Accounting automation software: A guide for businesses in 2023

Apr 05, 2024

It’s funny that there are still many companies that prefer manual accounting. They maintain paper bills and invoices and write accounts in a ledger book. That can be time-taking and painful to take note of every minute of spending.

The turning point came when business owners switched to accounting automation software. It brought order to their accounts payable functions and helped them pay on time. But what is accounting automation? 

What is accounting automation?

Accounting on a whole is a department that’s filled with manual tasks. The accountants perform these tasks in routine wasting a major part of their day.

Accounting automation is a process that automates the manual tasks involved in payment and expense management with the help of accounting automation software.

By introducing automation into the accounting world, accountants can focus on other real tasks that demand their attention.

Some tasks that accounting automation computerizes are data entry, disbursements, reconciliations, expense reporting, and a lot others. Automation also excludes the need for paper and files and stores everything in electronic format.

What types of accounting processes can be automated?

1. General ledger accounting software

A general ledger in accounting is an overall record that contains every accounting activity of a company. It records everything including assets, liabilities, accounts receivable, accounts payable, and equity.

As this is a comprehensive accounting window, it can get complicated for medium and large companies to maintain manually. In order to avoid this inefficient and delaying process, an automated accounting process can be adopted.

GL accounting software can automate this core accounting process and sync different accounting functions in real time with the ledger automatically.

Transaction matching, any-time reconciliation, and integrations with banks and other accounting software are its other distinct features. 

2. Expense and accounts payable processing

Every business starts spending right from day one. It’s entirely a manual process where mistakes are expensive. And if the invoices aren’t scheduled properly for payments, you can annoy vendors. 

Relying on banks or basic payment apps alone will turn this chaotic. You need automated accounting services that provide all-in-one expense software.

With this software in place, you can schedule payments and automate them from collecting invoices to approving and sending out payments. Expenses also must be synced with the ledger and other books.

Automation journal entry automation makes it possible. Automation for accounting processes like this will make it more accurate, efficient, and time-saving. 

3. Payroll

Whether you have 10 or 100 employees, payroll computation and salary distribution can become complicated so easily. It includes the calculation of eligible wages of each employee, tax percentages, extra hours worked, bonuses, and other numbers.


In any way, payroll needs the introduction of accounting automation software to automate the process. This application can gather data like attendance, key-ins, approved leaves, and total hours worked.

Instead of wasting time calculating this for each employee, the automation software can do it instantly and round up the earned wages.

The payroll automated accounting process also helps in filing taxes, depositing salary in employees’ accounts, generating reports, and storing payroll data.

4. Expense reports

A business is responsible for paying back the money employees spend on business travel. In this process, employees suffer a lot waiting for months to get their money back.

They must also save receipts with the utmost care, fill reimbursement forms, and hold back till the approvers notice it. Accounting automation software has a solution for this.

You can update your travel and expense policies here to regulate claim requests. Creating approval workflows and assigning approvers is also a piece of cake.

So, when a claim request is raised, it automatically travels from one stage to another till funds are deposited into employees’ account.

Note: Volopay issues corporate credit cards for employees with proactive controls, budgets, and centralized monitoring. Corporate cards are an excellent replacement for the traditional reimbursement process as employees don’t spend their own money here.

5. Accounts receivable

Accounts receivable denote the payments received from customers. If you don’t receive it on time or forget to follow up, you can’t run a profitable business.

Accounts receivable include many functions like invoice distribution and tracking, customer follow-ups, generating reports, reconciliations, and many more.

Without accounting workflow automation, one cannot do it all on time without errors. In accounts receivable, reports generation plays a huge role.

They tell you detailed insights about your revenue and forecasts. Rather than playing with spreadsheets, accountants can rely on automated accounting processes. 

Automation is also necessary to set up recurring payments where you receive monthly fixed payments from customers. 

Interesting read: How to simplify AP and AR management with automation?

6. Accounts payable

Accounts payable is the process of paying your suppliers and service providers. Automation for accounting is the solution for advanced sending processes and controls like automatic payments, scheduled payments, invoice processing etc.

Note: Volopay corporate cards are great for recurring subscription-based payments. Every month, the payment gets auto-withdrawn based on the mentioned date and time.

Challenges associated with manual accounting

1. Manual data entry

Moving information from one application to another or one document to another happens a lot in the accounting area. It’s a repetitive and time-wasting process as they aimlessly download upload statements.

In the absence of automation accounting software, the role of connecting different accounting sections together falls over accountants’ shoulders. Just because it’s repetitious, one cannot be careless. It can lead to erroneous data.

Check this out - Eliminate manual data entry challenges with automation

2. Inefficient process

Manual accounting is inefficient because the means of how work gets done is not clear. The data produced or stored is not accurate and up-to-date. Naturally, one cannot derive actionable insights out of it.

Employees' lack of interest makes them lethargic while working on such tasks. Inefficient accounting processes lead to talent and productivity wastage.

Accounts have many other skills up their sleeves which can save more money for you. But if they keep focusing on inefficient workflows, they never get exposed to situations beyond their comfort levels.

