While many businesses shuttered during the pandemic, those with sufficient capital, flexible operations and the ability to make fast decisions based on real-time reporting shifted into the new world with ease.
Major business predictions and operational plans were made in the span of weeks versus years, as natural selection played out in every industry. The workforce largely moved online, and CFOs everywhere became critical decision-makers, offering predictions based on accurate reporting that allowed them to see their businesses’ full financial picture in real time. This experience shone a bright light on the need for accounting automation and the benefits it provides.
Previously, the accountant was largely responsible for manual workflows, including record-keeping, bill payments, receipt collection, expense matching and approvals. The manual work didn’t end there. The bank uploads, journal entries, payroll and reconciliation were all additional manual work required to develop accurate financial reporting. The time required to achieve a business’ full financial picture not only hindered budgeting, forecasting and planning, but growth itself. With the new developments in accounting automation, these manual processes are largely eliminated, freeing up the accountant to focus on the full financial picture in real time.
The ability for accounting automation to provide businesses with real-time reporting lies in the technology stack being integrated. As more information is received, artificial intelligence learns everything about the business’ finances and starts to automate financial workflows. As information, such as receipts and transactions, is received, the human bookkeeper trains the AI to categorize the specific expense. Then, in the future, AI can do it automatically.
Once expenses and revenues are received, the software begins the data entry process of making journal entries and then reconciling the books. Accurate and continuous financial reports are created based on the information received, allowing business leaders to see the full picture of their financial outlook at any time. This end result will translate to accountants moving from a record-keeping role to an advisory role, as the software takes over the manual tasks of ledger management.
Reluctance to change is the main barrier
Every accountant understands the drudgery of data entry, an age-old workflow required to get a clear understanding of a client’s financial picture. Both client and accountant have long participated in a paperwork-filled exchange of information to onboard and enter information into a ledger. At the end of each business period or quarter, the accountant provided the client with their current state of business, a process that not only took hours of manpower, but put a halt on the ability of a business owner to make any major decisions. To that end, growth was stalled, a state of affairs that is no longer necessary, thanks to accounting automation.
With the advent of accounting automation, the early adopters are leaving the outdated processes of manual entry behind, placing trust in the system and experiencing a newfound ability to make business decisions much faster. However, those who delay the adoption of accounting automation and the process of training their team are inadvertently halting business growth. As the business world adopts this technology and growth expands at a more exponential pace, businesses that delay will be left behind.
What is crucial for businesses considering this technology to know is that developers of accounting automation are not replacing the time-trusted processes of revenue and expense tracking, data entry and ledger balancing. They are simply adopting these best practices and automating them. In other words, the software collects, digitizes, categorizes and reconciles the data, which ultimately produces real-time reporting. This frees up the time of the accountant.
A common misconception about accounting automation is that the system takes over, and that is that. However, from the start, an investment of time is required to train AI in each facet of a business’s financial picture. For example, when training the software, receipt uploading and categorization by the bookkeeper is required for the system to understand how to categorize the expense in the future. Most accounting automation systems sit on top of existing tools and extract the relevant data. Once the machine is trained, the accountant’s time is freed up to analyze the real-time reports and make faster business decisions. The accountant role of the future will move into more of an advisory one, taking on higher-level responsibilities.
Accounting automation is the long-term way to achieve business goals
With the adoption of accounting automation, businesses can see their full financial picture. Accurate profit-and-loss and real-time financial dashboards are a game-changer for any company. With accounting automation, annual budgeting, forecasting and resource allocation decisions can be made at any time of year. Companies will be better able to understand their metrics, including cash position, debts and money movement in real time. Workforce planning tools will be better utilized, allowing a business to assess payroll and budget, thereby accurately planning for sufficient headcount. Expenses can easily be trimmed, and a full financial picture can be achieved, allowing business leaders to make decisions on a much faster basis. Businesses can expand at a faster pace, adjust their product or service offerings, and manage their workforce more effectively.
It’s clear the benefits of accounting automation largely outweigh the discomfort a team may experience in adopting this technology. With the world moving faster and technology evolving daily, every business leader should consider adopting accounting automation if they want their business to remain competitive and experience the growth this technology may promise.