Accounting automation 2024: key benefits, technologies, and how to get started

When we asked experienced CPA and firm owner Marie Greene about the importance of accounting automation, her message was clear: “Automation is no longer just a convenience; it’s a necessity for firms aiming to stay competitive.”

As a cloud accounting leader and the founder of Connected Accounting, Marie knows a thing or two about leveraging automation to drive efficiency. But success with automation isn’t a given. To reap the benefits, you must first understand how it works, where it can be applied, and where it can’t. 

In this article — written in partnership with Marie Greene — we’ll explain everything you need to know about accounting automation. By the end, you’ll have the information you need to drive new levels of efficiency and productivity across your firm. 

What is accounting automation?

Accounting automation is the process of using software and other technologies to perform tasks with minimal human intervention. In other words, the software takes certain tasks or processes off your hands, freeing you up to do something else. 

Not all tasks can be automated, however. Prime candidates for automation include any sort of repetitive, administrative, or rules-based task. Examples include data entry, tax calculations, and client reminders. 

Problems with manual accounting processes

Accounting involves all manner of repetitive processes. When performed manually, these processes can hinder efficiency, accuracy, and business growth. 

Take administrative tasks such as invoicing, document gathering, and client communication, for example. While essential to the running of a firm, they don’t add any real value. If an accountant spends half their day answering client emails, they have limited capacity for actual accounting work.

Then there’s the accounting work itself. When performed manually, tasks such as account reconciliation, financial reporting, and data entry are time-consuming, painstaking, and prone to error. In an industry where accuracy is everything, manual processes represent a major risk. 

What’s more, manual processes simply aren’t scalable. Humans can only work on one email, invoice, or data point at a time. This limits your firm’s ability to take on new clients.

The benefits of accounting automation

According to Marie, automation brings huge benefits to accounting firms, completely transforming the way they operate and serve clients. “It allows accountants to spend less time on repetitive tasks and more time on strategic client support, directly impacting a firm’s bottom line,” she points out. 

By leveraging automation in accounting, you can: 

• Boost efficiency. Automation tools can perform repetitive rules-based tasks in an instant and never need to take a break. 
• Improve accuracy. In an industry where accuracy is paramount, automation tools remove the risk of human error. 
• Scale your business. Automation can handle multiple tasks simultaneously. As your client base grows, your processes can scale to meet increased demand.
• Save time and money. Automaton tools save your practice countless hours while freeing up internal resources. Ultimately, this has a positive impact on your bottom line.
• Ensure compliance. Accounting automation tools come with compliance features built in, ensuring adherence to the latest regulations and laws. 

10 common accounting tasks that can be automated

The beauty of automation is that it can be applied to a broad range of accounting tasks in different ways. Here are ten real-world examples of how automation can be implemented in your accounting practice. 

1. Bank reconciliation

Bank reconciliation can be a tedious, time-consuming task when performed manually. With bank reconciliation software, you can automate the process entirely, ensuring that your accounts are always accurate and consistent. Here’s how it works: 

• Bank statements are imported into your accounting platform
• The system automatically matches transitions with your accounting records
• Any discrepancies are flagged for manual review by an accountant

2. Expense management

The process of tracking and approving employee expenses can also be automated. Using a comprehensive accounting platform, you can: 

• Scan and upload receipts via a mobile app 
• Automatically extract and categorize data based on predefined rules
• Auto-route approvals to the right accountant
• Generate automatic expense reports 
• Speed up the expense process while improving accuracy

3. Financial reporting

With an automated accounting system, financial reports can be prepared automatically in a matter of seconds, using financial data consolidated from various sources. These can include:

• Financial statements (balance sheet, income statement, cash flow statement)
• Budget reports
• Accounts payable and receivable reports
• Payroll reports
• Inventory reports

Beyond financial data, automation software can generate accurate and timely reports covering areas such as team productivity, the value of different services, and client attrition rates.

