A Comprehensive Guide to Accounting Process Automation

Implementing Accounting Process Automation in Your Organization, In this blog we have covered the following topics:

• Introduction
• What precisely is automated accounting?
• Why Should Your Accounting Be Automated?
• The main accounting difficulties that RPAs can resolve
• Manual accounting versus automated accounting
• How to Automate Your Accounting Processes in 6 Easy Steps
• Benefits of Automating Accounting Processes
• Drawbacks of Automating Accounting Processes
• 7 Accounting Tasks You Can Automate Now for Your Business
• With Velan, Enjoy the Benefits of Automation

Introduction:

Manual accounting procedures are well known for taking a long time. Tasks that may be finished in a matter of seconds or minutes—like accounts payable, payroll, and tax compliance—can take many hours or even days if the main financial activities, such as these, are handled by spreadsheets. Additionally, every manual step is vulnerable to human error, which can result in extra expenses, delays, and irritation.

APA stands for accounting process automation. Businesses may greatly speed up their procedures while lowering the risk of human mistakes by using software to automate key accounting tasks. The benefits of APA, which jobs to automate first, and how cloud-based solutions boost accounting operations’ speed, accuracy, and security are all covered in detail in this blog.

Main Points

• Software is used to automate accounting processes, particularly laborious, time-consuming procedures that are prone to human mistakes. This practice is known as accounting process automation (APA).
• Faster accounting procedures, lower operational expenses, more scalability, and stronger data quality and governance are just a few advantages of APA.
• Accounts payable and receivable, payroll, cost management, monthly financial closure, and procurement are among the accounting processes that can currently be automated.

What precisely is automated accounting?

• Accounting duties may be completed automatically by employing software. Although computerized accounting is nothing new, in recent years, automation has dramatically improved the usefulness of these applications.
• Accounting software may perform a wide range of tasks, from tracking and recording transactions to creating financial statements, by utilizing artificial intelligence and other complex features.
• This frees up accounting experts to concentrate on more important activities by taking care of tedious processes like data entry and calculation verification.

Why Should Your Accounting Be Automated?

Automation is a strategy that reduces the volume of manual procedures used in a business’ routine operations and automated accounting achieves just that.

Every single firm, from freelancers and small enterprises to multinationals, is required to maintain accurate records that abide by the law in every way. Therefore, the moment you start a firm, you are instantly influenced by accounting automation and may gain from it.

But what specific tasks might automation and AI perform to improve our business processes? Actually, it appears like they are capable of handling a lot. budget management, suppliers, and purchases.

Have your supplier purchase automated

When purchasing services and products from your suppliers, a number of operations are subject to strict record-keeping and monitoring. Many of these tasks may be automated, including follow-ups and record-keeping. Automation, for instance, can:

• Create buy orders based on inventory levels and client purchases.
• Keep track of the delivery of requested goods and modify stock levels as necessary.
• Create invoices from purchase orders.
• Automatically incorporate invoices and related information into the utilized accounting program.
• Control the taxes paid.

Make your sales process automated

Additionally, your sales staff must manage some accounting-related tasks. In order to manage the demands of a complete follow-up and to properly dedicate time to your clients, your staff must be effective. You can utilize automated accounting to:

• Making estimates and proposals; Converting proposals and estimates into purchase orders;
• Create client invoices from purchase orders;
• Automatically incorporate invoices and related information into the utilized accounting program;
• Assure that the digitalization of invoices complies with the law;
• Manage the money from taxes.

Streamline and Automate Payroll Processing

Payroll is a necessary, ongoing process. Automating payroll might be quite advantageous for your business since it frequently utilizes the same settings, only changing them slightly for a longer or shorter period of time, for the entrance or departure of personnel, or for modifications made to deductions. Using automated payroll, one can:

• Save the pay processing information in the appropriate accounting record.
• Determine the gross pay.
• Calculate source deductions.
• Determine the employee’s net compensation.
• Update amounts related to accumulated wages and source deductions.

Establish and Continually Monitor Your Budget

Whether you use a single budget type or the operations, improvements, and projects (OPP) three-budget model, automating accounting may help your financial activities in a number of ways, such as:

• Automatically integrate bank transfers into the linked expense or income records.
• Monitor cash flow in real time.

The main accounting difficulties that RPAs can resolve

Numerous accounting activities are seen as laborious and simple. This simplicity, though, can be deceiving. Managing all financial operations well entails juggling a number of tasks, including those below. Traditionally, they are carried out manually or somewhat automatically. RPA solutions increase performance accuracy, efficiency, and speed while removing many of the hazards associated with their implementation.

