In accounting, automation is one of your most valuable tools. It has the potential to save you time, save you money, reduce errors, and even make your customers happier. But are these accounting automation benefits, combined with the others, capable of justifying the costs of automation software?
The answer is yes – but let’s explore the mechanics of why this is the case.
How Accounting Automation Works
How exactly does accounting automation work?
That partially depends on the specific tool you plan to use, but nearly all accounting automation software is capable of taking manual tasks and making them happen automatically, without much human intervention or oversight.
Obviously, automation tools aren’t so advanced that they can replace your entire accounting division, since you’ll still need experienced, thoughtful people making high-level decisions and resolving issues. But automation software can help you with a wide variety of tasks, including:
· Accounts payable. Accounts payable is relatively simple, but it still takes a lot of time.
· Accounts receivable. Accounts receivable is similar, and automating it can be a major relief to your team.
· Payroll. Your employees need to get paid, and usually in very consistent, predictable ways. This makes payroll an excellent candidate for automation.
· Financial closes. Closing the books at the end of the month is time-consuming, sometimes complicated, and always stressful. But when it’s automated, it ceases to be such a challenge.
· Reporting. You can even use automation to automate reporting and improve data visibility for your financial leaders.
The Benefits of Accounting Automation
What are the benefits and why are they so valuable?
· Time savings. The headline here is that automation saves you time. Instead of forcing an employee to spend hours on a task, you can set the task up to be done automatically. This is beneficial in two different ways. First, you’ll save on labor costs, and second, you’ll free up hours that your employees can spend on bigger priorities.
· Cost savings. Oftentimes, automation can save you money as well. You’ll reduce what you’re spending on labor, you’ll reduce errors, and you might even be able to trim down transaction costs and expedite turnaround time for various transactions. In many cases, this advantage alone can more than make up for the price of accounting automation software.
· Fewer errors. Accounting errors can be downright painful, and no matter how skilled or attentive to detail your accounting employees are, mistakes are a possibility in manual work. When you have automation running things, the possibility of human error is reduced to zero or near zero.
· Faster payments. Automation typically leads to faster payments, which is beneficial for all parties involved. You can cut out several manual steps and process payments and record time.
· Higher security. In many ways, automated systems are more secure than manual ones. As long as you’re using secure software, you won’t have to worry about the human members of your team accidentally misusing customer data or sensitive financial information.
· Future proofing. We are currently living in an era of rapid tech acceleration, where businesses are clamoring to adopt the latest technology in a variety of areas. Soon, manual efforts are going to be dramatically outclassed by automation and AI technologies. Adopting accounting automation software now is a way of loosely future proofing your organization, setting it up for easier scaling and more convenient technology integrations in the future.
· A competitive edge. Not every business has adopted accounting automation software, despite the advantages. Incorporating automation and restructuring your business processes to take full advantage of the benefits can give you a massive competitive advantage.
The Challenges of Accounting Automation
There are some challenges associated with accounting automation, of course.
For example:
· Costs. Accounting automation software isn’t free, but it’s probably not as expensive as you think. When you factor in all the advantages, it’s often a no-brainer for business decision makers.
· Upskilling/displacing workers. Automation doesn’t really create or destroy jobs; it simply transforms them. You probably won’t be in a position to remove staff members. But you will need to transform roles and responsibilities to better accommodate these automated processes.
· Integration and workflow updates. You’ll also need to make plans for integrating the software into your current systems, which could include updating your workflows. Depending on the complexity of your organization, this may be relatively easy or quite challenging.
The Bottom Line
There are some costs associated with accounting automation software, including your recurring subscription fees, the costs of workflow adjustments, and various growing pains as you adapt to this new technology.
But these costs pale in comparison to the benefits that you’ll receive from having accounting automation at the center of your accounting department. Business is unique, so it’s nearly impossible to make a universal claim, but most businesses enjoy strong, measurable net benefits from incorporating automation in this area.
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