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Explore the top 5 advantages, disadvantages, and challenges of automated bookkeeping. Learn how it can reform the finance industry by providing advanced AI tools.
In the past few years, automated bookkeeping has revolutionised the finance industry. According to research, the U.S. accounting industry proves to be highly profitable. Its revenue has grown since 2012 and is predicted to reach almost 145$ Billion in 2023.
A few factors contribute to financial industry growth, such as Machine Learning (ML), Artificial Intelligence (AI), and Robotic Process Automation (RPA). That’s why it is crucial to understand what accounting automation is before moving towards its benefits.
What is Accounting Automation?
Automated bookkeeping systems automate the daily tasks that accountants must perform. Writing problematic ledger files and making countless data rows is not required now. Employees can quickly generate reports with built-in structured formulae. The main goal of automated bookkeeping services is to simplify complex finance procedures and to make them more effective.
This software tracks financial transactions automatically and gives space to CFOs so they can focus on company goals. Moreover, they can also utilise time to interact with clients.
Let’s explore some benefits of automated bookkeeping.
Automated Bookkeeping Advantages
Automated bookkeeping solutions have become more popular as they ease employee tasks. Automated accounting is forecasted to generate 39.45$ Billion in the U.S. by 2025. Here are more benefits that will help in understanding accounting automation.
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Time-Saver
Automated bookkeeping software helps businesses by saving their time. CEOs can quickly analyse financial reports anywhere and anytime. Employees can put their energy into more productive tasks.
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Improves Productivity
Automated software improves employees’ productivity as they don’t have to do manual tasks. They scan the receipt, and all the data will be uploaded automatically through a barcode or serial number.
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Quick Data Retrieval
Traditionally, employees store financial figures manually. It took a lot of time to find any transaction and figure out the problem. But, with the help of automated bookkeeping services, employees can easily find any problematic transaction with just one click. It removes all the worries that the file is in a different building or at a different location or it is just lost.
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Data Authenticity
In the financial industry, employee mistakes lead to loss. Automated bookkeeping systems remove this hassle and can produce accurate results in seconds. Multiple financial entries can be completed within seconds. Supplier’s and buyer’s data are safe with automated software.
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Real-Time Integration
Finance departments utilise automated bookkeeping services so they can generate real-time results. Businesses don’t have to transfer physical files from one location to another.
Automated Bookkeeping Disadvantages
Although there are many advantages that automated software provides, there are a few disadvantages that businesses should consider while acquiring any services.
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Degree of Difficulty
If employees don’t know how to operate or work with automated software, how will they proceed? It will create a problem while scanning receipts and giving commands to the system. Maintenance is also an issue that companies must consider.
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Lack of Support and Service
Automated bookkeeping is beneficial but can’t beat human knowledge and expertise in financial matters. Companies usually think that automation can replace human expertise. This point of view is wrong in many aspects.
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High Setup Costs
Automated bookkeeping is expensive to execute initially, with costs for hardware, software and training adding up.
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Technical Glitches Risk
Automated systems can show different technical issues, potentially leading to misunderstandings and errors that disrupt business operations.
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Potential Job Loss
Automated software can lead to job losses as few employees will be needed to manage the financial books.
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Needs Continuous Update
Automated bookkeeping systems need regular updates, which is time-intensive and costly.
Accounting Tasks that Need Immediate Automation
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Payroll
One of the finance team’s essential responsibilities is managing payouts and payrolls. It needs attention to minor details. Moreover, payroll analysts spend hours maintaining employee tax rates and records to create accurate reports.
Automating the payroll saves team effort and time. It also ensures the payroll reports accuracy, leading to diminished disputes and improving employee satisfaction. While dealing with hourly or fixed-pay freelancers, automated bookkeeping solutions directly deposit funds into employee’s accounts.
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Purchase Management
When businesses buy goods, they usually have to deal with more paperwork, from contracts to purchase orders. That’s why automated bookkeeping systems provide purchase management features that help automate low-value and repetitive processes. Moreover, businesses can reduce the procure-to-pay cycle, diminish errors, and save personnel expenses by automating the purchasing process.
Key Takeaways
Companies should purchase automated bookkeeping systems after analysing all their advantages and disadvantages. Automated bookkeeping automatically determines discrepancies in information and diminishes the data amount that has to be entered manually by recognising entries from bank statements, forms, and invoices using AI.