The main issues in contemporary accounting

• Monitoring regulatory changes Between updates and adjustments, maintaining compliance may be difficult.
• Creating forecasting analyses Accounting requires the prediction of financial results, but this might include enormous data quantities that are challenging to analyze well.
• Data input by hand is time-consuming and seems to be inevitable, but it also raises the chance of mistakes.
• Paying suppliers – While handling payments one at a time may be correct, it slows you down, especially if you have to go after late suppliers.
• Reporting – Another time-consuming but essential task that is getting harder as demands for speed, openness, and meaningful data rise is compiling high-quality, insightful reports.
• Document retrieval – A bottleneck that frequently impedes the advancement of other operations is the tracking and requesting of missing documents.
• Processing orders and invoices are the foundation of accounting, but it may occasionally taste bitter when employing too many accounting systems in isolated silos or when attempting to fill in the blanks.
• Risk assessment — Regardless of how robust your audit system is, some discrepancies will inevitably slip through the cracks. Examples include a lack of contextual knowledge about the company or function or the absence of ground rules for completing the assessment.
• For every accountant’s favourite jigsaw puzzle, reconciling bank accounts is a routine task that can take a long time (and a lot of concentration) to complete manually and is exceedingly error-prone.

Manual accounting versus automated accounting

The fundamental distinction between automated accounting and manual accounting is that almost every part of your bookkeeping and accounting is handled by software. The software handles the majority of the work for you instead of needing a fully staffed accounting department or hired CPAs to assist you with these chores.

Automated accounting can reduce your reliance on accounting professionals while not totally eliminating the need for their assistance. Although accounting software helps to automate all the little processes required for accounting, your company may still benefit from the insight of an accountant. For instance, an accountant can assess financial data and insights to assist you in making decisions regarding the future of your company.

How to Automate Your Accounting Processes in 6 Easy Steps

It’s not as easy as just purchasing APA software to automate accounting procedures. It necessitates a deliberate process that begins with comprehension of the operations that must be automated, breaking them down into smaller steps, and modifying human workflows to fit the functionality of APA software.

Testing is also necessary to ensure that the automated procedures function as expected. The following six stages can help organizations automate their accounting procedures.

Step 1: Analyze current accounting processes.

Most accounting procedures can be automated, but not all of them. Jobs that involve regular, repetitive work, little human interaction, and little to no innovation make the greatest candidates for automation. Automation is meant to support accounting staff, not to completely replace them, by increasing speed and efficiency.

Step 2: Assess the available technologies.

APA is a methodology based on software. Whether or if a company’s accounting technologies and software applications currently communicate with one another or still need to be connected, the ideal automation strategy for that company will rely on those systems. In the second scenario, cloud-based APA solutions are a well-liked choice since they integrate a business’ accounting and financial systems onto a single platform where data is produced, exchanged, and processed in a common language.

Step 3: Assign a project owner.

Even though automated processes just require software to operate, APA workflows still need to be overseen by a person to ensure that everything goes as planned and to address any difficulties that may sometimes surface.

For instance, the software operates according to rules established by users or the firm administrator, and these restrictions may result in payroll errors and late payments.

Before it impacts workers, a project owner may identify and remedy that problem, or at the very least lessen the effects by swiftly correcting the issue.

Step 4: Create and document current workflows.

The best strategy to achieve APA’s aim of streamlining and improving current workflows is to seek opportunities to streamline operations.

Businesses may determine where existing workflows might be enhanced and how to effectively re-create jobs with an APA solution by breaking them down at a detailed level.

Step 5: Automate based on the updated workflow.

Trigger, action, and consequence are the three components that make up any workflow in an organization. These three components must be explicitly stated when automating procedures in order for them to consistently produce the desired outcomes.

Consider a straightforward operation in the chain for approving purchase orders (POs). A new PO being submitted by your procurement manager might act as a trigger.

Further action, such as an automated email notifying the pertinent business stakeholders that the PO is ready for approval, would be brought about by that trigger.

An accepted PO is what is hoped to happen.

Step 6: Test and iterate.

Businesses may test and iterate to ensure that an automated procedure consistently produces the desired outcomes. It is typical to test and iterate several times to iron out kinks, especially when converting manual procedures to automated software. One test run may be sufficient.

Benefits of Automating Accounting Processes

Accounting operations are completed more quickly, more easily, and with more accuracy thanks to accounting process automation. This more effective procedure thus offers a variety of advantages to a firm and its clients, all of which are likely to boost the bottom line. The following are some of the main benefits of APA.

• Enormous time savings.

One of the main motivations for process automation is time savings. Finance professionals have historically had to examine and transfer enormous amounts of data across several systems in order to complete accounting duties like bank reconciliation and quarterly reporting, which is a time-consuming and error-prone process. Accounting data is now automatically checked and transferred across systems thanks to APA, reducing finance teams’ time-consuming chores.

• Reduced operating costs.

Accounting procedures that are automated move more quickly and with less assistance from humans. They are almost always more cost-effective as a result. Take accounts receivable as an example. The cost of billing a client may be as low as $2 for high-performing companies, compared to $9 for the worst-performing ones, claims the American Productivity and Quality Center (APQC).

• Better integrity and quality of the data.

The incidence of errors caused by manual data entry rises as the firm and its accounting requirements expand. Another justification for automation’s potential value is this. With APA, financial teams may simultaneously capture, move, and update tens of thousands of data points with little chance of the information being lost or corrupted.

• Improved access to data.

