Automated Bookkeeping: Benefits, Drawbacks and Prices

Bookkeeping automation refers to using specific tools and processes to optimize financial operations. It can include accounting software, bookkeeping tools, and even bookkeeping service providers.

Automation helps convert time consuming jobs into instant tasks without direct human input. But not every tool is as useful. Knowing how to choose can make a significant impact on a business.

Table of Contents

• Why Should You Use Bookkeeping Automation
• Benefits of Automated Bookkeeping
• Drawbacks of Automated Bookkeeping
• How to Automate Bookkeeping
• How FreshBooks Can Help
• Frequently Asked Questions

Why Should You Use Bookkeeping Automation

Accounting automation through accounting software, CFO services, and other means can eliminate redundancies. These and other tools can help create better financial statements. They help accounting professionals accomplish their jobs in a timely manner.

Companies can spend more time working on big-picture goals and high-value tasks, and they can do it with optimized workflows without compromising the integrity of financial data.

Benefits of Automated Bookkeeping

There are several advantages to using automated bookkeeping.

Save Time

Many bookkeeping tasks are time-consuming or low-value tasks. Too often, employees spend countless hours entering data into programs instead of doing what they do best. It doesn’t mean that menial tasks aren’t necessary for businesses to thrive and get their finances in order, but no company needs their financial team to waste time on small tasks when they can focus on financial projections, optimizing processes, performing data analysis, etc.

Save Money

Repetitive tasks don’t just waste time, they waste money. Any time spent performing low-value tasks is time not spent doing something that moves the business forward.

Automated bookkeeping can save companies money whether they outsource accounting tasks or have an in-house team. Automation takes care of many repetitive tasks while still providing ample financial intelligence.

Real-Time Data

Automated bookkeeping, when done correctly, can improve real-time reporting. The better the software, the more accurate the insights, giving companies the capacity to analyze their revenue and expenses in real-time.

Limit Errors

Manual bookkeeping has its place, however, human error is always possible. Automation makes it less likely to duplicate records, misplace them, or input the wrong data.

Furthermore, good accounting software can help centralize ledgers and other financial documents. File management and storage become easier, streamlining everyone’s access to relevant data.

Drawbacks of Automated Bookkeeping

Implementing automated bookkeeping comes with some minor drawbacks. It won’t solve every issue in the financial department or fully replace human input.

Requires Human Implementation

Using bookkeeping software is a great way to introduce accounting automation. However, automated software for small businesses needs the proper setup.

Employees and accounting teams must learn to use automated bookkeeping software. Therefore, using bookkeeping services that can configure and optimize the bookkeeping and accounting processes is essential.

Software Lacks Judgment

Bookkeeping automation can streamline client invoices, transaction details, accounts payable, and other processes. However, it won’t help reach the company’s business goals.

An accounting tool offers data but can’t guide a business owner’s decision-making process. Small businesses still need a finance professional or accounting firm to understand the data. These experts can generate reports and create business plans and budgets.

Human Oversight

Despite what some believe about automated continuous accounting, it’s not infallible. Not every bookkeeping process is a good fit for automation. Manual data entry automation is a good starting point, as it reduces the chances of input error. Of course, all final reports still require oversight and reviews from a professional finance team.

How to Automate Bookkeeping

Automated bookkeeping can take care of manual tasks and several other time-consuming processes. Depending on the goal, many bookkeeping services and tools can help.

Use an Accounting App

An accounting app is one of the fastest ways to optimize bookkeeping and accounting tasks. You can use it for the following tasks.

• Expense tracking
• Cash flow tracking
• Inputting transaction details
• Accounts payable tracking
• Accounts receivable tracking
• Time tracking
• Payroll entry
• Purchase orders tracking
• Client invoice automation

Naturally, some automated software solutions can do more bookkeeping tasks. FreshBooks accounting software makes it a breeze to prepare financial reports, manage double-entry accounting, and stay compliant with tax regulations. You can also use the FreshBooks mobile accounting app to access great features like invoicing, accounting, and online payments on the go.

Payment Processors

Using payment processors to collect invoice payments from clients is helpful in many ways. First, it can automate income transactions and make it easier to compile cash flow reports. When you use an integrated Payment Processor and Accounting Software like FreshBooks, your payment transactions and fees are tracked directly in your software, making bookkeeping easier than ever. There’s no need to manually add all your transactions—it’s managed automatically by FreshBooks.

Secondly, payment processors make it easier to bill clients and receive payments. Fewer payment delays lead to better cash flow. For example, FreshBooks Payments powered by Stripe automates your income transaction process for quicker, more accurate payments. You can boost your billing efficiency with automatic payment reminders to clients, reducing payment delays and helping you get paid faster. 

