Manual Accounting process and its challenges
Even today, in many firms the accounting process is manual, which involves repetitive tasks like Manual data entry into a computer, Manually reconciling bank statements, Paying suppliers one by one, Producing financial reports in a spreadsheet, and chasing after documents from your client.
Different studies show that as much as 86% of present-day accounting work has the potential of being automated. If it takes so many working hours to perform these tasks, it’s clearly quite natural that the costs are saved on a significant scale by automating these processes.
Artificial intelligence (AI), Robotic process automation(RPA) are rapidly bringing change to the way financial institutions are operated and this change is expected to take over the core aspects of the accounting industry. The accounting profession has changed its focus from the paper and pencil era to the software and computer era. This study aims to examine the impact of artificial intelligence on the accounting industry and the level of advancement of the accounting industry in automating the accounting process.
Automation means using technology to perform tasks you used to do manually; most accounting operations can be automated using basic technologies, such as:
- Optical character recognition (OCR): Scans and digitizes physical documents like receipts and pulls numbers from them.
- Robotic process automation (RPA): Automates repetitive tasks by mimicking human actions.
With these technologies, powered by AI, RPA, and machine learning, businesses will be in a place where they don’t need to fiddle with expenses and revenues through manual data entry.
In recent years productivity has increased across all fields. Without automation it wouldn’t be possible to manually manage an increasing volume of data, avoiding the mistakes which can occur when human beings are the ones entering the data manually.
Let’s discuss a few Accounting tasks that can be automated in the section below:
Running after employees to collect receipts is never fun. If you issue corporate credit cards or reimburse employees for expenses, you can save time by eliminating the need for tracking spending via paper receipts. Automating expense management can help us by:
- Simplifying receipt uploading with snapshots
- Matching data from company credit cards to receipts
- Creating an easy approval process
- Forwarding expense data for bookkeeping
Payroll is among the most tedious and highly automatable parts of bookkeeping. Sorting through employees’ working hours, tax documents, and employment types is quite time-consuming. Automating payroll can help us by:
- Calculating the net pay for each employee
- Disbursing paychecks with a click
- Inputting data to the accounting system
Reconciliation is an important part of accounting. It involves matching your accounting records to bank account statements to spot and correct any discrepancies. A bank reconciliation tool will check your records in a fraction of the time it takes to do it manually. Automating bank reconciliation can help you by:
- Matching your books and bank statements
- Flagging any missing or double entries
- Rectifying inconsistencies within cash records
- Detecting fraud in real-time by initiating periodic reconciliations
Accounts receivable are the lifeblood of small and midsize businesses. If it goes wrong, it will directly impact the revenue streams. It includes issuing and tracking invoices and working with multiple teams–finance, sales, and customer service. The involvement of so many stakeholders and approval authorities makes this process time-consuming and prone to human error. Automating AR can help you by:
- Generating accurate invoicing against sales records
- Getting quick approvals
- Issuing prompt reminders to customers for payment
Accounts payable is what you owe to others; it can be bills, rent, etc. Delaying your payments can cost you by accruing expensive fees, not to mention a lousy rapport with suppliers. Accounts payable management requires many discrete steps involving multiple business units, which often becomes the cause of delays and bottlenecks for accounting professionals. Automating AR can help us by:
- Collecting bills in a central repository
- Initiating auto-matching of deliveries received against bills
- Automating approval processes for invoices
- Initiating payment to suppliers
- Recording transactions to your accounting software.
Tax compliance and financial reporting:
This is where automating accounting becomes more than transactional as tax season is stressful. Calculating tax obligations and preparing financial reports is not only labor-intensive but also complicated for accountants. Moreover, these reports are difficult for non-accounting stakeholders to understand, thus, requiring accountants in small businesses to diversify as advisors and deliver insights. Automated Tax compliance and financial reporting software can do wonders for the finance teams by giving them the time and means to identify trends and even forecast results. It will make your tedious processes simple, more accurate, and more efficient. Automating tax compliance and financial reporting can help you by:
- Updating taxes based on your region and current rates
- Preparing tax returns
- Creating financial statements
- Predicting future revenue
Learn how Financial Compliance impacts Data Backup & retention
With Automating Software like DBSync, it becomes easy to automate your accounting process and save on time, money, and compliance issues.