Automated Bookkeeping: A Guide From a Veteran Bookkeeper

If you’re a bookkeeper or small business owner who would like to optimize your financial operations, then you should consider automated bookkeeping.

After spending more than a decade working in accounting firms as a treasurer and bookkeeper, I have seen firsthand how modern technology has helped the financial sector run more efficiently and successfully.

The key is to make sure you choose the right tools and services and that your automation strategy aligns with the needs and goals of your business.

What is automated bookkeeping?

Automated bookkeeping is when computers complete tasks that would otherwise be performed manually by financial professionals.

Automated bookkeeping mimics manual data entry with the use of technology and artificial intelligence through accounting software, automated services, and financial tools.

By using one or a combination of these, you can streamline your accounting team’s financial operations and make your business run much more efficiently.

What are the benefits of automation in bookkeeping?

Automation in bookkeeping helps businesses save time on tedious tasks and reduces human error.

There are several key benefits when it comes to automating your bookkeeping process.

1. Saves time

The majority of bookkeeping and accounting tasks, such as data entry, are repetitive and take hours to complete.

Automated bookkeeping minimizes the time spent on these menial tasks so that more time can be spent on high-value tasks, such as data analysis, financial projections, and process optimization.

Automated bookkeeping saves time and makes for a more productive environment.

2. Provides real-time data

It takes time for bookkeepers to keep the various financial records updated manually.

With automated bookkeeping, records are updated as soon as the data is available, so you’re always working with real-time data and insights.

3. Reduces human error

There is always room for human error when keeping records manually.

Bookkeeping automation makes it less likely that data will be recorded and distributed incorrectly.

This means that financial statements and records will be more consistent with more accurate data.

How to choose the right automated bookkeeping software

There is no one-size-fits-all automated bookkeeping solution.

That’s why you need to consider several key elements when choosing your software.

Follow the steps below to choose the right automated bookkeeping software for you:

Step 1. Determine your company’s needs

The first step in choosing the right bookkeeping automation solution is determining your business’s needs and accounting processes.

Your software should align with your accounting process as closely as possible.

Step 2. Only consider the accounting software that’s appropriate for the size of your business

Automated bookkeeping solutions cater to businesses of various sizes.

Some are designed only for small to mid-sized businesses or medium to large businesses, while other accounting software caters to all three.

Make sure the software you are considering is appropriate based on the size of your company, number of employees, users, and business transactions.

Step 3. Narrow the software down based on the features that support and streamline your financial operations

Think about the features that are needed for supporting and streamlining your financial operations.

Do you need any or all of the following features in your accounting software?

• Project management

• Time tracking

• Accounts receivable

• Accounts payable

• Bank reconciliation

• Expense tracking

• Payroll system

• Inventory management system

• App integration

• Certain reporting features

• Cloud-based

Step 4. Make sure the software will grow with your business

One thing that bookkeeping and accounting professionals often forget to consider is the scalability of their software.

Will the software grow with your business as you add more employees, users, and business accounts?

If not, you may have to start all over again by choosing a software option that caters to larger businesses.

Step 5. Ensure that the accounting automation falls within your budget

Before you get carried away with all the bells and whistles—which is easy to do—make sure the bookkeeping software fits within your business budget.

There’s nothing worse than spending time on all the research only to find out it’s out of your price range.

Questions to ask yourself when selecting automated bookkeeping software

Asking the right questions can help you choose an appropriate automated bookkeeping tool.

• What are my company’s needs?

• Is the automated software appropriate based on the

  size of my business?

• Does the automated bookkeeping platform have the features that will best support and streamline my financial data and operations?

• Will the automated software grow with my business?

• Does the price of the software automation fall within my budget?

• Is the software desktop based or cloud-based?

• Does the software come with an app?

• Is the software user-friendly?

• Is the software easy to set up?

• To what degree of complexity can the software handle transaction details?

• Will I have to pay extra for any of the features that I need?

• Does the automated solution integrate with any of my other accounting tools?

• Does the software generate the financial statements that I need?

What are the best practices for implementing automated bookkeeping software?

Automated bookkeeping can easily be integrated into your existing business operations by using the following practices:

1. Let the finance professional with the most technical experience oversee the automation process

Assigning one person to oversee the automation process gives everyone in the company a designated individual to go to for questions or help.

It also gives the representative with the automated bookkeeping platform a contact for communication between the two.

2. Prioritize features needed in your automated bookkeeping solution

While every business has different priorities, there are automated bookkeeping features that I have found to be essential for financial professionals.

