What is Automated Accounting? Benefits and Best Practices

Did you know about half of professionals use automation in accounting to replace manual, time-consuming tasks? From improving cash flow management and decision making to reducing costs, the benefits of business automation are hard to ignore.

In particular, accounting automation provides a variety of crucial benefits to improve sales strategies and enhance efficiency. With technology developing rapidly and customer expectations rising, implementing an automated accounting solution will give you a clear edge over competitors.

In this blog, we’ll explore:

• What is automated accounting?
• How does automated accounting impact sales?
• Benefits of automated accounting
• Automated accounting best practices
• E-invoicing rules
• How to choose the right automated accounting software

Let’s dive in.

What is automated accounting?

Accounting automation refers to computers replacing manual bookkeeping methods. Through a combination of advanced accounting software, machine learning and artificial intelligence, automated accounting expedites basic data entry processes to save time, enhance accuracy, and improve cash flow management.

Automating accounting processes don’t replace human expertise, but they do reduce the burden on your team to free them up for higher value tasks. With software handling manual accounting duties like automatic invoicing, financial calculations and reports, your accounting team can focus on more important strategic responsibilities like investment planning or budgeting.

How does accounting automation impact sales?

You can unlock a number of benefits for both your sales and finance teams with automated accounting. If you’re looking to optimize your sales strategies, accounting automation offers:

Real-time insights

With access to real-time data, your sales teams can get the latest information on revenue, profit margins and expenses. Not only does this allow them to track their performance against targets, but it also means they can see which products or services are the most profitable and adjust their sales prospecting methods accordingly.

Cost control and pricing strategies

Automating the analysis of financial data allows businesses to determine more competitive pricing strategies, taking into account sales-related expenses to better control marketing spend, sales commissions, and discounts.

Compliance and risk management

Automation reduces the risk of human error in accounting, ensuring more accurate financial records and reducing the risk of non-compliance, which could negatively impact sales if penalties or fines are incurred. Reliable, automated financial data gives sales leaders more confidence in their strategies when presenting to stakeholders or investors.

Benefits of accounting automation

Besides the obvious productivity benefits of automating your accounting processes, you can expect many other improved business outcomes when you invest in accounting software. Let’s dive into some of these benefits and how they will impact your organization.

Enhances data accuracy for better decision-making

Automated accounting ensures accurate calculations by reducing human error in financial data entry, leading to more reliable financial reports. Access to real-time and error-free data helps organizations generate accurate reports that can guide critical decision-making processes and ensure leaders can make business decisions with confidence.

Reducing errors also prevents any unnecessary costs or fines, and the expenses associated with correcting these mistakes. This not only improves profit margins, but also enhances customer satisfaction and boosts brand reputation.

Speeds up financial reporting for timely resolutions

One of the greatest benefits of accounting automation is how much it speeds up report generation. In just a few clicks, businesses can produce accurate financial reports that allow them to sort, filter and visualize data in seconds.

This efficiency means businesses can produce reports as frequently as they need to, improving transparency and accountability and enabling faster decisions on everything from budgeting to cost control. Generating accurate financial and expense reports quickly also means stakeholders and management can stay up-to-date on financial health, enhancing overall operational efficiency and business processes.

Improves cash flow management for sales teams

Automated accounting systems enhance cash flow management by streamlining the creation of cash flow statements and forecasts. Sales teams can use the timely and accurate cash flow forecasts to understand how much working capital is available for operations – allowing them to make better decisions regarding investments, discounts, or sales strategies.

Accessing real-time cash flow insights gives you confidence that funds are available to support ongoing operations. This empowers businesses to maintain a healthy financial position, avoid liquidity issues, and plan for expansion.

Increases sales efficiency by reducing manual tasks

Automating routine bookkeeping tasks significantly increases sales efficiency by eliminating the time-consuming and error-prone aspects of manual bookkeeping. No longer having to spend so much time on manual data entry frees up resources and accelerates workflows, giving teams more time to strategize and close deals. Focusing on revenue-generating activities rather than administrative tasks means sales teams are more likely to bring in new customers and boost revenue.

