Do you know how a business determines if its transactions and functions are profitable or not? It analyses the data collected and recorded in the business books during the bookkeeping process. Earlier, bookkeeping was done manually, but it was prone to errors and used too much time and resources. To overcome these issues, automated bookkeeping services have been introduced. Automated bookkeeping, in-house or outsourced, saves businesses time and resources and reduces the chances of error to provide accurate and reliable business financial records. Let us read further to know more about automated bookkeeping services.
What is automated bookkeeping?
Automated bookkeeping refers to completing bookkeeping activities with the help of computers and software. The automated bookkeeping services help businesses manage their basic data entry and bookkeeping tasks by using AI (Artificial Intelligence) and ML (Machine Learning). To better understand automated bookkeeping, it can be split up into three different parts, namely:
- Categorization- Machine learning allows businesses to categorize their transactions properly. Instead of just applying the simple rules, machines consider hundreds (or thousands) of variables for data categorization at the same time. Accounting software using the automated bookkeeping system can achieve greater accuracy and efficiency.
- Investigation- Machine learning technology helps bookkeeping software to confirm the transactions and very them, offering businesses a sense of confidence. It even provides feedback about unknown transactions and suggests uncategorized transactions.
- Transaction improvements- It isn’t easy to understand data without any context. Automated bookkeeping helps conduct audits to get necessary information about old and new transactions. The thorough information generated by the automated bookkeeping services makes clients’ check-ins more accurate.
Top tasks that can be streamlined by automated bookkeeping
Bookkeeping involves tracking and entering data in the business’s books of accounts, and it requires diligence to ensure not missing anything and keeping the final data accurate. To use automated bookkeeping services in a better way and understand their importance, it is critical to know what tasks can be streamlined with their help. Following are the top tasks that can be streamlined with the help of automated bookkeeping:
- Bank and credit card data transfer- The automated accounting and bookkeeping services record all the debits and credits on the business’s bank accounts and corporate cards as soon as possible. This ensures that the transaction details match the business’s finance platforms and that cash balance and cash flow data used for analysis and reporting are always up to date. A business must verify that its accounting software includes integration with its specific financial institution or credit card provider if the software does not provide the automation.
- Transaction categorization- Machine learning technologies allow businesses to arrange transactions into relevant categories in their accounting software automatically. For example, a business that pays $100 monthly for a CRM system automatically classifies these transactions into their Software expense category. When manually categorizing a large number of transactions, automated accounting services can easily understand them and accurately arrange them.
- Accounts payable invoice management- In some cases, the business’s bookkeeper or finance department has to hunt through accounting software files to locate the corresponding entry in the accounting system. Then, it has to email the invoice to a manager for approval and file the invoice for accounting purposes. Alternatively, a business can set up an automated accounts payable system to detect which emails are invoices and process the information. With the help of these details, the system will match the invoice to the relevant expense and any supporting documents (e.g., purchase orders), apply the correct category code and assign it to the appropriate person in the business’s approval workflow.
- Receipt filing- A business can eliminate the need for paper receipts by scanning or updating their images into a corporate credit card or reimbursement system. This system takes care of the rest of the activities, like extracting key data from receipts, archiving images of them, and paying out reimbursement to the person who submitted the receipt. A business can also use the apps to upload receipts as soon as it has made the payment.
- Payroll management- It can be difficult to keep track of and calculate the payroll for a business using an individual payroll tool as there are a lot of laws and regulations to follow and significant penalties if a mistake is made. Payroll tools can help eliminate human error from a business’s processes by removing the risk of technical mistakes. Some accounting software offers built-in payroll automation, but some specialized payroll tools, such as ADP or Surepayroll, may also do the job. Payroll automation will track employees’ hours, compute their pay (including commission payments, bonus pay, and wage deductions), and compute payroll taxes.
Benefits of using automated bookkeeping services
Accounting and bookkeeping services, in-house or outsourced, help businesses manage financial functions to ensure the final reports are accurate and reliable. The process has become easier and faster with the introduction of automation. Let us see the benefits of automated bookkeeping to understand why a business should switch from manual to automation.
Instead of spending too much time manually entering the business’s financial data in the books of accounts, the finance team can focus on the tasks that need their expertise and experience, such as analyzing data, improving different processes, and building better financial projections. Automated bookkeeping takes care of the data entry process without wasting too much time and resources.
Access to real-time data:
Automated bookkeeping updates business records as soon as the data is available, so real-time business insights will always be available. Businesses don’t need to wait for their bookkeeper to work on the accounts.
As computers are less liable to make mistakes than humans, businesses are likely to encounter fewer errors and have duplicate or missing records.
As automated bookkeeping services have almost replaced the manual bookkeeping process, accounting statements’ accuracy, reliability, and speed have increased. It also helps businesses enhance productivity and profitability by relieving their resources and time from repetitive bookkeeping activities. However, choosing the right automated services is vital to get the best benefits out of them. So, understand what automated bookkeeping services are, how it benefits a business, and the options available, before making any final decisions.