FreshBooks Payments, also offers a variety of ways for you to accept online payments, including credit, debit, Apple Pay, Google Pay, and ACH bank transfers. Clients can pay with the method that’s best for them, boosting payment convenience and flexibility. With more ways to pay, it’s easy to pay an invoice instantly, improving client satisfaction and helping you get paid faster.

Business Accounts

Linking business accounts to reputable accounting software is essential. Many companies have multiple accounts.

• Debit card
• Credit card
• Bank accounts

Integrating all accounts or linking them with automated bookkeeping software makes it easy to track all transactions. Thus, business owners can get a clear overview of income and company or employee expenses. Generating expense reports becomes easier.

Business Expenses Receipts

Integrating business accounts with an automated bookkeeping platform won’t eliminate receipts entirely. But with the right accounting tools, businesses can upload receipt data on the fly by scanning them or taking pictures.

In addition, expense tracking can work with cloud storage solutions like Dropbox and Google Drive. Other apps are more advanced and can extract information from scanned receipts to automatically add them to your accounting platform. FreshBooks expense tracking software makes it easy to keep track of all your business expenses so you’re ready for tax season. The receipt scanner lets you scan and upload physical and digital receipts, with options to automatically categorize key details for effortless record keeping. Upload, track, and organize all your business expenses so you never miss another deduction again.

Service Providers

Expense trackers sometimes have to handle a difficult task. For instance, tracking service provider expenses and other costs can be a complex process. However, creating spreadsheets, even in Google Sheets, can make extracting and tracking data easier.

Payroll

Not all accounting and bookkeeping tools are equal, but no matter what you use, it should be good enough to manage the payroll.

Automated bookkeeping solutions for running payroll may offer additional support over automated data entry. For instance, some software tools take into account laws and regulations. Others manage payrolls differently based on industries, rewards, taxes, etc.

“FreshBooks Payroll powered by Gusto is an all-in-one solution that allows you to pay your team right from FreshBooks. Get payroll done in minutes with unlimited runs, automated tax calculations and filings, and a world-class support team. Plus, FreshBooks Payroll is integrated with your FreshBooks account, so transactions for every pay run will be automatically tracked and your reports and books will stay accurate and organized. FreshBooks Payroll software is available as a paid add-on to any FreshBooks package.”

Outsourcing

Automation tools don’t always involve software and hardware solutions. Sometimes, automation comes from outsourcing accounting tasks to specialized service providers. Again, businesses have many options.

For example, companies can forgo in-house teams for an outside expert. The outside accounting firm can use data from your automated software to compile monthly, quarterly, and yearly reports. 

Third-party bookkeepers and accountants can also perform audits for your business. Audits take a lot of time and can halt regular business operations when done in-house.

Implementing software automation is often a challenging and time-consuming process. Hiring a specialized service provider ensures all accounting tools work correctly and meet your needs. Accurate financial projections and pivoting ideas may require outside input.

When everyday tasks are automated, you can focus your energy on more high-value work to help grow your business.

How FreshBooks Can Help

The right automation tools can boost your efficiency, improve accuracy, and free up time so you can focus on growing your business. In many cases, a combination of automation software tools can deliver the best features to support your small business.

FreshBooks offers bookkeeping services through Bench, so you can access the benefits of automated bookkeeping and accounting through one versatile partnership. This powerful combination delivers a fast and easy system for tracking expenses and receipts, generating financial records, and helping you make the most of tax deductions and returns.

FAQs on Automated Bookkeeping

Is Excel used for bookkeeping?

Excel is a powerful spreadsheet program, arguably one of the best on the market. It works with almost all platforms and has advanced computing and graphing capabilities. It can help track expenses and various other financial metrics. For detailed insights on this refer to our guide on How to Use Excel for Bookkeeping Services. It will walk you through a step by step process along with examples.

What is AI bookkeeping?

AI bookkeeping refers to using automation software powered by machine learning algorithms to analyze financial data. AI bookkeeping and accounting tools can look at transactions, expenses, sales, and accounts and create tax documents. Note that AI accounting is assistive technology. Small businesses may still require a professional accounting team.

Why is automation a positive turning point for accountants?

Automated bookkeeping and accounting create more efficiency. They can streamline repetitive tasks and generate more accurate data. Automation helps accountants and bookkeepers easily manage more complex tasks and helps businesses improve their finances.

What is the easiest bookkeeping software?

FreshBooks is the best accounting software for small to medium-sized businesses. The web-based service offers unparalleled accessibility. Not only that, its advanced tracking and reporting features, along with human input, can streamline financial projections and tax reports.

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