The combination of COVID and, ongoing supply chain disruptions, have challenged businesses and caused many to foresee a slowed economy.
Under such circumstances, business owners and managers have focused on cost savings and margin growth as they prepare. Although cloud accounting and accounting automation may not seem a priority, the company should include it in these preparations. Research shows that companies that cut costs and improved productivity during past downturns achieved better returns on equity or investment than those that didn’t.
Benefits of cloud accounting automation
Automating manual accounting tasks with cloud accounting tools has many benefits: greater productivity, better use of resources, lower overhead and more. These results are far-ranging and pay off for businesses in several ways, including:
- Increased efficiency
Manual processes are, by their nature, inefficient, taking longer and requiring more resources to complete than when automated. Tasks like entering vendor bills, creating invoices and processing customer payments are also labour-intensive, especially when dealing with hundreds of transactions.
These sorts of mundane, highly repetitive processes are ideal targets for automation. Rather than entering transactions manually, for instance, they can be created automatically from scanned documents or, in the case of recurring transactions, on a predefined schedule. These efficiency gains free up time, allowing team members to focus on higher-value activities like analysing data and providing strategic insights that improve company performance and reveal ways to lower costs and work more efficiently.
- Lower labour costs
With fewer students graduating with accounting degrees, filling entry-level positions has become difficult. The funnel of experienced job candidates has reduced as a result, and with large organisations offering better salaries, turnover has also become a problem. Attracting and retaining qualified accounting staff is a real challenge for midsize and emerging businesses.
Cloud accounting automation helps in a couple of ways. Because it increases efficiency, fewer people are needed, so losing a single staff member has less impact on productivity than in companies that lack automation. Automation can also ease workloads, reducing stress and freeing time for less mundane tasks, which aid employee retention. And should the business grow despite the economic downturn, accounting departments that are sufficiently automated may be able to hold off on hiring new personnel, preventing labour costs from rising.
- Better data quality
It’s no secret that manual data entry is a common source of accounting errors. A simple slip-up can throw off account balances and affect the accuracy of financial statements. Relying on spreadsheets to keep track of depreciation, allocate expenses or perform other everyday accounting tasks increases the risk of errors.
As the use of data for decision-making and strategy increases, avoiding errors has become more critical. The finance department is often seen as the primary keeper of company data, responsible for ensuring the accuracy and completeness of financial records and operational and statistical data. Automation improves data quality by reducing the need for spreadsheets and manual entry.
- Risk mitigation
Companies with poor financial controls are more likely to be taken advantage of than those with effective ones. Invoice fraud, including overcharging, sending duplicate invoices and billing for goods or services that weren’t provided, is one of the common ways businesses are victimised.
Automating accounts payable minimises the risk of fraud by automatically comparing invoice details to purchase orders and receiving documents to ensure pricing, unit quantity and totals match. This three-way matching can simplify accounts payable processes by automatically scheduling approved invoices for payment while flagging anomalies for further investigation by AP staff.
NOVA helps businesses automate accounting with cloud accounting solutions
Without adding headcount, CFOs are responsible for leading their teams to improve productivity as a whole. It isn’t easy to have manual data entry and spreadsheet-based processes to achieve it. With NOVA’s cloud accounting solutions and different partnership, we help our customers to overcome these limitations with top-tier cloud accounting solutions that increase productivity and improve data quality and accuracy with accounting automation.
Here are a few examples of how our cloud accounting solutions can automate accounting workflows:
- General Ledger
- Depreciation and Amortisation - Ensuring the expenses are recorded into the account consistently and applied to the appropriate cost centres according to the recurring schedule.
- Revenue Recognition - Apply standard revenue allocation rules for each business unit, or develop custom rules if necessary. Recognise revenue automatically according to the specific schedule of each contract commitment on a timely basis.
- Journal Entries - Reduce reliance on manual data entry with rules-based consolidation elimination, inter-companies transaction within the group, and auto-posting journal entries.
- Accounts Receivable
- Invoice Creation - Avoid duplicate data entry by converting sales orders into customer invoices with a simple click.
- Subscription Billing - Some of the solution supports multiple pricing scenarios which best suit Software as a Service (SaaS) technology startups, including tiered, volume and customer-specific pricing model; variable or consumption-based charges; and promotion pricing or discount, as well as fixed-fee billing.
- Scheduled Billing - Automate the creation and delivery of invoices by email. Flexible rules-based schedulers can be easily modified before being sent or put on hold as needed.
- Aging Management - Reduce outstanding AR aging days to minimise bad debt by automating sending payment reminders and dunning letters.
- Settlement Processing - Automatically process customer settlements via multiple types of credit cards, direct debit, Apple Pay and other payment services providers without integrating with numerous payment networks.
- Invoice Consolidation. Automatically combine multiple invoices for the same account into a single consolidated invoice and deliver it to the recipients.
- Accounts Payable
- Purchase controls - Automated three-way matching and approval workflows simplify the process of confirming the delivery of goods and services before issuing payment.
- Bill creation - Automatically create vendor bills from existing or previous purchase orders.
- Recurring billing - Expenses like utility bills, rental payments, telecommunication or subscription fees can be automatically scheduled for recorded payment or approved.
- Reporting / Account Closing
- Bank Reconciliation - Nightly bank downloads and intelligent automation automatically match journal entries to bank account details, flagging discrepancies for further review. Missing entries, such as bank and transaction fees, are created automatically.
- Transaction Matching - Automatically match customers' payments to the appropriate open invoices, confirming whether the payment was made in full or updating the remaining balance in the case of partial payment. Potential errors are flagged for further review.
- Intercompany Transactions - Sales orders are automatically linked to corresponding purchase orders as they're created to simplify the processing of intercompany transactions. Automated netting facilitates the reconciliation of intercompany accounts.
- Financial Consolidation - Accelerate the close process with automated consolidation of subsidiary-level transactions and ensure compliance with relevant accounting standards, tax codes and reporting requirements wherever your business operations.
Want to learn more about how NOVA helps with business accounting automation? Click here to discuss further with our representatives and read more about cloud accounting.