4. Payroll processing

When it comes to paying your staff, accuracy and speed are essential, but manual processes are inherently error-prone and time-consuming. With payroll automation software, you can do the following without lifting a finger:

• Calculate employee salaries, taxes, and deductions
• Manage payments
• Generate payroll reports

5. Accounts payable and receivable

Accounting software can automate accounts payable (AP) and accounts receivable (AR) processes. Here’s a breakdown of some of the key tasks you can hand over to accounting automation software: 

Automating your AP and AR processes is a no-brainer, ensuring accurate and timely payments, reliable cash flow, and happier vendors. 

6. Tax compliance and filing

Gone are the days of manually calculating tax liabilities. With tax preparation software, you can automate much of the tax filing process, ensuring accuracy and compliance with the latest regulations. Here’s how it works: 

• Automatically calculate tax liabilities based on financial data
• Prepare and submit tax returns electronically
• Software is automatically updated in line with the latest regulations 

With practice management software, you can even automate the process of gathering the relevant information and documents you need to prepare tax returns. TaxDome, for example, comes with customizable tax organizers (digital forms) that guide clients through the process of submitting information. These can be sent out as part of a wider tax preparation automated workflow.

7. Budgeting and forecasting

Accountants can now create accurate budgets and forecasts automatically using automation tools that analyze historical financial data to spot patterns and trends. This takes much of the guesswork out of planning for the future, enabling finance teams to allocate funds, identify risks, and make key decisions with a higher level of confidence.

8. Audit and compliance checks

Manual audits can be time-consuming and error-prone. With audit management software, you can automate the process almost entirely. Here’s how it works: 

• Continuously monitor financial transactions
• Ensure compliance with regulations and internal controls
• Analyze huge data sets and flag anomalies in real time
• Generate detailed audit reports 

The result is a faster, more streamlined, and more accurate audit process. Instead of spending hours on manual, data-intensive tasks, audit professionals have more time to verify results and investigate issues. 

9. Inventory management

Manually tracking inventory levels and maintaining accurate records is a highly complex process, often leading to inaccurate data. Automation makes this a breeze. Some accounting platforms come with inventory management capabilities built-in, enabling accountants to:

• Automatically update inventory levels based on sales and purchases in real time
• Use that data to ensure more efficient inventory management and reporting

10. Categorizing transactions

Categorizing financial transactions makes for more accurate and detailed financial reporting. Accounting software can handle this for you by:

• Using machine-learning algorithms to automatically categorize transactions based on historical data and predefined rules
• Continuously learning from new data to improve the accuracy of future categorizations
• Re-categorize transactions if errors are discovered

In addition to accounting processes, many tasks related to the day-to-day running of a firm can be automated. As Marie explains, tasks like client follow-ups, deadline reminders, and document filing are often overlooked, yet they are perfect candidates for automation: 

Automating these can free up a surprising amount of time for accountants to focus on more strategic client needs, leading to better client satisfaction and reduced admin hours. Our team spends more time handling client communication than doing the work on some accounts. Automation can solve that.

Will accounting automation replace accountants?

The short answer is no. Accounting automation won’t replace accountants, but it will transform their roles. Like artificial intelligence, automation tools are designed to augment accountants. By handling all those repetitive, administrative tasks, they free accountants up to focus on more strategic, value-driven work. 

Here are some reasons why accountants are here to stay: 

• Automation handles repetitive tasks, not strategy. Automation tools excel at handling time-consuming, repetitive tasks, but they cannot replicate strategic thinking and nuanced decision-making.
• Increased demand for advisory roles. Automation gives accountants the time and space to focus on providing advisory services that require human judgment and trust, such as financial planning, tax planning, and business consulting. 
• Complex problem-solving. Accountants play a critical role in solving complex tasks such as navigating tax regulations and interpreting financial trends — tasks that automation cannot handle alone.
• Human oversight and interpretation. For tasks or processes that are entirely automated, humans are still required to provide oversight and guarantee accuracy and compliance. 
• Ethical and regulatory guidance. Professional ethics is central to the accounting industry. It’s something that cannot easily be reduced to an algorithm or piece of code. Likewise, accountants are needed to ensure compliance with ever-changing regulations.   

How to automate accounting processes

With accounting automation involving so many different tasks, processes, and tools, it can be hard to know where to start. In this section, we’ll guide you through the steps you can take to ensure successful implementation. 

