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Accounting Automation

What Is Accounting Automation?

Accounting automation, also known as computerized accounting, refers to the use of software applications to perform the essential functions involved in the process of maintaining a business’s financial records. Digital processes minimize, and may even eliminate, the need for manual data entry and cumbersome spreadsheets.

Accounting software executes fundamental tasks, such as capturing and entering data into the business ledger, reconciling discrepancies, updating records, and producing reports and financial statements. Automation greatly reduces the time, labor, and costs involved in the accounting process. It improves efficiency and accuracy, and it frees up staff to perform higher level tasks and strategic activities.

When Is Accounting Automation Used?

Accounting automation is a hot topic for businesses and organizations looking to leverage digital technology to improve their accounting systems. It is becoming more popular as companies see the advantages of migrating their accounting systems from a manual, spreadsheet-dependent or paper-based system to one that is completely digital and automated.

The benefits have become even more apparent as software capabilities have expanded and programs have become more sophisticated and intelligent. With greater choices and options, businesses that want to keep up with their competition are migrating to accounting automation software to save money, improve processes, and reduce the burden on accounting staff.

Other Related Terms

When considering accounting automation, you may encounter this related terminology.

Artificial Intelligence

Artificial Intelligence (AI), or sometimes referred to as machine learning can be used in many accounting automation platforms. AI in accounting automation platforms can execute accounting tasks such as entering and matching data from receipts and invoices to purchase entries in accounts receivable and enforcing company policies in the expense reimbursement process.

AI is distinct from robotic process automation (RPA) in that the software “learns” and develops its own logic from the data that it processes. This helps improve the process over time by increasing efficiency and accuracy.

Cloud Computing

Accounting automation is a form of cloud computing that stores information in a centralized database that can be accessed over the Internet (the cloud) from anywhere. With cloud computing, accounting information is not stored primarily on one or more employees’ desktop computers. Instead, it is stored in a centralized place that everyone can access.

This allows for more seamless integration of different applications and data sources, and it helps integrate the work of your team. All of this reduces the amount of time it takes to access and process information and can give you a more complete view of your data.

Data Entry

Traditional accounting systems involve data entry, which is the input of information into a centralized source. Historically, accounting information was entered into paper ledgers. Even with the advent of computers and digital spreadsheets, accounting information still needs to be entered manually.

Accounting staff must enter information from various documents that record the financial activity of the company, such as receipts, invoices, bills payable, and expense reports. Accounting automation can eliminate the need to manually enter this information by capturing the data from these different source materials and inputting it into a central information source.

Machine Learning

Accounting automation programs that employ artificial intelligence are using machine learning. This is the process by which computers are programmed to learn much like humans, by processing data and rules, otherwise known as algorithms. Machine learning allows programs to improve and increase the efficiency of their processes by predicting and making decisions.

Real-Time Integration

Accounting automation dramatically speeds up the time it takes to enter and process information. This is referred to as real-time integration because software programs that are working together can process and apply information almost instantaneously.

In traditional accounting systems, humans must first gather and enter information. Then they extract the data and apply it to other programs or execute calculations manually. Accounting automation eliminates the need for humans to physically and mentally conduct these steps, dramatically reducing processing time and improving accuracy.

Robotic Process Automation

Robotic process automation is a form of automation that performs repetitive assignments, including sorting, data insertion, form completion, and interpretation of text and data. Unlike AI, RPA does not learn or develop logic, instead relying on structured data and rules. It can greatly reduce processing time and free up staff for other work by performing these time-consuming, repetitive tasks.


What Are the Benefits of Accounting Automation?

Migrating to accounting software helps business owners streamline and improve the accounting process, by applying a digital application to many of the functions normally assigned to a person or team of people. Computers can perform manual tasks in a fraction of the time it takes for humans to do the same, so digitizing routine, repetitive, time-consuming, and tedious tasks dramatically speeds up the overall process.

How Does Accounting Automation Improve the Accounting Process?

Automated workflows use rules and assigned tasks to eliminate delays and improve efficiency in the assignment process.

Real-time integration dramatically speeds up the process by entering, extracting, and processing data from different sources and between applications, in real time.

Automation also makes Accounting smarter. Software applications improve accuracy by reducing human error. Artificial intelligence can improve the process by learning from the data that it captures.

By capturing information from different sources, automation software creates a centralized and uniform repository of necessary information. Having a digital process also allows employees to access accounting information from the cloud, which makes the workforce more nimble and agile in a mobile age.

Automation improves the business operation. Real-time execution can increase cash flow by streamlining the cash application and reconciliation processes. Most importantly, automation frees up staff to perform other higher-level functions, such as analysis and strategic evaluation.