Automated Bookkeeping: Benefits, Drawbacks & Prices

Bookkeeping automation refers to using specific tools and processes to optimize financial operations. It can include accounting software, bookkeeping tools, and even bookkeeping service providers.

Automation helps convert time consuming jobs into instant tasks without direct human input. But not every tool is as useful. Knowing how to choose can make a significant impact on a business.

In this article, we’ll cover:

Why Should You Use Bookkeeping Automation

Benefits of Automated Bookkeeping

Drawbacks of Automated Bookkeeping

How to Automate Bookkeeping

How FreshBooks Can Help

Key Takeaways

Frequently Asked Questions

Why Should You Use Bookkeeping Automation

Accounting automation through accounting software, CFO services, and other means can eliminate redundancies. These and other tools can help create better financial statements. They help accounting professionals accomplish their jobs in a timely manner.

Companies can spend more time working on big-picture goals and high-value tasks. But they can do it with optimized workflows and without compromising the integrity of financial data.

Benefits of Automated Bookkeeping

There are several advantages to using automated bookkeeping.

Save Time

Many bookkeeping tasks are time consuming or low-value tasks. Too often, employees spend countless hours entering data into programs instead of doing what they do best. It doesn’t mean that menial tasks aren’t necessary for businesses to thrive and get their finances in order.

But no company needs their financial team to waste time on small tasks when they can focus on financial projections, optimizing processes, performing data analysis, etc.

Save Money

Repetitive tasks don’t just waste time. They waste money. Any time spent performing low-value tasks is time not spent doing something that moves the business forward.

Automated bookkeeping can save companies money whether they outsource accounting tasks or have an in-house team. Automation takes care of many repetitive tasks while still providing ample financial intelligence.

Real-Time Data

Normally, it takes time for people to update financial records. It also takes accountants and bookkeepers time to go through the data and compile reports.

But automated bookkeeping, when done correctly, can improve real-time reporting. And the better the software is, the more accurate the insights.

Limit Errors

Manual bookkeeping has its place. But human error is always possible. Automation makes it less likely to duplicate records, misplace them, or input the wrong data.

Furthermore, good accounting software can help centralize ledgers and other financial documents. File management and storage become easier, streamlining everyone’s access to relevant data.

Drawbacks of Automated Bookkeeping

Implementing automated bookkeeping comes with some minor drawbacks. It won’t solve every issue in the financial department or fully replace human input.

Requires Human Implementation

Using bookkeeping software is a great way to introduce accounting automation. However, automated software for small businesses needs the proper setup.

Employees and accounting teams must learn to use automated bookkeeping software. Therefore, using bookkeeping services that can configure and optimize the bookkeeping and accounting processes is essential.

Software Lacks Judgment

Bookkeeping automation can streamline client invoices, transaction details, accounts payable, and other processes. However, it won’t help reach the company’s business goals.

An accounting tool offers data but can’t guide a business owner’s decision-making process. Small businesses still need a finance professional or accounting firm to understand the data. People can generate reports and create business plans and budgets.

Human Oversight

Despite what some believe about automated continuous accounting, it’s not infallible. Not every bookkeeping process deserves or requires automation. Manual data entry automation is one thing. It reduces the chances of input error. But all final reports still require oversight and reviews from a professional finance team.

How to Automate Bookkeeping

Automated bookkeeping can take care of manual tasks and several other time consuming processes. Depending on the goal, many bookkeeping services and tools can help.

Use an Accounting App

An accounting app is one of the fastest ways to optimize bookkeeping and accounting tasks. You can use it for the following tasks.

• Expense tracking
• Cash flow tracking
• Inputting transaction details
• Accounts payable tracking
• Accounts receivable tracking
• Payroll tracking
• Purchase orders tracking
• Client invoice automation

Naturally, some automated software can do more bookkeeping tasks.

Payment Processors

Using payment processors is helpful in many ways. First, it can automate income transactions and make it easier to compile cash flow reports.

Secondly, payment processors make it easier to bill clients and receive payments. Fewer payment delays lead to better cash flow. For example, apps like QuickBooks Online support integrations with multiple payment processors like PayPal, Stripe, etc.

Business Accounts

Linking business accounts to reputable accounting software is essential. Many companies have multiple accounts.