Identify your needs and goals

The first step to successful implementation is to understand where you are now and where you want to be. To do this, you’ll need to define the tasks you want to automate and what you want to achieve, so you know how to measure success. For example, do you want to save time and money, scale your business, or enjoy a better work-life balance? 

To identify tasks that are ripe for automation, Marie has the following advice: 

Start by identifying processes that are repetitive, time-consuming, and prone to error. These are often tasks like data entry, reconciliations, or document management. Prioritizing these tasks can provide immediate time savings and impact, helping the firm adjust to automation gradually while experiencing early wins.

Choose the right tools

Now you know the goals you want to achieve, you can start researching potential tools, apps, and platforms that can help. We recommend choosing software that:

• Is intuitive and easy to use
• Integrates seamlessly with your other systems
• Will scale as your business grows
• Offers clear and transparent pricing
• Has excellent user reviews and ratings

Implement your new software

Once you’ve chosen the right software, you’ll need to go through the careful process of implementation. This typically involves steps such as:

• Migrating data from legacy systems
• Integrating your software with your existing tech stack
• Setting up accounts, users, and permissions
• Configuring and personalizing the system to meet your needs

Train and prepare your team

To maximize the potential of automation in accounting, you’ll need to get your team up to speed on the new tools you plan to use. As Marie points out, “Training is fundamental for the success of streamlined and automated processes. Employees must understand both the “how” and the “why” behind changes to ensure consistent application.”

Marie recommends a three-tiered approach to ensure that staff are comfortable with the tasks they’ve been assigned: “We first train people, then watch them do the work, then make ourselves available for further questions if necessary.”

Document your processes

Before diving into automation, it’s important to fully understand your current workflows. Marie recommends using standard operating procedures (SOPs) to document your processes, starting with high-level steps and refining the details over time. 

“Identify team members responsible for defining each sub-step, and create resources like videos, checklists, and flowcharts to ensure consistency in training,” explains Marie. She recommends using tools like Loom or Scribe to create video and step-by-step visual content to help new employees during onboarding.

Documenting your processes enables you to spot any inefficiencies or irregularities that need fixing before they are automated. This helps you avoid what Marie calls “automated chaos,” where inefficiencies persist, just at a faster rate. 

Consider delegating before automating

Before rushing into automation, Marie recommends delegating tasks where possible. According to Marie, effective delegation lays the groundwork as it highlights tasks that are ideal candidates for automation. “Delegation helps firms optimize team strengths and test workflow efficiencies before introducing automation,” she explains. 

So how exactly should you go about delegating work in preparation for automation? Marie kindly provided this checklist: 

• Assign tasks by seniority and skills. Match tasks to team members based on both seniority and skill level. For example, assign routine month-end tasks to staff-level employees, while managers handle reviews and issue final reports.
• Establish timelines and due dates. Define due dates for each task and mark recurring ones (e.g. weekly, monthly). Clearly indicate non-negotiable deadlines (e.g. filing 1099s by January 31) versus flexible tasks (e.g. scheduling monthly client meetings). 
• Use tracking tools for accountability. Implement project management tools like TaxDome or Asana to keep track of task progress and ensure visibility for the whole team.
• Look for repetitive tasks. Identify routine and time-consuming tasks that are ideal for automation. Think of the “usual suspects” that take up time with minimal value added.
• Identify bottlenecks or redundancies. Look for inefficiencies within workflows, such as the manual preparation of prepaid expense schedules. Track how many clients require these tasks, the time spent, and the potential time savings from automating them. 
• Engage team members in process development. Involve your team in designing and refining processes. Team buy-in not only builds ownership but also uncovers valuable insights that can improve workflows. 
• Evaluate for automation potential. Prioritize automation opportunities based on impact. For example, automating a task that saves 15 minutes daily for an executive has greater value than one that saves 5 minutes monthly for a staff member. 

Review and fine-tune processes

Post-implementation, it’s important to periodically review how your accounting automation software is performing against the goals you established back in step one. If you aren’t seeing the improvements you were hoping for, you’ll need to understand why and make necessary adjustments.