3. Inability to manage information

Businesses must store most of the accounting data for a certain period of time. Manual storage won’t work for long term. Cloud storage solutions can be expensive if you have to store them for years.

Storing them on desktop devices is also dangerous. If the hard disc gets corrupted or virus-attacked, you can retrieve them. Handling a huge chunk of data is never easy with manual accounting processes.

It will be unmanageable when your company receives more business.

4. No overall visibility and control

Manual accounting offers no visibility at all to the involved teams. Finance teams rely on expense and income reports to make crucial financial decisions.

When accounting is done manually, they either have to go over piles of files or lengthy spreadsheets with messy numbers. That won’t help at all when someone in charge wants to understand what happens with the business money.

Again, someone from the accounting team should make meticulous reports, graphs, and presentations to demonstrate this to directors or c-suite executives.

As there is no clear visibility, finding ways to curb expenses is also low. Budgets won’t be handy as they are prepared with unreliable data.

5. Vulnerability to fraud

Even if you lock files in cabinets or use a password-protected device, it’s easy to break into it and access the contents inside. Fraudsters within and outside your organization will be happy knowing that your records have no protection.

Stealing and selling them to competitors will get them money. But for a business, this is an utter loss as their personal information is out now.

Other frauds like fake sales reporting, payroll fraud, theft, timesheet fraud, and many similar activities can affect your organization’s financial health. Automated accounting process has its own ways to deal with this internal and external fraud.

Everything comes within the radar. So, when something suspicious happens, it instantly gets noticed. 

6. Subject to errors

Humans are bound to make errors. A simple row replacement can mess up the whole data present in a sheet. When accounting and finance are involved, every mistake you make will cause loss to your business in different ways.

Imagine sending the payment to the wrong person or uploading the wrong information into the ledger. There are mistakes that are irreversible. And that’s exactly why automation for accounting should be brought into existence.

7. Lacks security

You can lose manual records anytime. Manual records either reside in papers or in spreadsheets with no encryption and password protection. That means you are leaving vulnerable data out in the open.

Anyone who hacks into the device can access and steal your valuable data. Losing sensitive data of clients and vendors put their business at risk too. You will be answerable for their loss.

Most accounting automation software is cloud-based. Hence, their data will be safely stored in the cloud. So, no one can access your data as the communication will be encrypted. Plus you get bank-grade security.

Benefits of automating your accounting

Automation for accounting is a real savior as it reaps value for money invested. Your business can easily get many benefits of accounting automation and they are as follows.

1. Saves time

First of all, you save time that gets wasted organizing, arranging, updating, or entering things manually. Accounting workflow automation does things itself saving time for your employees.

It can save up to six to eight hours for each employee every week. That means the same task can be accomplished by a lesser number of employees in lesser time.

2. Higher productivity

Once the tasks are well-organized, employees can finish their tasks on time. Accounting automation services are there to rescue them from boring tasks.

They stay productive throughout the day as they are equipped with the resources they need. Companies that use accounting automation software are filled with happy employees.

They know that their opinions are valued and pain points are considered.

3. Data accuracy

Manual and semi-automated accounting systems can have false, error-filled, and misleading data. Because not every expense gets properly reported here. 

4. Fast data retrieval

As seen already, it’s impossible to retrieve accounting data that gets destroyed in the manual reporting process. Paper files can get ruptured, dampened in water, or even reduce to ashes.

Data stored in devices are prone to fraudster attacks or system malfunctions. Accounting automation software stores data in the cloud which you can retrieve anytime.

5. Secure file storage

Handling sensitive data needs secure storage solutions. For taxation and audit reasons, you need to store data for a few years. Automated accounting services keep your data intact and give bank-grade level protection. No one can tap into this unless they are authorized to do so. 

6. Cloud access

Cloud access comes with many liberties. Unlike desktop software which needs manual installations in each system to be used, cloud-based systems can be accessed anywhere.

All you need is a stable internet connection and a device to access the portal. Set user and admin level accesses to make sure that only the entitled information is available for accountants to work on.

7. Real-time integrations

Cloud-based applications have API integrations enabled. This open integration system allows connection between different accounting systems.

So if you have multiple applications for each accounting function, you can integrate them directly into your bookkeeping system and sync in real-time.

Integrations with third-party apps are also available. You can connect communication, eCommerce, payroll, and apps of other categories to automated accounting software.

8. Professional development

Getting accustomed to automated accounting processes will give employees wider exposure. They can learn many practical skills needed for career upskilling and development.

As accounting automation is still selling widely, those who practice and work with it learn what’s in demand right now. And with increased learning, they can contribute more value to their organizations. Real growth means a company grows with its employees together.

What are the features needed in a accounting automation software?

Before you choose an accounting automation software, you should prepare a checklist with the following items and see if the provider has them.

1. Integration

Without integration, the automation isn’t complete. Your employees will still manually transfer accounting data between two applications. Without real-time syncing, the data will never be up-to-date.

Automatic closing will become a far-fetched goal. That’s not worth the money you pay them for. Modern and advanced accounting systems allow open integration to be a part of their core functions.

