Automation: The Future of Financial Technology

In every aspect of our lives we are faced with automation. Options or choices that are automatically curated for us, so why not accounting? We order breakfast from options based on a restaurant’s recommendations. We request an Uber to drive us to work or an appointment. We read news feeds that are automatically curated for us based on past behavior on our smartphones.

Bookkeeping has been replaced by terms like accounting or accounting technology to reflect the new paradigm of automated financials. Subscription-based bookkeeping platforms continue to pop up such as QuickBooks, Xero, Zoho Books, FreshBooks, and Wave Accounting.

Almost all service providers are utilizing technology to streamline processes related to financials. Banks push transactions directly into accounting systems, expense management applications talk directly to accounting interfaces, and invoicing can be done directly from an accounting interface. Technology has truly advanced accounting automation beyond the scope of imagination.

Processes That Should Never Be Automated

While bank and credit account reconciliations should be automated as much as possible, there are certain activities and transactions that should always be reviewed by a manual set of eyes or reviewed by an accounting advisor:

• Expense Categorization. With third party applications like Expensify and Concur, it is easy to categorize expenses on the go and with a direct feed to an accounting interface. While this is convenient, certain details might be missed like classifying items under appropriate categories like UberEATS under travel instead of Meals.
• Building a Chart of Accounts. While almost all accounting software come with a Chart of Accounts template, time should be taken by an accounting advisor to be customized based on the needs of the business.
• Bill Pay Applications. Most banks offer an online bill-payment feature and companies like Concur and Bill.com also allow for bill payment. There should always be a human check point for review and approvals.
• Automating Inventory. Automating management of inventory can help streamline your business. It is also important to ensure inventory controls are in place to uncover internal flaws with inventory like damages, theft, etc.

In conclusion, the process of automating may be high in terms of initial cost, but the long-term rewards and savings are residual. Before making the switch here are some things to be mindful of:

• Always have an expert accounting advisor assist with this process. It is very easy to link bank feeds and merchant service accounts to an accounting interface, but being able to do it correctly to avoid dual entries should be left to an expert.
• There are at least a dozen accounting systems geared to SMEs (small and medium enterprises) and it is absolutely critical that company management selects the right software and version for their business. We often encounter situations where a random software selection is made by a company leader that does not meet the needs of the business.
• Selecting the right service providers is also important when automating your business’s accounting. For example: Not all banks can provide live bank feeds to an accounting interface, not all payroll companies can sync directly to an accounting interface, etc.