The Benefits of Automated Bookkeeping Services for Small Businesses
In This Post
As an entrepreneur or a small business owner, it can be daunting to manage company finances. Rightfully so, as there’s already a mountain of tasks that founders attend to. For them, the first option is to hire a team of accountants that will spend countless hours entering data. However, accountants make mistakes, and managing the team efficiently poses an even greater challenge. This is why 50% of small businesses fail within the first five years. The other option is to look towards accounting automation. These services leverage modern technologies, such as cloud and AI, to increase efficiency so that decision-makers can focus on high-value business matters. Here’s an in-depth look at the benefits of automated bookkeeping services:
Financial Efficiency and Enhanced Accuracy
Compared to corporations and enterprises, small businesses have the benefit of being adjustable and adaptable. The leadership in these companies should strive for efficiency to get better gains. To do this, the most viable option is to automate repetitive tasks. Although accounting is an integral part of a business, it should help the company move forward rather than become a liability. Traditional methods that require a team of professionals for data collection, entry, and report generation tend to reduce the overall output of the business. An Atradius study reveals that 90% of companies in the US report frequent delays in payments.
According to the Institute of Finance and Management (IOFM), 39% of invoices contain errors, which can strain client and customer relationships. On the other hand, online bookkeeping services streamline operations and create a lean structure. Accounting automation ensures that data will be collected and ready for insights in record time, thus reducing the overall processing period.
Improved Transparency and Visibility
Typically, accountants work on distributed channels with diverse ownership of data and financial reports. Although the current system provides accountability options, it can reduce data consistency and integrity. Digital bookkeeping services offer multiple ways to enhance data transparency and visibility in small businesses. Firstly, modern automated bookkeeping solutions come with a finance bot that leverages cloud technology. According to Accountancy Age, 78% of small businesses used cloud bookkeeping services in 2020. Since data losses cost at least $18 billion annually in the US, using cloud-enabled systems has become even more pivotal. This technology ensures that all of the firm’s financial data is stored in a centralized server that is readily available and secure. Consequently, it becomes easier for leaders and employees to update the status of projects. Secondly, accounting automation increases transparency by reducing manual errors and fraudulent activities that can occur due to human intervention.
Informed Decision Making
The business landscape and markets are ever-evolving, and quick adaptability is the only way to survive, especially for small businesses. Therefore, founders need to make informed decisions using data. Even though bookkeeping is a way to turn data into critical insights, it can only help if the data is clean. Apart from the errors, the average time to process an accounts payable invoice is 14.6 days. Employing digital bookkeeping solutions enables the firm to gather accurate and real-time financial data that can be the cornerstone of business decisions. These solutions utilize cutting-edge optical and intelligent character recognition methods to collect data from invoices and receipts automatically. After that, the finance bot swiftly generates required reports, providing immediate assistance in the decision-making process.
For small businesses, even minor expenses can stack up over time and reduce the expected profits. During manual accounting processes, data entry takes long hours and precious resources of the company. Similarly, manual processing of a single invoice can take more than a week and approximately $12.44. Besides time and processing costs, human talent is prone to errors, which adds to the overall cost of traditional accounting. In contrast, accounting automation replaces manual data entry with AI-powered solutions. It translates to lower labor costs and reduced errors. Moreover, online bookkeeping services incur lower transaction fees, therefore, saving in this department as well.
Cash flow management is the most critical part of the accounting department. Broadly stated, it refers to monitoring cash coming in and going out of the firm. Managing invoices, generating reports, and sharing results can be hectic for human talent. Work overload often results in miscommunications, missed deadlines, and process errors. These disruptions can derail the company from its goals and vision. As a small business owner, the most viable option is strategically integrating online bookkeeping services into the financial system. These solutions assist accountants in generating error-free reports and provide a centralized portal for tracking expenses and project updates. Moreover, digital bookkeeping automatically reconciles financial accounts with bank statements. This can help quickly discover discrepancies and allow the company to take proactive measures.
Suggested Reading: Top 7 Benefits of Outsourcing Tax Services for Small Businesses
Manage Your Books with RecordMe
Small business owners and entrepreneurs usually do not prioritize manual data entry, back office management, and repetitive tasks. Granted, they have strategies to design and decisions to make, but accounting is also a crucial pillar of business. The most viable option for strategic leaders is to move towards online bookkeeping services.
AI-powered RecordMe surpasses resource efficiency, providing accurate data collection and reliable report generation. Even more so, RecordMe takes care of all your bookkeeping services seamlessly and cost-effectively.