2. Core accounting modules

Core accounting modules include accounts payable, receivable, ledger, and payroll. Without these, no automated accounting software is eligible to be called an accounting system.

When you bring in automation for accounting, it should be for all four core processes. Their presence or absence should be the deciding factor for you.

3. Cloud access and capabilities

Desktop accounting services still exist in the market. Though their functionalities are similar, they aren’t innovative, smart, and proactive like cloud systems.

Cloud systems give any time, anywhere access and have simpler dashboards. Due to their technically simple nature, anyone can use them.

You won’t wait long to receive update roll-outs. Data storage is one game-changing factor that will push anyone to use cloud applications.

4. Multi-user access

Business software cannot be used by one person alone. Different users need admin or user-level access. But certain automated accounting services deny this feature or cost more for every additional user.

Though a nominal fare is acceptable, it shouldn’t break your budget in the future when your team grows.

5. Business Intelligence

In simpler terms, business intelligence refers to the capacity of a system to read, store, and analyze business data to produce actionable insights and goals for the organization.

Your software must be intuitive enough to perform data analysis and draw forecasts on its own.

6. Ability to scale

It’s not worth investing in an application that won’t serve you in the long term. When your company and its fund capacity grow, your accounting automation software should be able to handle the load.

Most automation accounting software isn’t restricted to the minimum number of users or usage. Don’t invest in applications that might hold you back wasting your time and effort spent on software training and adaptation.

7. Reputed service provider

Waitlist three to five service providers. Attend free demo sessions. Read product reviews on different platforms. Check product rankings to analyze their brand reputation.

Check if they have negative comments into account. Understand where they stand amidst their competitors. And finally, review how long they have been in business and who their key clients are.

Will accounting automation replace accountants?

So, automation makes employees' job easier and save time. But does that mean they can fetch jobs from accountants and completely replace them with automated accounting processes? 

A study conducted by the Oxford university underlines the replacement of 99% of tax preparers and 98% of bookkeepers by automation. The basic level accounting, bookkeeping, and auditing clerks' jobs are already at risk.

And in a list prepared by McKinsey that highlights departments and their automation possibilities, accounting professions are either highly automatable or fully automatable.

And there are many data and statistics to prove that accounting departments can be easily automized. 

However, this doesn’t mean the end for accounting professionals. They can still adapt to changing technologies and equip themselves with high-end skills. Also, even if fully automated, it will still need human help to keep things running smoothly.

It’s safer to say that a part of the accounting team and functions will get automized. This might shift the number of employees required to do the job.

How to transition to accounting automation software?

Accept that it’s not a one-day task to switch from a manual to an automated accounting process. Though it’s wise to start sooner, you can pretty much switch at any point in time of your business existence. To set it smoothly right from the start, follow these steps.

1. Plan what areas need to be automated

It’s impossible to automate all sections of accounting in a single stretch. But you have to start somewhere. Gather inputs from different sections and choose one or a few of them.

For instance, you can start from accounts payable as that touches every point of the accounting borders. You can also choose minor but potential tasks like payroll to go with it.

Note: Volopay offers the best accounts payable automation solutions. Set them up right away, automate payments, and sync with your books instantly.

2. Select your accounting automation software

There are many providers in the market. Check-in review sites, Google suggestions, and other marketplaces. Ask for recommendations from your business network.

Compare their features with their pricing plan. Highlight a few of them and talk to the sales team for a free demo session. Look for starting offers and deals. Check their customer base and finally select one.

3. Training phase

Your employees need some getting used to before you fully onboard the software. Let them be part of training sessions to understand and familiarize themselves with the accounting workflow automation steps.

Let them clarify their questions and concerns with the customer success team for a smooth work experience. If the provider has a trial version, roll them in and start using it till you finally upgrade.

4. Onboarding and transition

Mark your calendars for the date when you onboard from manual systems to accounting automation software. Before you onboard, make sure your systems support the new product fully and you have the required IT infrastructure.

Before signing the contract, read carefully and understand their terms, payment cycles, billing methods, support levels, and everything. Get support from the internal IT team to solve glitches and liberate restrictions for the new software use. 

5. Continuous monitoring and improvement

Keep checking how the software works and track the time it saves, the efficiency and accuracy it brings in, the assistance offered, and every other key factor.

There you go! You have successfully implemented automation accounting software in your organization. Now there is no turning back. You can follow the same procedure to automate other areas in accounting as well.

Simplify your accounts payable and accounting with Volopay

Volopay is an all-in-one accounting and spends management platforms that offer you a variety of features to digitalize your business.

It is your one-stop solution to automate complex manual accounting tasks such as employee reimbursements, subscription management, invoice processing and payment, and lots more.

We offer various accounting software integrations with platforms like Xero, Quickbooks, Netsuite, etc., and these integrations automatically account for every transaction under the correct field and you can easily download the reports.

We safeguard all your accounting structures with digital receipts and invoices, that help you streamline all your transactions. 

Automate manual accounting tasks in a single platform