Accounting Automation: What SMB Owners Can Really Expect

Many SMBs are leveraging accounting automation to streamline their financial management. Over 28% are automating bookkeeping tasks, and 52% are using compliance digitization.

But maximizing the benefits of automation isn’t as simple as set-it-and-forget-it. You need to know:

• What automation really means.
• What automation can achieve today.
• Tasks that still need human input.
• Risks of over-automating.

If you want to start using automated accounting systems in your business, you have to do it strategically. Here’s what you need to know.

What Accounting Automation Actually Means

For many business owners, the idea of “automation” means putting their systems on autopilot and eliminating all of the manual work that they need to perform. But automation is not about software that does the accounting for you.

Software automation eliminates manual steps in your workflow so that you can focus on other key accounting tasks.

Tools that fit into this classification include:

• BILL
• Gusto
• QuickBooks
• Rippling
• Etc.

With the right setup, you can achieve a lot of automation that saves you time on the accounting side without eliminating all of your manual input. 

For example, BILL can have automated approval workflows based on custom rules or automate payment execution. Gusto offers auto-run payroll and general ledger syncing. Each of these accounting tools offers powerful features that help small business owners with accounting automation.

Knowing the power of each solution and what it can realistically offer will help you make the right choice for your business.

What Accounting Automation Can Realistically Achieve Today

Automation with rules and the right systems in place can do a lot, but it doesn’t mean that the human element is eliminated in the process.

Areas where automation thrives include:

• Bank feeds and transaction syncing: APIs can pull transactions from your accounting software, such as bank and credit card transactions.
• Receipt capture and expense categorization: Mobile apps and software that read your email will use OCR to capture receipt information and categorize it.
• Invoicing and accounts receivable: Systems routinely schedule recurring invoices, send follow-ups and mark off payments.
• Accounts payable and bill processing: AI can scan bills, populate payment information and send them through approval chains for human approval.
• Payroll processing: Basic payroll can be automated to sync with your chart of accounts. Platforms can calculate gross-to-net pay, distribute direct deposits, file taxes and deduct benefits.
• Financial reporting: Live dashboards compile financial reports for a snapshot of the business’s operational health. 
• Sales tax calculation: Geofencing solutions allow for tax jurisdiction across states and countries.

While tools and platforms provide impressive benefits and reduce accounting workloads, as mentioned before, there is still a need for human input.

These Tasks Still Need Human Input

Automating invoices is one thing, but oversight by you or your team is still needed for a variety of accounting tasks, including but not limited to:

• Categorization judgment calls (don’t blindly trust automated tools)
• Cash flow forecasting and planning
• Audit trail and compliance reviews
• Vendor and client exceptions
• Financial storytelling
• Month-end close
• Tax strategy

Some of the most important, insightful and profit-oriented tasks are still left to humans. If you over-automate tasks or don’t keep a close eye on what you’re automating, it puts your business at risk.

The Risk of Over-Automating

Automation requires a proper setup, but this is not related to your configuration. One risk that’s rarely considered is that a business’s books may not be clean before setting up automated systems.

When the initial data is inaccurate, all subsequent data from automation remains inaccurate.

Human insight would help spot these issues, but many owners take the risk of a “set-it-and-forget-it” approach to automation. If you plan to automate your accounting to any degree, there must be a human review layer.

For example, an OCR for a receipt scan may have a misread figure, turning a $1,200 bill into one that is $12,000 or $120,000. Without human approval and strict rules in place, payments of these amounts may go out and cause overdrafts.

Think about the way you automate your business before the implementation process to avoid costly mistakes.

How to Think About Automation for Your Business

First, outline the biggest time sinks in your operation. Once you have these tasks on paper, you can then review the processes to ensure they’re complete and not broken. If a process already has issues within it, fix them before even considering adding them to your automation queue.

Once you decide to start the automation process, review your tasks regularly.

Ideally, all automation should be reviewed at a minimum of once per month to ensure everything is working as planned.

Final Thoughts

Automation is a powerful component of small businesses. You want to do more with less, but you also need to act strategically. Moving in the wrong direction too quickly can lead to costly mistakes that cost you time and money.

Take automation slowly and with a purpose, and it’s one of the most powerful tools to get more done with less.

To learn more about our technology services or how we can help you with your accounting automation needs, schedule a consultation now.