Last Updated on August 17, 2021 by Rakesh Gupta
Automation has changed the face of Cloud IT and the industries that rely on it. Not only can data be viewed anywhere, processes can be done instantly with nothing more than a click of a button, if that. While this is a game changer for every industry and business process, this is a boon to financial management.
For the past 10+ years, automated accounting has grown in scope and popularity, so much so that it provides a significant advantage for organizations who have embraced it. This hasn’t been more evident than during COVID-19, with the shift to remote work. This was revealing, both for the power of automated accounting and how companies can build on its potential in the future to great effect.
The Rise of Accounting Automation
It’s important to understand that accounting automation is in no way a new thing. It’s been rapidly developing for years, fueled by many companies shifting from older legacy IT systems to cloud-based programs. However, the scope in automation has grown to more than just basic accounting functions, which is telling. Core accounting automations prioritized central functions like:
- Accounts Payable
- Accounts Receivable
- General Ledger
The way in which these accounting functions can be deployed primarily within three formats.
- Event Automation– Transactional accounting is now more streamlined and easier because accounting solutions can fully automate repetitive accounting data entries through event automation.
- Batch Automation – Batch automation, or batch processing, is automation in which the system completes batches of jobs at once instead of forcing you to do each job individually and manually.
- Scheduled Job Automation – Scheduled job automation ensures that your accounting never falls behind for you or your customers. Once set, these can be easily adjusted to reflect new changes to billing or revenue cycles.
Of course, accounting automations diversified and expanded further as unique accounting solutions started branching out. More advanced accounting software like Accounting Seed also offer automations around advanced processes like revenue recognition. Even accounting-focused automated internal controls are being offered, which are vital for security, compliance, and data accuracy.
The companies using such automations were not only equipped with stronger accounting, but more prepared to weather the COVID-19 storm.
How Accounting Automation Helped Businesses Through COVID-19
Because companies were forced to pivot to a virtual setting, the role of automation became elevated, particularly in accounting. Since December 2020, a survey found that 45% of executives have concurred that the influence of accounting has grown. Of these leaders, 19% described this increased influence as ‘substantially’ impactful. Just because staff work remotely, accounting actions and data can be completed and reviewed automatically without the need for in-person interference.
Remember, financial data is critical for making the best decisions for organizational success. In an uncertain market, this data is even more important to make the most cost-effective and beneficial decisions.
In the economic fallout of COVID-19, cost effective business decisions with high return-on-investment (ROI) became important for steady operation. Organizations using automation were more prepared and empowered to weather the storm and still achieve key goals. COVID-19 has reinforced two things:
- Most of accounting’s manual entry is no longer necessary. Today, about 75% of accounting tasks can be automated. What’s been very clear with the pandemic is that automation allows for a smoother, more efficient experience in a remote environment. An office or in-person environment isn’t required
- Avoiding automation creates a major disadvantage for companies. 43% of financial professionals reported that their organization’s accounting process still required some manual work. When COVID-19 forced a shift to work-from-home operations, extraneous processes like these became a great hindrance for companies not automating their accounting. Additionally, lack of automation threatens the accuracy of data.
With automation, data was also accessible in real-time, and accurate – very important for understanding what’s going on in the organization. Automation makes cash-flow management and forecasting financial data critical for navigating COVID-19, not only more quickly available, but also more accurate and actionable. This allowed businesses to survive and even thrive under lockdown.
The Benefits of Accounting Automation
Accounting was one of the first business processes to be transformed into IT software to save time from manual entry. This brought core benefits to companies which we’ve already touched on.
Here’s a quick overview of just a few overarching benefits of automated accounting.
- Financial processing becomes faster and less demanding
- Data is faster to acquire, easier to analyze and use in critical moments
- Real-time statuses on the time/expenses of projects
- Fewer human-related accounting errors
- More streamlined accounting lifecycles
- Automated accounting eliminated uncertainties for ROI
- Stronger milestones and key performance indicators (KPIs)
- Automation allows for easier and more effective methods of monitoring accounting data
- Financial issues and questions can be resolved more quickly
- Customer behavior, preferences, and other trends can be identified
- Stronger, automated security surrounding financial data and processes
- Compliance and regulation rules are easier to manage
- Increased control and flexibility over financial management
To say automation just makes accounting faster and easier is a major understatement. Harnessed correctly, users have virtually unlimited benefits.
What’s Next for Automated Accounting?
Moving forward, automated accounting will increase. Companies are now looking to recover from the effects of COVID-19 and create a more efficient, effective financial life cycle by adopting more automation in their accounting. Companies not using automated accounting have a significant disadvantage. It’s likely that we will see a surge in organizations looking to harness accounting software. To learn more about accounting automation and its value in business, be sure to check out this free Guide to Accounting Automation In 2021, and be sure to visit AccountingSeed.com.
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