• Debit card
• Credit card
• Bank accounts

Integrating all accounts or linking them with automated bookkeeping software makes it easy to track all transactions. Thus, business owners can get a clear overview of income and company or employee expenses. It makes physical receipts less critical and more straightforward to manage. Generating expense reports becomes easier.

Business Expenses Receipts

Integrating business accounts with an automated bookkeeping platform won’t eliminate receipts entirely. But with the right accounting tools, businesses can upload receipt data on the fly by scanning them or taking pictures.

In addition, expense tracking can work with cloud storage solutions like Dropbox and Google Drive. Other apps are more advanced and can extract information from scanned receipts to automatically add them to your accounting platform.

Service Providers

Expense trackers sometimes have to handle a difficult task. For instance, tracking service provider expenses and other costs can be a complex process. However, creating spreadsheets, even in Google Sheets, can make extracting and tracking data easier.

Payroll

Not all accounting and bookkeeping tools are equal. But no matter what you use, it should be good enough to manage the payroll.

Automated bookkeeping solutions for running payroll may offer additional support over automated data entry. For instance, some software tools take into account laws and regulations. Others manage payrolls differently based on industries, rewards, taxes, etc.

Outsourcing

Automation tools don’t always involve software and hardware solutions. Sometimes, automation comes from outsourcing accounting tasks to specialized service providers. Again, businesses have many options.

For example, companies can drop in-house teams for an outside expert. The outside accounting firm can use data to compile monthly, quarterly, and yearly reports. And it can work out great when using automation software.

Third-party bookkeepers and accountants can perform audits. Audits take a lot of time and can halt regular business operations when done in-house.

Implementing software automation is often difficult. Hiring a specialized service provider ensures all accounting tools work correctly. Accurate financial projections and pivoting ideas may require outside input.

Many menial to high-value tasks can benefit from the right input. And that also counts towards automation when outsourced.

How FreshBooks Can Help

It may seem that automation software comes in many forms. That doesn’t mean finding all the necessary tools is difficult. Bookkeeping through FreshBooks allows business owners to access a rich software suite.

The online accounting service can help anyone, from self-employed individuals to medium-sized businesses. It can put repetitive tasks on autopilot and automate many daily activities. The multiple app integrations and online accessibility can take care of expense and invoice tracking. That means your clients are more likely to pay on time.

Furthermore, the intuitive interface and simplified processes make FreshBooks easy to use. Its mobile compatibility is an even greater advantage, especially in hybrid workplace environments. From basic bookkeeping to invoicing to estimates to accurate reporting, FreshBooks is all about optimization.

Key Takeaways

Modern technology is far from replacing a public accounting firm or in-house finance team. However, automated bookkeeping is an excellent resource. Its impact on workflow optimization, data entry, and categorizing transactions is critical.

Bookkeeping automation lets finance professionals and other employees focus on high-value tasks. It declutters the workflow and simplifies many business processes. When employees don’t waste time on tasks that can be automated, they can be more productive. That allows everyone to work towards achieving vital business goals.

Accounting software isn’t a replacement for managing transactions, payroll, and other HR or accounting tasks. It’s a collection of tools that enable people to work smarter, faster, and better. And with the amount of customization for various industries, it isn’t hard to find software per your personal preference or needs.

Frequently Asked Questions

Is Excel used for bookkeeping?

Excel is a powerful spreadsheet program, arguably one of the best on the market. It works with almost all platforms and has advanced computing and graphing capabilities. It can help track expenses and various other financial metrics. For detailed insights on this refer to our guide on How to Use Excel for Bookkeeping Services. It will walk you through a step by step process along with examples.

What is AI bookkeeping?

AI bookkeeping refers to using automation software powered by machine learning algorithms to analyze financial data. AI bookkeeping and accounting tools can look at transactions, expenses, sales, and accounts and create tax documents. Note that AI accounting is assistive technology. Small businesses may still require a professional accounting team.

Why is automation a positive turning point for accountants?

Automated bookkeeping and accounting create more efficiency. They can streamline repetitive tasks and generate more accurate data. Automation helps accountants and bookkeepers easily manage more complex tasks and helps businesses improve their finances.

What is the easiest bookkeeping software?

FreshBooks is the best accounting software for small to medium-sized businesses. The web-based service offers unparalleled accessibility. Not only that, its advanced tracking and reporting features, along with human input, can streamline financial projections and tax reports.

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