The Ultimate Guide on Achieving Automated Accounting
Automation has made it possible to do just about everything faster and more efficiently. But there are still some holdout areas. Accounting, for example, represents a particular spot where there’s still been a lag; many companies are still relying on outdated, manual bookkeeping processes.
Fortunately, though, there’s now a better way. Automated accounting is the new order, and it can be easily adopted by your company.
Manual Bookkeeping is a Relic of the Past
The way that businesses kept account of their finances has evolved over the years. What started with paper-based bookkeeping eventually transitioned to digital logging in Excel, and over to digital accounting platforms like Quickbooks and Xero. But there still remain many repetitive tasks and digital spreadsheets in the accounting process, rife with potential issues including:
- Errors resulting in incorrect data input and difficulty reconciling
- Manual reconciliation work to map expenses to the appropriate categories
- Data lag, stemming from the fact that numbers were only added up and reviewed at the end of the month or quarter
- Frustrated employees wasting time on tedious accounting tasks
Manual processes take time and resources. Should an error crop up, much more time and effort will likely be wasted in an attempt to find and rectify the problem.
On top of this, the lack of visibility makes it difficult (if not impossible) to properly gauge your financial performance in real-time. Without automation, even the most up-to-date information will still have a time lag that renders the information ineffective.
If you want to make savvy business decisions, you must be able to respond to events in real-time. For that, you need all of your information to be on hand as it rolls in.
Enter Automated Accounting
Automated accounting removes much of the hassle and inefficiencies that come along with fully manual, conventional accounting processes. In short, it digitizes your accounting methods, tracking and logging financial transactions in real-time. Per Business Insider:
“Computers and software have evolved to a point where they can populate spreadsheets, crunch numbers, and generate financial statements and earnings reports more quickly and accurately than any human accountant. In fact, machines are already taking on many of an accountant’s old, routine, administrative chores—online tax returns and bookkeeping software, are great examples of routine work that accountants no longer have to do.”
This progress is beneficial for everyone:
- Accountants – It allows accountants to focus on more sophisticated tasks—ones that actually require their expertise.
- Managers – It grants managers visibility over their team’s P&L, enabling them to make smarter business decisions
- CFOs and Executives – It provides greater visibility to company finances in real-time. Instead of having to wait a month or two to see historical company performance, they have the tools they need to understand their company’s current financial health.
Achieving Automated Accounting
When it comes to achieving automated accounting, there are four things you need to consider:
- Create the right processes and educate your company
- Select a digital accounting platform that suits your needs
- Find the right finance tools that integrate well with the accounting platform
- Automate manual accounting processes
Create the Right Processes and Educate Your Company
The key to success in automated accounting starts from the top down.
It’s critical that you instill a company culture where every team member is responsible for minimizing waste and optimizing business processes. With the right processes in place from budget setting to automating expense requests and approvals, you’ll empower your employees and make your accounting team’s lives easier. Maintaining an open line of communication can help highlight weaknesses or areas of improvement when it comes to your company’s finances.
Once these are set, your team can then turn to accounting and finance tools to simplify and streamline basic manual processes—all of which tend to be time-consuming, error-prone, and an inefficient use of your team’s resources.
Select a Digital Accounting Platform that Suits Your Needs
What are your company’s accounting needs and pain points? Whatever they may be, your digital accounting platform should cater to those issues. Quickbooks and Xero are popular platforms with SMBs, while Sage Intacct and NetSuite are typically designed for mid-market and enterprise companies, with more customization modules and complexity.
Accounting integration is another significant consideration. Aim to use an accounting platform that’s able to connect to the various other tools in your finance stack via direct API integration. This will directly help you automate accounting.
Finance tools that are able to integrate with both smaller and larger accounting platforms make it easier for you as your business grows and graduates from SMB focused platforms to those that have additional features and customizable options needed for larger operations.
Find the Right Corporate Card that Integrate Well with the Accounting Platform
While there are many tools that can help you integrate with an accounting platform, few considerations are more critical than the type of corporate card you use.
Most corporate card platforms like American Express require accountants to manually download CSVs of card transactions in order to upload and map the data to the accounting platform. Ideally, your corporate card has instant integration with your accounting platform.
That way, transactions can be synced with just the click of a button.
Automate Manual Accounting Processes
By utilizing the right finance tools—namely, those that sync to your accounting platform—you ensure that most tedious parts of accounting are automated.
Expense reports, for example, are typically time-consuming, riddled with errors, and stressful for both employees and finance teams alike. This headache likely costs your company thousands of dollars in time a year.
But it doesn’t have to. Ideally, you want features that improve expense management, including:
- Automated receipt matching – As soon as a transaction is made by a member of the team, the employee should receive an SMS or email prompting them to attach a photo of the receipt. Once submitted, the corporate card platform can then match this to the transaction. Automated receipt reminders can also prompt employees to match receipts if they didn’t do so immediately.
- Automated transaction categorization – Once the receipt is matched to the transaction, an accountant does not need to manually input the data into the general ledger. With automated accounting, each transaction is automatically mapped to a specific department, team, and type of expense.
- Real-time spend visibility – If you want to empower your team to make the wisest financial decisions possible, they’re going to need every piece of information available. With an automated corporate card platform, you can see an expense the moment it is processed. This improves accountability, reduces employee expense fraud, and makes it simpler for managers to control their team’s spending practices.
Why is Automated Accounting Critical to Your Company?
As you can tell, there are plenty of reasons why pushing for accounting automation will benefit your business. Here are just a few:
- Fewer errors – Digitalization is far more efficient and less error-prone than manual processes completed by employees. When errors occur, it not only throws off your books, but wastes a significant amount of your finance team’s time finding and correcting the mistake.
- Reduces fraud – According to the ACFE 2018 Global Study on Occupational Fraud and Abuse, 17% of all business fraud is related to employee expense reimbursements. Automated expense reporting makes it so you don't have to worry nearly as much about this significant expense burden, particularly since all transactions are tracked and matched with receipts.
- Increases visibility over income statements – Automatic transaction logging makes it much simpler to keep track of your P&L in real-time. In addition, the system allows you to compare your current period against previous ones.
- Saves money and time – Time is money. When employees waste their time, your business suffers. Automated accounting streamlines processes, preventing employees from needlessly wasting their time on archaic manual processes. Instead, they’re able to focus their skills and attention on the things that actually matter.
- Help you manage cash flow – To properly manage your cash flow, you need oversight on your entire financial profile. Understanding what’s coming in and out allows you to anticipate cash flow shortages before they can have an outsized impact.
Ramp: Your Key To Achieving Automated Accounting
The accounting process no longer needs to be filled with frustration, delays, and errors. With Ramp, you have the ability to automate your accounting methods with powerful features like:
- Automated accounting processes
- Automated expense reporting
- Real-time spend visibility
No more running around, chasing down receipts, and manually entering data. With Ramp, all transactions are itemized, accounted for, and matched to their receipts.
What’s more, Ramp allows you unlimited cards, so you can create spending limits for entire departments, vendors, and individual employees.
Are you ready for the future? Ramp can help you get there.
Sign up today to gain all the benefits of automated accounting.
Business Insider. AI is an Opportunity for Accounting. https://www.businessinsider.com/artificial-intelligence-is-an-opportunity-for-accounting-2017-3
ACFE. Report to the Nations. https://www.acfe.com/report-to-the-nations/2018/
Forbes. Eight Reasons Employees Cheat On Their Expense Reports. https://www.forbes.com/sites/forbesfinancecouncil/2019/02/22/eight-reasons-employees-cheat-on-their-expense-reports/#c9855a3674e4