Automation is on the minds of small and large businesses alike. The advancements technology brings now makes it possible for companies to speed up and automate what would’ve otherwise been a tedious and erroneous process. Among all the other facts of business operations that can be automated, one of the most talked-about is accounting.
The reason for this is simple. Proper and efficient accounting is crucial to a business’s success. For small businesses with the prospect of financial growth, it’s important to get the business accounting right. With small businesses, this can be a challenge as every single penny counts. One mistake could blow up your business’s financial statements, creating the necessity to compute once again those financial records. This is where the promising potential of automated accounting comes in.
If you’re still on the fence about whether your small business should switch to automated accounting from a manual accounting system, here’s a list of the potential benefits to convince you that you should:
1. It May Result In Faster Customer Payments
The right accounting software will have features that’ll enable your small business to get paid faster. This is even true for those customer payments still classified as receivable. Those are customers that have a credit line with your business, thereby comprising your accounts receivable.
In a manual system, you’ll have to send out payment reminders to those clients who have payable accounts to you one by one. Now that you have an automated system, you can accept a wider range of payments and have scheduled payment reminders both for receivable and delinquent accounts.
Faster customer payments also mean you’ll be able to streamline your financial statements even more. The creation of your financial statements becomes more challenging when the payments aren’t in order as you’ll have to keep revising what would’ve otherwise been set payment dates and schedules.
2. It’s More Time-Efficient
One of the ways that a small business can benefit from an automated accounting system has to do with saving time. When previously time-consuming manual tasks are automated, it follows that the time spent to complete those tasks is cut. For small businesses who scramble on for growth, anything that can buy them more time is heaven-sent.
Even small businesses will need accountants on their teams to complete their financial records. And no matter how well-skilled an accountant is, there’s always the likelihood of mistakes given the heavy workload and computations they go through regularly.
For those on the accounting team of the small business, any simplification in the financial closing process is a good advantage to free them of some manual computations.
For small businesses, being time-efficient comes with its own set of advantages such as:
- It ensures your accounting team doesn’t miss any deadlines;
- It may enhance your accountant’s work quality;
- It increases your small business’s productivity.
3. It Improves Accounting Accuracy
The human brain has its limitations brought about by overwork, fatigue, and stress. This isn’t unheard of across accountants who may be handling the accounts of multiple businesses simultaneously. So, it’s also not surprising that a few mistakes may be made. Unfortunately for the accounting department, even a small discrepancy like cents can result in an inaccurate financial statement.
With automated accounting, those gaps are filled. A better check and balance can be done to ensure that periodically, the accounts and financial statements are all accurate. A good accounting software will be able to help the accountant in computations related to:
- Sales orders;
- Accounts payable;
- Accounts receivables;
- Credit memos;
- Purchase orders;
- Sales tax;
- Payroll deductions.
4. It Results In Higher Productivity
Going hand in hand with saving time is the added advantage of more productivity in the accounting and finance team. Accountants can do more or produce more financial statements and records in the same period. For accountants, this also means they now have more time to help more clients and go in-depth with any explanations or reporting that’ll be done with your small business, as well as for other small businesses that the accountants handle.
There are many compelling reasons why productivity should be on the agenda of businesses, and these include:
- It may increase your business’s profitability when other employees will now have more time in their hands to do other productive tasks;
- It allows small businesses that may still be short on resources to optimize what they have and be better at the distribution of roles;
- It increases the likelihood of small businesses to seize their potential for growth.
5. It Organizes Financial Information
Another indication of a smooth accounting system is when financial information is properly organized. This is necessary to ease out the job of the accountant. Even small businesses will have a lot of financial data especially when there are daily transactions. If financial information isn’t well-organized, this will make the creation of financial statements even more challenging. Most importantly, confidential financial information would now be at risk of breach and theft due to easy access.
For example, you want to go back to your transactions this month and verify that Client A with a payable account to you of USD$100 paid their due on a certain date. With an automated system, you can verify that information with a few clicks. Otherwise, you may have to go through mountains of records just to find that small sales invoice you’re looking for.
Modern accounting software brings about great potential for small businesses. However, this doesn’t mean that the software replaces the brains of accountants. Your business will still need these professionals, but their job is made more efficient with fewer chances of error when you have automated accounting software to supplement their expertise.
To enjoy the promising ways automated accounting can benefit your small business, the most important factor to bear in mind is to choose quality software. Don’t skimp on what automated accounting can do for your small business as it’ll be all the more helpful in the long run. Consider the ideas mentioned here as you improve and modify your workflow.