Having access to the latest financial insights also aids in driving smarter, faster decisions. For example, if you’re selling VoIP for small business, you can use your automated accounting system to review profitability margins and adjust your strategy accordingly. If clients on the basic VoIP plan have a higher churn rate and lower profitability compared to those on the premium plan, the sales team can shift their focus to promoting the premium plan to potential customers, knowing it brings in more consistent revenue and higher margins.

Reduces operational costs by minimizing human error

Mistakes are unavoidable when humans are involved. But with automated accounting, computers take the guesswork and risk out of manual accounting to avoid costly mistakes in business expenses. Accounting software reduces the risk of miscalculations and incorrect cash entries, streamlines expense tracking, and saves on costs related to error correction or penalties.

The reduction in manual labor required for bookkeeping and financial management also leads to lower operational costs, as businesses can optimize their workforce and resources more effectively, maximizing profitability.

Provides better customer insights through integrated systems

Nowadays, being able to integrate all your systems is an absolute essential. Whether it’s CRM systems, automated marketing tools or project management solutions, combining the power of the platforms you use day in day out will ensure ultimate collaboration and efficiency.

The insights gained from integrating these programs empowers you to enhance your business strategy by tracking customer purchasing patterns, payment behaviors, and sales trends. Armed with this information, you can optimize your business processes and tailor your sales efforts and inbound marketing campaigns more effectively. This holistic view of customer interactions improves customer satisfaction and drives revenue growth, helping you align financial and operational goals.

Automated accounting best practices

As with all new business processes, getting it right the first time requires some research, training and effort. We’ve put together some best practices below to help you get started.

Ensure data accuracy and consistency before automation

Before doing anything else, you need to make sure you’re starting with reliable data. Inputting incorrect, duplicated or inconsistent data will cause you a whole host of problems further down the line and will mean you have to start right back at square one again.

Avoid this by reviewing existing records, correcting any discrepancies, and establishing standard formats for data entry. Automation relies on clean, structured information to deliver reliable results, and inconsistencies in data can lead to errors in financial reports or decision-making.

Verifying your data beforehand helps the system run smoothly and reduces the need for manual intervention later on, but your chosen software solution should also be able to flag up any discrepancies or errors.

Integrate real-time data from various sources for a centralized view

Integrating information from multiple sources will give you the best and most up-to-date overview of data. Automated accounting systems that pull data from different areas of the business provide a unified financial perspective across departments, which leads to better resource allocation and faster strategic adjustments. This real-time integration helps companies stay up to date with sales trends, cash flow, and expenses, making it easier to react swiftly to market changes.

For example, the system might show that one product is selling faster than expected, and cash flow forecasts indicate that current inventory will soon run out. With this clear financial insight, the company’s sales and purchasing teams quickly increase the budget to restock and avoid shortages. This quick action not only takes advantage of the sales trend but also keeps operations running smoothly without affecting cash flow, helping the business maximize its revenue opportunities.

Conduct regular data validation to prevent errors

Although automation reduces the risk of errors, it doesn’t eliminate the need for oversight. Regularly validating your data will ensure financial records remain accurate and compliant, keeping the automation process running smoothly and giving you confidence that your reports and analyses are based on trustworthy data.

One thing that helps with this endeavor is setting up automated validation rules for incoming transactions. This catches inconsistencies early, preventing small errors from turning into costly mistakes. These checks should be built into the system to flag any irregularities, such as mismatched invoices or incorrect data entries.

Establish clear procedures for handling exceptions and errors

Even the best automation systems can encounter exceptions or errors. That’s why it’s so important to have clear protocols in place to manage them – especially when new staff come on board or you need to integrate new platforms.