These essential features include the following:

• Bank reconciliation

• Billing and invoicing

• Payments and collections

• Accounts payable/accounts receivable

• Payroll

• Cash flow management

• Expense tracking

• Revenue recognition

• Fixed asset management

• Reporting

• Transaction categorization

• File management

• Accounting app

3. Thoroughly educate your team on the software tools and bookkeeping processes

When you first begin to use automated bookkeeping, it can seem a bit overwhelming.

So, take the time to thoroughly and patiently educate team members on the software—it will pay off in the long run!

How can you integrate automation with existing practices?

Implementing bookkeeping software and services is the best way to integrate automation with existing practices.

There are many tasks that can be automated to improve the efficiency of any business.

The practices that are already in use are a good starting point.

1. Tracking cash flow and reconciling accounts

Automated bookkeeping should allow you to link your bank accounts and credit cards to your accounting software so that cash balances from bank statements and cash flow match across the board and are consistently updated.

This will always reflect an accurate picture of the company’s financial position so that sound strategic business decisions can be made at any point in time.

2. Expense management

Tracking and categorizing transactions and expenses manually can be tedious, time-consuming, and often lead to human error.

There are services that automate the expense tracking process that will make employee reimbursements and tax time much simpler.

One of these is Shoeboxed.

Shoeboxed provides digitized automation through its receipt scanning service.

You can either scan the receipt with their mobile app or mail your receipts to the company where it’s then turned into digital data, categorized for tax deductions, and transformed into expense reports.

This is also extremely helpful if you are ever audited by the IRS.

3. Running payroll

Trust me, doing payroll by hand is a royal pain.

Using the manual bookkeeping method for figuring wages, commission, salary, bonuses, state taxes, federal taxes, and other deductions takes an unbelievable amount of time and is like a career in itself.

There are also a lot of laws and regulations to follow and significant penalties for human oversight.

There are automated bookkeeping services and software that will take on this burden for you.

With automated payroll, the software will track employee hours, calculate pay, calculate deductions, and print out paychecks.

Employees can also access their pay information and submit their timesheets via the web.

4. Managing accounts payable/receivable

Automated bookkeeping is an efficient way of staying on top of and paying vendor invoices as well as tracking client invoices.

Accounting software can automatically issue and collect recurring payments and send reminders for upcoming and late payments.

Common mistakes to avoid in automated bookkeeping

Automated bookkeeping systems, while important, cannot replace human assessment.

Automated bookkeeping is not a replacement for human interaction and assessment. While there are accounting errors that can occur, it’s always best to review everything one more time after automation

Mistake #1. Ignoring the importance of human review

While computers are extremely accurate, it doesn’t mean that the manual data entry was entered correctly.

Automated bookkeeping is also geared toward repetitive tasks and not human judgment.

So, it’s still important for a financial professional to go back and review all data and reports at any part of the accounting cycle.

Mistake #2. Overlooking software updates and upgrades

Since laws and regulations change so frequently in accounting, it’s imperative to keep up with all software updates and upgrades.

Mistakes from outdated information can lead to significant penalties.

Mistake #3. Inadequate security measures for financial data

Automated bookkeeping deals with personal and sensitive financial information, and clients want to be assured that their information is secure online.

That’s why it’s important to have the optimal security measures in place for your automated bookkeeping solution so that none of their personal information is compromised.

Frequently asked questions

Is there a way to automate the bookkeeping process?

Implementing automation software and services are two of the best ways to automate bookkeeping and business processes.

What are the benefits of automation in bookkeeping?

The benefits of automating bookkeeping processes include the following:

• Saves time

• Provides real-time data

• Reduces human error

Conclusion

Automated bookkeeping streamlines the financial operations of a business and optimizes its workflow by completing repetitive bookkeeping tasks. 

This saves time that can be spent on higher-valued tasks.

Though there are many bookkeeping services and software tools that enable individuals to work faster, better, and smarter, by no means do they replace human bookkeepers in small businesses.

After all, you can’t have automation without humans running the program, entering the data, or making professional judgment calls. Checkout our AI Bookkeeping article if you want to see how AI help you.

Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service. She uses a variety of accounting software for setting up client information, reconciling accounts, coding expenses, running financial reports, and preparing tax returns. She is also experienced in setting up corporations with the State Corporation Commission and the IRS.

About Shoeboxed!

Shoeboxed is a receipt scanning service with receipt management software that supports multiple methods for receipt capture: send, scan, upload, forward, and more!

You can stuff your receipts into one of our Magic Envelopes (prepaid postage within the US). Use our receipt tracker + receipt scanner app (iPhone, iPad and Android) to snap a picture while on the go. Auto-import receipts from Gmail. Or forward a receipt to your designated Shoeboxed email address.

Turn your receipts into data and deductibles with our expense reports that include IRS-accepted receipt images.

Join over 1 million businesses scanning & organizing receipts, creating expense reports and more—with Shoeboxed.

Try Shoeboxed today!