5 Key Uses of Accounting Automation

Should accountants be threatened by increased automation or embrace it^? There's no question that finance teams do a lot of repetitive tasks that can be automated. Perhaps when considering future job security, finance professionals should worry less about the threat of accounting automation and worry more about the danger of being left behind by not constantly looking at available tools which will improve efficiency and increase accuracy. Harnessing these tools can change the focus of finance teams from churning out results to meaningful analysis of those results and more importantly looking to future strategy. The good news is improvements don't have to happen in all areas at the same time. A systematic review of the accounting process should allow the prioritisation of the automation of different functions within the finance department. Different organisations will have different bottle-necks in the process. Involving team members in this review and with the automation projects can be very rewarding for all concerned.

Let's take a quick look at five key areas where automation could make a big impact.

1. Automated ordering and purchasing

The days of signing off paper invoices should be over. The problem for some businesses is that this has been replaced by endless emails and AP processes so complex that it makes it very difficult to get anything paid. An AP system should make life easier for all involved. The system should be appropriate for the size of the business and the volume of transactions. Approval limits should be well thought out and in accordance with the company's policies and procedures. An important factor to consider with increased automation particularly in the area of purchase orders and payments is the mitigation of the increased risk of fraud associated with a paperless process. Staff training in this area is vital. Sometimes it's as simple as picking up the phone to a known contact instead of acting blindly on an email purporting to be from the supplier with new banking details.

2. Bank Reconciliation process

Bank reconciliations used to be the stuff of nightmares. The process involved endless ticking off of cheques against paper bank statements and having to start again if it didn't balance. In theory automated bank reconciliations should make life so much easier for finance departments. There are some caveats though. Here are the things to bear in mind if you are bringing in an automated bank reconciliation system.

- Does the system have a ' bank feed' process and will it work for you?

- Does the system have a transparent audit trail?

- How much manipulation is involved before transactions can be imported to the system?

- Do users understand how the system works? For example do they understand that if you put transactions through the nominal instead of the banking module it will cause a lot of issues. I have seen situations in businesses where the automated bank reconciliation system was not being used correctly mainly because users didn't understand what they were reconciling to. Bulk processing only works when users are properly trained. Used properly automated bank reconciliations lead to huge time saving a greater control. Without the proper knowledge, the same system can be used to create a huge mess!

3. Dedicated Fixed Asset Software

Depreciation of fixed assets was typically calculated using excel. These spreadsheets can become very complicated and difficult to follow especially when trying to keep track of a large number of fixed assets. Automated fixed asset registers can take a lot of the pain out of calculating depreciation. It's vital that the monthly process includes a check to ensure that the fixed asset register reconciles to the nominal ledger. The data required when inputting assets into the register needs to be appropriate to the business and ideally each Fixed Asset will have a unique reference number so that the physical assets can be tied into the register.

4. Task Management Software

A lot of the finance teams work involves repetitive tasks. It can be hard to keep track of all of these tasks particularly in an organisation which is growing and with a growing finance team. A simple task management system can be a game changer. Tasks can scheduled in at the appropriate frequency, be assigned to individual team members, who can then take responsibility for ensuring that all of their tasks are completed in a timely manner. The manager can see exactly what has and has not been done so that nothing falls through the cracks.

5. Painless accruals and prepayments

Accurate accruals and prepayments are absolutely essential in order to produce meaningful financial reports. Calculation errors can lead material misstatements of financial statements. In particular when starting a new role it can be difficult to interpret a predecessors list of adjustments. An automated accrual and prepayment system takes the guesswork out of accruals and prepayments by calculating the adjustments based on the data available at the time. Software which accurately allows you to automate accruals and prepayment is hard to fine. A lot of accounting software which claims to automate the process only automates the journals, or the journal reversals. EasyAccrue actually does the accrual and prepayment calculations for you as well as automating the journal process.  A list of adjustments can be imported into the system at the click of a button. Reports can be downloaded into excel and easily made available to auditors. Completed periods can be 'locked' so as to avoid inadvertently making any changes to periods when reporting has already been completed. With EasyAccrue it is easy to delegate the task of keeping accruals and prepayments up to date to more junior members of the finance team.

Automation will not replace your job, but it will change it. Reducing the time spent on repetitive tasks leaves more time to get more involved in other aspects of the business and more time to think strategically and add value. There is little doubt that accounting professionals need to keep themselves informed about the latest automation tools available in order to improve efficiency and increase accuracy of financial reporting.

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