It’s also important to listen to the feedback of those using the software day-to-day. Have they found it easy to use? Are they more productive as a result? Do they need additional support and training to fully utilize the software?

Challenges in adopting automation

In your journey to a more automated and streamlined accounting practice, there may be several bumps in the road. Here are some key challenges to consider when implementing accounting automation software in your practice:

Initial setup and integration costs

Upgrading from legacy systems or adding new tools to your accounting tech stack doesn’t come for free. But rather than focusing solely on the cost of new software, we recommend that you also factor in the return on investment (ROI) they will bring to your firm — as well as the opportunity cost of doing nothing.

By making your practice more efficient and scalable, automation will save you countless hours — and in accounting, time is money. Think of it this way: when your direct competitors are automating their processes, can you afford not to?

Data security and privacy

Any new software or app represents a new data risk, as well as a new attack vector for potential hacks. By choosing automation tools that offer advanced security features — such as encryption, multi-factor authentication, and regular security updates — you can mitigate these risks significantly. And with more than 80% of cybercrime incidents being caused by human error, awareness training is also crucial.

Resistance to change

Many accountants see automation and AI as a threat to their jobs. This is perfectly understandable, but it isn’t true. Rather than replacing accountants, automation will help them do their jobs faster and better than ever before. 

To successfully implement automation software, you’ll need to get buy-in from your staff. As we’ve already explained, this will involve effective training, highlighting not only how automation works but the huge benefits it can bring.

Integration with existing systems

Adding new tools to your current tech stack can cause concerns around integration. To sidestep this issue, choose software that offers native integrations with the platforms you already use. The best software providers will guide you through the implementation process, ensuring that the new software is seamlessly connected to your other systems. 

Data quality and consistency

To work effectively, automation tools need access to high-quality data. If your data is poor quality or incomplete, you’ll get inaccurate outputs that could jeopardize your firm’s processes and decision-making.

You can avoid this issue by establishing robust data governance policies, implementing data cleaning procedures, and making sure your automation software has seamless access to different data sources.

Scalability issues

Every business wants to expand its client base and increase revenue. But if your software isn’t able to scale as your business grows, you’ll be fighting an uphill battle. This is why it pays to choose automation software that can scale seamlessly, easily handling spikes in data volumes. 

Concerns about compliance

When it comes to adopting new tech, one of the biggest concerns accountants have is regulatory compliance. This is made even more pressing given that rules, regulations, and standards are constantly evolving. 

The best accounting automation tools have compliance built into their processes. And with regular updates, you can ensure that the latest version of the software always reflects the latest regulations.

How to choose the right accounting automation solution

While you’ll have your own unique needs and goals, there are some features that are objectively important when it comes to choosing new accounting automation software, including: 

• A simple and intuitive user interface
• Seamless integration with other key software platforms
• Automation that is customizable and adaptable
• The ability to scale seamlessly as your business grows
• A team that continually releases new updates and innovative features
• Excellent user reviews and ratings
• Demonstrable ROI

You’ll also need to consider factors such as pricing and weigh it up against potential return on investment (ROI). Make sure you sign up for free trials and product demos to understand how different systems work — and how much time and money they could save you.

In addition to automation tools, Marie recommends using a centralized knowledge management tool such as Guru or Process Street to store and update documentation. “Document processes with visuals, checklists, and step-by-step guides, making it easy for all team members to follow and contribute to improvements,” says Marie.

Practice management platforms like TaxDome are also a good place to store your SOPs as they act as a central hub for all your processes, data, and tools. 

Conclusion

Given the huge advantages that the automation of accounting processes brings, this isn’t a trend you can ignore. Firms that fail to take advantage of accounting automation will fall behind those that do. By following the steps and advice outlined in this article, you’ll be well-placed to implement automation and take your firm to the next level. 

Automation isn’t just limited to accounting work, however. To run a truly efficient firm, you need technology that can automate and enhance the day-to-day running of your business — everything from client communication and onboarding to task, team, and document management. This is where TaxDome comes in. 

To see how TaxDome can take your practice to the next level, request a demo today.