On a single software platform, APA automates record-keeping and data input. Accounting pros only need to input the pertinent search phrases in their APA solution to quickly identify the papers they’re searching for rather than sifting through spreadsheets or literal mounds of paper to find a critical document.

• Simplified document approval procedures.

Similarly to this, key stakeholders may automatically access documents like purchase orders and supplier contracts, which removes bottlenecks from the approval process.

• Stronger commercial partnerships.

Relationships between businesses and their customers and suppliers can be strained by improperly managed invoices and late payments. The procure-to-pay cycle is sped up by APA to the satisfaction of all stakeholders.

• Guarantees governance and compliance.

According to local regulatory standards and rates, APA software automatically prepopulates tax forms, generates financial statements, and updates tax records. The software not only makes procedures more efficient, but it also makes sure they are more accurate and compliant. In the meanwhile, enhanced data transparency and integrity enhance governance while relieving strain on accounting teams responsible for monitoring compliance.

Drawbacks of Automating Accounting Processes

Accounting process automation can provide problems, just like any new technology, particularly if it’s not done properly. Here are three ideas to think about:

• Improving staff skills.

Accounting teams must naturally learn how to properly adapt APA software when they work with new technologies. Every person will have a varied level of confidence utilizing technology and depending on automated procedures to accomplish accounting jobs they had previously handled manually; thus upskilling may need patience.

• Workflows that require updating.

A well-designed automated workflow can do wonders, but one that has not been well-tested or that has been inadequately adapted might cause widespread confusion and accounting problems. The secret to avoiding problems with APA processes is testing, iterating, and improving them.

• Change administration.

Accounting teams are not exempt from the general human tendency of resistance to change. In order for them to embrace APA and include the use of automation in their everyday work, they must be inspired, supported, and provided with the resources they need to do so.

7 Accounting Tasks You Can Automate Now for Your Business:

Every company implements APA at its own rate and from a distinct starting point. While some businesses want to automate several operations at once, others prefer to go more methodically, automating one activity at a time in order of importance. Here are seven accounting activities that may be automated right away by any business.

• Payable accounts.

The automation of AP streamlines all payment procedures. It makes it easier for accounting staff to keep track of invoice due dates and guarantees that vendor invoices are paid promptly. Additionally, APA reduces the chance that fraudulent invoices will go unnoticed by reporting those that the system determines to be suspicious or otherwise problematic.

• Receivables in credit.

Automating AR enables businesses to better control their cash flow, increase the accuracy of their invoices, and dramatically lower processing expenses. The whole AR process, from planning the delivery of bills to the collection of past-due payments, offers opportunities for automation.

• Payroll.

For businesses with constrained accounting staff, manually processing payroll is a huge time-eater, especially as they expand and the workload on their accounting teams rises. Automating payroll procedures makes sure that workers are paid on time and that a busy team never forgets to submit any crucial payroll paperwork.

• Financial month-end closures.

Although the process of closing the books at the end of the month is a crucial business function, it can also be one of the most stressful for finance teams. The pressure on accountants to finish their monthly closures more rapidly unavoidably results in hurried procedures and doubts about the accuracy of end-of-month findings. Many of these demands on speed and data correctness are relieved by automation of the monthly close, enabling accounting staff to provide findings more quickly without compromising quality.

• Procurement.

It has long been necessary for several stakeholders to manually evaluate and handle a large amount of documentation when purchasing products and services from outside vendors. Companies may significantly reduce the time and cost of their procurement process without compromising the integrity of their operations or jeopardizing their supplier relationships by automating procurement activities like purchase order management.

• Cost reports.

Cost reports are an unavoidable evil. Employees still frequently have to physically glue receipts to forms, print their expense reports as spreadsheets, and submit the entire package to accounting for approval. Employees may electronically fill up and submit their costs to accounting via automated expense reports, which eases the administrative strain and paper backlog for all parties.

• The sales order procedure.

The secret to guaranteeing that client purchases are finished, dispatched on schedule, and priced reasonably is a clear sales order procedure. Businesses may codify each stage of their sales order processes using automation software, guaranteeing that they consistently match client expectations.

With Velan, Enjoy the Benefits of Automation

A variety of accounting procedures are greatly accelerated by automation, which also lowers the possibility of human mistakes and overhead. Gains in cost and efficiency, however, only tell part of the tale. Enhanced data visibility and management can aid in meeting increasingly crucial requirements like regulatory compliance.

For businesses willing to upgrade from spreadsheets or basic software to a fully automated, integrated platform that centralizes their data and makes it available to stakeholders throughout the organization, Velan offers a comprehensive accounting solution. As a result, accounting teams spend less time on manual data input and tedious activities and more time using their expanded perspective on accounting data to assist their companies operations.

By boosting productivity and streamlining the numerous crucial processes that accounting teams must perform, APA enables them to reach their full potential while reducing time spent on each activity and enhancing the accuracy of the outcomes. For a long time, manual accounting procedures required a lot of effort and cost firms more time and money. Businesses of all sizes are gradually getting past that obstacle because of APA.