accuracy
Typically, HR departments are diligent about getting payroll right. On average, companies have an 80% accuracy rate. However, these same businesses are also busy correcting an average of 15 mistakes each pay period. These errors don’t come cheap, with expenses running in the thousands per year.
Expenses related to payroll inaccuracies can include back pay, penalties, and even lawsuits. Hidden costs include the loss of trust in the employer-employee relationship. Moving forward, workers may be skeptical of what company leaders promise. Employees could also lower their productivity and customer service levels. Making a mistake with someone’s livelihood is probably one of the fastest ways to stir up negative feelings.
Automated workflows keep tabs on the entire payroll process, from onboarding to annual raises. Sick time, PTO, and direct deposit authorizations don’t have to be 100% manual tasks. Automation mitigates the risks associated with payroll errors, including tax deductions. And speaking of taxes, software with automation capabilities can perform the calculations and file the required reports, reducing time spent. Fewer mistakes also mean less backtracking.
Manage Inventory
Point-of-sale systems are effective because of the software’s dual purpose. Its main job is to calculate and complete a sale. Simultaneously, the software is managing a store’s inventory. It records how many items have been sold and how many need to be ordered to keep enough products on hand.
Retail stores aren’t the only organizations benefiting from the built-in automation of point-of-sale systems. Restaurants and public school nutrition programs are other examples. Businesses that operate 100% digitally can also integrate online shopping carts with inventory management capabilities.
Syncing sales activities with inventory works in reverse, too. When products get returned, the team doesn’t have to remember to add those items back in. Software set up to automatically align inventory with sales and returns takes care of it instantly. Automation also reduces inventory count errors and helps identify potential shrinkage. You’ll be able to act swiftly when anomalies stick out while reducing unnecessary expenses associated with less-than-optimal stock levels.
Flag Suspected Fraud
Sadly, not everyone will be above board when money is involved. A study from the Journal of Financial Economics estimates a mere one-third of corporate fraud is identified. Equally disturbing is an average of 10% of publicly traded companies are guilty of securities fraud each year. In smaller companies, it can be more difficult to uncover questionable activities because of less robust guardrails.
Because there are fewer employees, there can be less division in responsibilities. So, the person responsible for the books may also oversee auditing all financial transactions. This overlap creates an opportunity for someone to get away with unethical practices. There may also be fewer internal controls, such as automated software that checks for irregularities.
With automation, companies can implement oversight of financial activities that are not tied to a human. Software can quickly flag questionable patterns. Naturally, smaller companies may want to involve an outside auditor to assist with investigating those patterns. Otherwise, you’re potentially in the same risky situation. But as transaction volume increases, automation will provide a scalable, efficient auditing tool.
Saving Time With Automation
The advantages of automation for your accounting team extend across multiple activities, from invoice processing to fraud detection. Since bookkeeping requires exceptional attention to detail, every task counts. Repetition can lead to cognitive fatigue and mistakes, something automated tools can alleviate.
Furthermore, an intense focus on the details makes it easy to lose sight of the big picture. Automated software lets employees concentrate on the larger meaning of patterns and how various financial activities fit together. With less time-consuming tasks and fewer mistakes, efficiency won’t have to take a backseat. Employees, clients, and the company will continue to see improvements as a result.
