Today, automation is everywhere.
At home, your lights can turn on and off depending on daylight, or your thermostat turns off the HVAC system to conserve energy when it senses you’re away from home.
New model cars now come with driver-assist capabilities which send out warning signals if you inadvertently glide out of your lane. Some cars even have self-driving options.
While automation and artificial intelligence (AI) are becoming a standard in personal lives, the same is not true in the offices of entrepreneurial organizations—not yet, at least! Even within Fortune 500 corporations, accounting functions are only beginning to take advantage of technology that automates business processes, called robotic process automation (RPA). Deloitte’s 2021 Intelligent Automation Survey found that the COVID-19 pandemic has accelerated the adoption of RPA, with 78 percent of respondents already using the technology and another 16 percent planning to implement within the next three years.
In accounting, the benefits of RPA are innumerable. Automated accounting optimizes workflows, reduces errors, and improves cash flow. What’s more, with accurate financial data acquired through automated processes, companies are better equipped to drive significant insights for better decision-making and long-term stability.
Although many automated accounting tools are not suited for entrepreneurial companies, more fitting options are on their way—and you should be ready for them.
Automated accounting leverages AI and machine learning to perform traditional accounting processes such as recording transactions to compile into financial statements. It takes repeated tasks—which, if done manually, are tedious and time-consuming—and performs them at the click of a button, allowing finance professionals to focus their time on the core business.
More specifically, RPA is a tool or set of tools that, according to Investopedia, “creates and deploys a software robot with the ability to launch and operate other software.”
Automated accounting ensures a high level of accuracy in data-entry functions. This reduces the chances of error, especially when recording transactions. Transactional processes such as billing and payments can be processed at a click of a button, without the need for rechecking data. With the right accounting programs, organizations can ensure data accuracy and consistently close their books on time. This, in turn, keeps financial statements up-to-date and audit-ready to improve regulatory compliance.
Automation also expedites data retrieval. For instance, a chart of accounts and trial balances can be categorized and named for easy data retrieval. This helps organizations operate more efficiently while collecting valuable financial insights.
Automation takes over error-prone tasks such as accounts receivable. Organizations can rapidly generate and send invoices, reconcile invoices, and send reminders to customers for timely payments. Additionally, automated accounting systems update data in real time, which improves the accuracy of invoices, helping businesses get paid faster and streamline cash flow.
Mounting unforeseen expenses such as an increase in COGS can eat into profits, impacting growth plans. Cost control is essential to minimize revenue leaks and optimize budget to actual performance. Automation helps create efficiencies in day-to-day financial processes such as data entry, transaction categorization, reconciliation, and gathering insights. This can improve cash-flow management as well as simplify tax filing.
Accounting automation can unify data rapidly. This, in turn, helps organizations understand trends, exceptions, and insights before the financial close to facilitate real-time decision-making. Through unified data insights accounting staff can quickly build easy-to- read and detailed reports and dashboards based on new revenue streams and changes in business strategy.
As companies deal with confidential information, securing data is critical. Manual accounting activities often require the use of spreadsheets. This hampers security and increases the risk of data breaches related to information delivered in Excel via email or through less-secure means. Automated accounting reduces manual intervention, in turn cutting chances of mishandling data.
Automated accounting with cloud-based software makes data storage easy and accessible. Employees can work and save files directly to the cloud. This helps access critical files such as financial statements, reports, or invoices anytime, anywhere.
Many business owners struggle to file their taxes. Automated accounting helps easily track sales tax, receipts for business expenses, and mileage. Access to this key data helps companies maximize deductions and streamline the tax-filing process.
Using automation software will free team members’ time away from routine bookkeeping activities, allowing them to work with other teams—such as sales, marketing, operations—for production planning and budgeting. This improves overall organizational productivity and efficiency.
As businesses grow, accounting processes become more and more complex. Maintaining financial transparency and objectivity is critical for smooth business operations so that leaders can focus on scaling up faster. Accounting teams that leverage technology can swiftly move from manual accounting work to automated accounting systems. This minimizes the tedious task of managing outdated accounting systems and helps build a sound, reliable, and clean data infrastructure.
The outcome: improved control over accounts, better data, and, therefore, better strategic business decisions.
The move to automated accounting requires a change in your business’s processes and systems. At Accelerated Growth, our financial and accounting advisory services can help build and manage the right processes and systems to enable the adoption of automation tools. Doing so will ensure that your financial data is clean and accurate, allowing you to make well-informed business decisions.
To know more about our finance and accounting services, click here.
Bobby Achettu is the founder and CEO of Accelerated Growth (AG) and has led the firm to 4 consecutive appearances on the Inc. 5000 list. Prior to founding AG, Bobby held several leadership roles, including at a Chicago-based private equity firm and within the strategy consulting practice of PwC. Bobby currently leads two nonprofit boards as co-chair of the Employer Advisory Board within Northwestern University’s Weinberg College of Arts & Sciences and as president of the Chicago chapter of the Entrepreneurs’ Organization. In addition, Bobby is an adjunct professor at both Northwestern and Loyola universities where he teaches on the evolution of modern business and social entrepreneurship.