The fusion of a labor shortage and record inflation, as well as higher interest rates and continuing supply chain disruptions, has challenges to businesses, prompting many to reset for a slower economy.
As they prepare, corporate leaders have shifted their attention to cost savings and margin expansion, while accounting automation may not appear to be a primary concern, even though it should undoubtedly be included in these plans. According to an American based research Bain & Company, businesses that reduced costs and enhanced productivity during previous downturns outperformed those that did not.
4 Advantages of Accounting Automation
Automation of manual accounting tasks has numerous advantages, including increased productivity, better resource utilization, less overhead, and more. These outcomes are far-reaching and beneficial to businesses in a variety of ways, including:
1. Improved Productivity
By definition, manual processes are ineffective, taking more time and need more resources to accomplish than automated processes. Entering vendor bills, generating invoices, handling payments from customers are all time-consuming tasks, particularly when dealing with hundreds of transactions.
Automation is a good choice for these mundane repetitive processes. Instead of manually entering transactions, they can generate automatically from scanned documents or in case of recurring transactions, on a predefined schedule. These gain efficiency in free up time, enabling team members to concentrate on high-value activities such as data analysis and supplying strategic insights that enhance business profitability and reveal ways to cut costs and boost productivity.
2. Reduced labor costs
With few accounting graduates, filling positions has become difficult. As a result, the skilled job seekers have shrunk, and the migration of older employees worsened the situation, resulting in a severe shortage of workers and substantial wage growth. With larger companies paying higher wages, turnover has also become an issue. Recruiting and keeping eligible accountants is a significant challenge for medium sized and new commercials.
Accounting automation is beneficial in a number of ways. Because it improves efficiency, fewer people are required in the department, and losing a single worker has a lower effect on productivity than it does in companies that do not use automation. Automation can also help to reduce stress and allow more time for less mundane tasks, both of which help to retain workers. And, if the company expands despite the economic headwinds, accounting departments that seem to be adequately automated may be able to delay hiring to prevent rising labor costs.
3. Improved data quality
It is a well-known fact that manual data entry is a usual cause of accounting errors. Minute mistakes, such as exchanging numbers or adding zeros can ruin your account balance and affect the accuracy of your financial reporting. Using spreadsheets to track depreciation, assign expenses, and perform other common accounting tasks increases the risk of error. As the use of data for decision making and strategy increases, it becomes more important to avoid mistakes. The finance department is often regarded as the primary administrator of corporate data and is responsible for ensuring the accuracy and integrity of operational and statistical data as well as financial records. Automation eliminates the need for spreadsheets and manual data entry while improving data quality.
4. Mitigation of risk
Companies with poor financial controls are more likely to be taken advantage of fraudsters. Invoice fraud includes overcharging, sending duplicate invoices and billing for goods or services that were not provided. Automating accounts payable minimizes the risk of fraud and automatically compares invoice details to purchase orders.
Automate accounting with NetSuite
Chief Financial Officers (CFOs) need to help their teams to fulfil more without increasing headcount. The manual and spreadsheet-based data entry process makes this more difficult. NetSuite overcomes these limitations with a comprehensive accounting solution that boosts productivity and improves data quality through automating time-consuming manual tasks.
Here are some examples of NetSuite accounting automation:
• Devaluation, amortization, and allotment
Ensures that costs are recorded regularly and applied to the suitable expense centers.
• Recognition of revenue
Apply default revenue rules for each service, or create custom rules as needed. Revenue is automatically recognized according to a specific schedule for each contractual obligation.
• Log entries
Reduce the need for manual data entry with rule-based transaction matching and automatic logging.
• Purchase management
An automated three-way coordination and approval workflow simplifies the process of confirming delivery of goods and services prior to payment.
• Creation of bills
Automatically create a supplier invoice from an existing order.
• Recurring fees
Fees such as utilities or subscription fees can be automatically scheduled for payment or approved individually.
Avoid duplicate data entry through converting purchase orders into customer invoices with one click.
• Subscription payments
NetSuite rating engine supports a variety of pricing scenarios, including tiered, volume, and customer-specific pricing; variable or consumption-based fees; and promotional prices, as well as fixed costs.
• Payment Schedule
Automate the creation and sending of invoices. The flexible rule-based schedule can change or be paused as needed.
Reduce overdue days and minimize bad debt with automatic payment reminders and mail processing.
• Payment Processing
Automatically process customer payments from credit cards, direct debit, Apple pay, and other payment providers, without the need to integrate with multiple payment networks.
• Invoice Integration
Automatically combine multiple invoices from the same account into one integrated invoice.
• Bank reconciliation
Nightly bank uploads and smart automation that automatically combine journal entries with bank account details, flagging deviations for further review. Missing entries, such as bank fees, are automatically generated.
• Matching transaction
Automatically match customer payments with appropriate open invoices, confirm whether payment has been made in full, and in case of partial payment, and update the remaining balance. Potential payment errors are flagged for review.
• Business-to-business transactions
Purchase orders are automatically linked to corresponding orders when created to simplify transaction processing between companies. The automated network simplifies the reconciliation of accounts between companies.
• Consolidation of finances
Speed up the closing process and automate the centralization of subsidiary-level transactions, while also ensuring compliance with all applicable accounting standards, tax codes, and reporting requirements wherever your business operates.
Connect with Jobin & Jismi to attain a better knowledge in Accounting Automation using Oracle NetSuite.