Having predefined procedures and workflows in place will help resolve these issues quickly and efficiently. Whether it’s a flagged transaction or a system error, your team will know exactly how to respond to minimize disruption to operations. For example, creating a process for reviewing flagged invoices or adjusting cash flow errors helps keep your financial operations on track without significant delays or setbacks.

Educate employees on automated workflows and their role

Automation works best when employees understand how the system functions and how they fit into the workflow. As we identified earlier, there will be times when your automated accounting software needs human intervention to ensure it operates to its full capacity. Training staff on how to use the system means they can identify potential issues and report errors quickly, keeping things running smoothly.

This training creates a culture of efficiency and accountability, where everyone is aligned with the company’s automation goals. For employees who may be resistant to change, thorough training will help them understand the importance of the system and how this benefits their role specifically. This ultimately drives better performance and outcomes for the software, the employee, and the business.

Automated accounting and e-invoicing rules

One of the most useful features of accounting software is e-invoicing. E-invoices can be generated automatically with all the correct transaction data, tax-compliant information, and localized currency and language.

Because of the sensitive nature of e-invoices, it’s no surprise that there are strict rules and regulations governing how electronic invoices are generated, transmitted and stored – especially with the global e-invoicing market projected to grow by 18% in the next decade.

Rules vary by country, but they exist to improve transparency, combat tax fraud, and ensure accurate reporting. These rules typically include:

1. Compliance with tax authorities

E-invoices must often be directly submitted or validated through government platforms, ensuring that tax information is reported accurately and on time.

2. Digital signatures

In some regions, e-invoices must include a digital signature to verify their authenticity and prevent tampering.

3. Data privacy

E-invoicing systems must protect sensitive data, adhering to privacy laws such as GDPR (General Data Protection Regulation).

Using automated accounting software can help you comply with the relevant e-invoicing for your regions by generating invoices in the correct format, integrating with tax platforms, applying digital signatures, securely archiving records, validating invoices for errors, and ensuring data security.

This replaces a lot of manual work for your staff and ensures all these essential processes are automatically in place, enhancing accuracy and maintaining compliance with local regulations.

How to choose the right automated accounting tool

Choosing the right accounting software solution requires some research. From identifying your own needs and objectives to comparing pricing plans, here are the key steps to follow when selecting an automated accounting tool:

1. Assess your business needs

You first need to understand the scope of your business and what capabilities you need before you can implement a solution. Identify the specific accounting tasks you want to automate, such as invoicing, expense tracking, or payroll. Consider the size of your business, industry requirements, and compliance needs.

2. Evaluate features

Look for key features like real-time financial reporting, tax integration, multi-currency support, and scalability. Make sure the tool can support future growth and integrate with your existing systems and established frameworks like TOGAF business architecture. If your business operates seasonally for instance, you’ll need a system that can scale up and down as demand fluctuates.

3. Check usability and support

Whatever solution you pick needs to be user-friendly for your team. Check out the training resources on offer, customer support, and ease of onboarding to ensure a smooth implementation. Read reviews and testimonials from previous customers to see how businesses similar to yours rate the system.

4. Consider budget and pricing

Compare pricing plans based on your business size and required features. Check for hidden costs, such as additional fees for upgrades, support, or integrations.

Quaderno for accounting automation

Quaderno's accounting automation empowers you to take control of your business, stay compliant and simplify your tax processes. Trusted by leading e-commerce brands across the world, Quaderno offers a range of features and capabilities including:

• Automatic invoicing localized to language and currency
• Tax-compliant invoices for every transaction according to local tax rules
• Expense management and recurring expenses
• Business reports that centralize all transaction data from across your sales channels
• Self-service dashboard for customers to update their own billing information and view their payment history
• Instant tax reports that track your input and output taxes, everywhere you operate
• Seamless integration with PayPal, Shopify, Stripe and many other e-commerce platforms.

Curious how Quaderno can save you time and give you peace of mind? Start your free trial today to see the solution in action.