Businesses have always used machines to make their work easy. Though the use of automated machines initially began with manufacturing activities, their use in accounting has been booming. Automation enables companies to process a large volume of data and reduce manual processing at cheaper costs.
Automated accounting is beneficial to the firm in the following ways;
– It quickly gathers and collates data from various sources.
– Communicates with users and customers easily as it records all information and monitors data to generate various reports.
– Detects errors and forecast future performances and outcomes.
Automated accounting reduces manual processing to the bare minimum and accounting tools and software handle processes. This provides better control, transparency and helps companies to focus on other important activities. Accounting automation is useful in the following situations:
- Transactions are of repetitive nature
- They are a high chance of errors
- Data and information are available in digital mode
- The processes follow a repetitive sequence.
While automation in accounting is a welcome change, there are some misconceptions, too. One must take nothing that is said at just face value but fully understand this accounting tool and how it can help in business success.
Expectations V/S Reality
1. Automation will replace humans and make them jobless
Automation makes regular jobs like bookkeeping and reconciliation easy. However, it cannot replace accountants. Companies will require accountants to oversee the automation. With automation in place, accountants need not spend time on regular and mundane activities. They can focus their efforts on budgeting, financial analysis, and other strategic decisions that can help the business grow.
Accounting information is sensitive and it will require people to interpret data even though Artificial Intelligence would do the processing part of the job. Accounting automation is at its initial stage of development. It will soon grow, and accountants should be ready to develop the skills required to use this powerful tool. Thus, automation would never replace humans but would complement them and they both will work for hand in hand.
2. Accounting Automation is Expensive:
Companies always find ways and means to reduce their expenses. They have this misconception that automating processes is a costly affair as it would require new software, systems, and also training employees.
However, this is not true in reality. Companies can review their processes and enable automation for only some important processes based on their needs and the budget. They do not need to automate all processes, but begin slowly with one process at a time and gradually proceed to other accounting processes. Companies can also do automation at different levels to reduce costs. Doing so will not only help the company fulfill its budgetary requirements but also enable the employees to get accustomed to automation slowly. Thus, initiating accounting automation at the company’s own pace will help to increase employee confidence and pave the way for its growth and success in the long run.
3. It is the software that handles the entire accounting automation, and there is no control by people over the process.
People are resistant to change. This is truer when technology replaces the tasks that they have been processing for ages. People feel they will lose control over their operations after installing new systems. Eventually, after automation, they depend on the accounting systems and believe that the entire process is in total control by the software and they have very little to contribute.
The reality is just the opposite. As accountants have in-depth knowledge of all procedures and processes, they can control and enforce the processes that the system needs to perform. Though all the processes in automation take place in the backend, the sequence remains the same as performed by the accountant manually. In case of system failure or any processing differences, it is the knowledge and the experience of the accountant that will come in handy and avoid any disruptions in day-to-day operations.
4. Expecting immediate changes after implementing automated accounting.
Companies believe that once they automate accounting, they will generate reports immediately. On implementing new software or system, they presume that all data and analysis will be readily available. They think everything will now be done in a new manner and the old method of doing accounting will be done away totally.
That is not the case. After installing an automated accounting system, several checks have to be done. Most of the time companies have to run their manual systems along with the automated system to ensure that it provides accurate results. This process takes time depending on the type of process that was selected for automation. There are different scenarios that take place in a normal working environment. A newly installed system cannot replicate these scenarios until they program it to do so. Hence, the system is only ready and fully functional after the accounting team gains confidence that the system or software can provide the right solutions in any scenario.
5. Accounting automation leads to huge cost reductions and increases the bottom line immediately.
There are some common expectations from every company management after investing huge amounts in accounting automation. They will immediately want to see their expenses reducing and profits increasing. If they notice costs are not reducing, they quickly blame the system, and sometimes they resort to old methods of processing and give up on automation totally.
This is not always true. Just installing an automated accounting system does not solve all problems in a snap. It takes time for the system to sync with the operations of the company. Companies need to be patient and the returns of investment in automation payout after several months, but the company will never be at a loss after implementing automated accounting. Over time, both the employees and the system will work out to be a helpful proposition for the company and its business.
Still, Confused? Get your Doubts solved :
The expectations from automated accounting are many as every business has different kinds of needs. Many companies are confused about the application of this technology and its benefits and usage. To solve all these issues, Diligen is always just a call away. Diligen has a specialized team of accounts, finance, and IT professionals who have knowledge and experience in automated accounting systems. Diligen has provided many clients with tailor-made automated accounting solutions based on their needs and their budget. We provide hands-on training to the client’s employees so that they can easily understand and use the system once it is implemented. Also, we ensure that all the expectations of the clients are fully met and provide the best solutions to satisfy them. Providing both tailor-made and pre-build solutions to fulfill every accounting need of the client.