Calculators, number 2 pencils, ledgers – things that we used for bookkeeping a decade back are now relic materials. Automation has rattled every industry and bookkeeping is not an exception. Now we have computers to do all the number crunching and with the advent of machine learning and artificial intelligence, the accounting industry has its growth in leaps and bounds.
Living in such a technology steered business climate, if you think you are investing too much time in bookkeeping, which results in slowing down the accounting process, you must consider switching over to automated bookkeeping.
If you think of human-like robots and giant machinery when you hear the word automation, this read is right for you. This read will run through what automated bookkeeping is, how it benefits your small business and what to look for when you automate your bookkeeping.
Breaking the Myths of Automation
Automation is no more robots, it can be as simple as a software tool that removes the manual elements in your workflow. And the majority of the small business crowd thinks that automation is only reserved for big enterprises and turns down. Moreover, small businesses are resistant to automation mainly due to the insecurity towards change. They think it takes some time to adapt their bookkeeping process to automation, some think it is costly and some are hesitant to change just because they are new to it.
But automation is not something to shy away from. If you look around, you can see that manual processes have nearly faded out of existence in most small to mid-sized businesses and even your competitors would have adopted automation. So it is high time you take up the call of automated bookkeeping.
What is Automated Bookkeeping?
Automated bookkeeping is the use of software to complete your bookkeeping chores. An automated bookkeeping application can document your payments and other transactions, post credits and debits, generate invoices, handle payrolls and financial statements. Some sophisticated applications can even balance your ledgers.
This means you don’t have to do the manual data entry or number crunching anymore. The bookkeeping software can handle all your bookkeeping tasks while you can navigate the road ahead.
How is it different from manual bookkeeping?
The main difference between automated and manual bookkeeping methods is that you will not be involving yourself in any repetitive data entry tasks, the software keeps tabs on every aspect of bookkeeping. Instead of having a fully packed crew of in-house accountants or contracted or outsourced accountants, you can manage your books on your own.
This does not mean that you are never going to need an accountant for your small business. It is just that you can minimize the complete reliance on an accountant or a bookkeeper for this. This, on the other side, increases the efficiency of your accounting team as they can work on strategies to improve your cash flow rather than sticking to grunt and low-value tasks. With accurate and updated records at hand, your accountant can derive better business decisions with clarity.
Perks of Automated Bookkeeping
Whenever you bring something new to your business, you must make sure that is a value-added investment. If you face complex payment scenarios, automated bookkeeping will be a saviour to your accountant. If you are a DIY bookkeeper for your small business, you can rest assured with automated bookkeeping tools. Below are some of the significant perks of having an automated bookkeeping system for your small business.
The major argument for automation is the speed at which it gets things done. And when we talk about accounting, the most time consuming and cumbersome task is manual bookkeeping. It is generally held that the average speed of manual keying is 12,000 to 15,000 keystrokes per hour. In that light, we can say that it takes roughly 15 hours to record 300 transactions. But a bookkeeping tool can get this done in a matter of minutes.
Automation is known for its accuracy. Statistics say that the average accuracy rate of manual keying is 96 to 98%. It can be pushed to 99% by various practices like double entry. However tried, however vigilant and experienced the data entry person may be, manual keying always has room for errors. But with automation, mistakes just don’t happen. You get to have 100% accurate books all the time.
Simplified Tax Filing
With automated bookkeeping tools, you will always get accurate and intact records. De-cluttered records leave you with easily balanced books. You can enjoy sweat-free reconciliations. Accurate books mean faster accounting and on the dot tax filing. The whole process runs smoothly, without any friction. And with proper records and on-time tax filing, you will only pay your fair share of tax, not a penny less or more.
Improved Cash Flow Management
It is hard for most small businesses to keep track of their cash flow and finances. Cash Flow management can be difficult if your books are not maintained properly. Without proper numbers, your accounting may be hassling and so you may not get a clear picture of the financial flow of your business. But automated bookkeeping gets your books straight and so you will know the exact status of the financial health of your business and make decisions accordingly with better clarity.
How to Automate Your Bookkeeping
The foremost way to automate your bookkeeping is by linking your payment system to your accounting system. By doing so, all your transactions through the payment system will be automatically recorded into your accounting system, without you having to involve yourself. For example, if you are using QuickBooks, you can link your payment system to QuickBooks by using third-party applications like PayTraQer to completely automate your bookkeeping.
If you are selling online, the bookkeeping tool can effortlessly sync all your sales, payouts, refunds, discounts, fees and taxes directly into the accounting software. You don’t have to be toggling between different applications or chase the scattered records to get your books done.
Having everything said, it is high time to take the call of automation for your small business bookkeeping. Stop wasting your time on outdated manual bookkeeping practices and automate your books to stay productive and alive to the prevailing trends.
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