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The Ultimate Guide to
Accounting Automation for Businesses in 2023

The Ultimate Guide to Accounting Automation for Businesses in 2023
The Ultimate Guide to Accounting Automation for Businesses in 2023

Gone are the days where Accountants and Finance professionals lay buried under heaps of receipts, forms, and documents. Instead, in these post-COVID times, they have emerged as the leaders of change who have helped businesses navigate such uncertain times.

What's interesting, though, is that most businesses worldwide that geared their employees to brace for these times had one thing in common. They used accounting automation like a superhero suit.

These software help Finance folks and Accountants enhance their capabilities and upgrade their processes and workflows. As a result, they now reap the benefits of simplified and streamlined processes with an added layer of accuracy and transparency to all things accounting.

Do you want to know the secret sauce behind how they achieved accounting and financial success with the help of automation tools and software? This 2023 accounting automation guide explores everything you need to know and how it can benefit your business. So, let's get started!

Index

What is accounting automation?

What is accounting automation?

What is accounting automation?

Gone are the days where Accountants and Finance professionals lay buried under heaps of receipts, forms, and documents. Instead, in these post-COVID times, they have emerged as the leaders of change who have helped businesses navigate such uncertain times.

What's interesting, though, is that most businesses worldwide that geared their employees to brace for these times had one thing in common. They used accounting automation like a superhero suit.

These software help Finance folks and Accountants enhance their capabilities and upgrade their processes and workflows. As a result, they now reap the benefits of simplified and streamlined processes with an added layer of accuracy and transparency to all things accounting.

Do you want to know the secret sauce behind how they achieved accounting and financial success with the help of automation tools and software? This 2023 accounting automation guide explores everything you need to know and how it can benefit your business. So, let's get started!

What is accounting automation?

Simply put, accounting automation is the process of using a software to complete manual, mundane, error-prone, and repetitive accounting tasks.

With these software, accountants no longer need to create and maintain ledger files and manually enter countless rows of data. Instead, with all the fundamental formulas built-in, they can easily create reports in just a few clicks.

Keep in mind that although computerized accounting software have been around for a while, the recent developments in the automation sector have increased these programs' capabilities tenfold.

Today, accounting automation software have eliminated the most redundant aspects of accounting – giving accountants and finance teams more time to focus on financial planning and analysis.

But how did we get here?

A brief history of accounting and automation

A brief history of accounting and automation

A brief history of accounting and automation

The accounting language dates back thousands of years, with its oldest records coming from the Mesopotamian civilizations some 7,000 years ago. Records of accounting from this time show business and financial transactions noted on clay tablets.

Here's some interesting research by Career Trend and Investopedia on the brief origins and history of accounting:

  • 8000 - 5000 BC: Earliest evidence of recorded transactions from Mesopotamian civilizations.
  • Before 2000 BC: Early bookkeepers emerged while society still practiced the barter system.
  • 1400s: The single-entry bookkeeping system becomes the standard.
  • 1494: Luca Pacioli, an Italian monk, laid the groundwork for modern accounting and is now referred to as the “father of accounting.”
  • 1880s: William Burroughs invented the adding machine. While it didn’t have any internal memory like computers, it could carry out arithmetic operations quickly with more accuracy.
  • 1887: The AAPA (American Association of Public Accountants) was founded.
  • 1889: Herman Hollerith developed the punch-card machine to enable the U.S census to handle data faster.
  • 1896: The establishment of the professional title of a Certified Public Accountant (CPA)
  • 1907: Businesses begin to use punch-card machines for accounting.
  • 1913: The U.S begins charging income tax to fund the upcoming World War.
  • 1928: IMB developed a tabulator that was capable of processing 100 punch cards a minute.
  • 1939 - 1945 (World War II): John Mauchly and Presper Eckert developed the ENIAC computer for military use.
  • 1940: The creation of the UNIVAC – a Universal Automatic Computer that could store data on magnetic tapes instead of punch cards.
  • 1955: UNIVAC begins to run payroll for one General Electric factory. This marked the first time an organization had brought in a computer purely for accounting purposes.
  • 1978: The founding of Visicalc – the world’s first spreadsheet software. Later that year, Peachtree Software introduced an accounting software purely for the early personal computer.
  • 1983: Intuit launched its first line of accounting software – the Quicken.
  • 1987: Microsoft launched Excel. Funnily, it was originally made for Apple computers. They later launched a PC version, and the rest was history.

Despite the numerous new tools developed since then, the accounting and finance profession didn't see any significant changes till processes started to become automated.

Accounting and automation worked like a charm.

Automation could do all the heavy lifting – copying data between two sheets and pointing out discrepancies, errors, and missing information. It could also reduce, if not nullify, the dependence on human intervention. This ensured data was always accurate and reliable. This made everything more easy, streamlined, and more efficient.

But to truly understand the impact of accounting automation, we first need to understand the challenges of manual accounting.

Challenges of manual accounting:

Challenges of manual accounting:

Challenges of manual accounting:

  • 1. Subject to errors: Manual accounting systems use books, papers, and physical records where accountants manually enter the data by hand. The probability of mistakes during manual data entry is high, and their corrections could cost a fortune. Harvard Business Review pointed out that bad data alone costs U.S companies $3 trillion every year.
  • 2. Loss of physical copies: Even in the off chance of data corruption, having an effective backup can ensure that data is safe. This includes digital copies in a secure cloud storage. Books and physical records are prone to loss, theft, and even fire/water damage. Having adequate backups would mean a painstaking copying process which can be time-consuming.
  • 3. Takes up time: Accounting functions aren't just limited to calculating taxes and saving receipts for the future. These are just a few things an accountant does to ensure a business stays profitable. Expecting your accountants and finance teams to waste time on low-impact tasks like printing and creating backups can become a way of wrongly utilizing their most fruitful hours at work.
  • 4. Poor cash flow management: Tracking every accounting document, from bills to bank statements, can be daunting if you still follow a manual process. You would have little to no insight into cash flow. As a result, monitoring, tracking, and reporting incoming and outgoing payments can get challenging.

If you resonate with some or all of the points mentioned above, now is the time you consider shifting to an automated accounting system.

How does accounting automation help businesses?

How does accounting automation help businesses?

How does accounting automation help businesses?

The reasons a business needs to automate its accounting are apparent – it’s easy to use and affordable, and it safeguards your company from any financial leaks or mistakes that can cost you dearly.

The Journal of Accountancy reported that around 53% of finance leaders say that AI can perform more than half of the tasks currently performed by people in the next couple of years.

This means these software can solely handle all and any functions that can do away with human intervention. This will free up time for your accountants and lets them focus on other important tasks.

Regardless of the size of your accounting function, rest assured that accounting automation will significantly improve the efficiency of your finance and accounting departments.

Major benefits of accounting automation in 2023:

  • 1. Reduces errors: While entering data on books and physical records can be error-prone due to the simple dependence on human interference, the shift to an accounting software ensures that data is automatically updated, thus, ensuring values are always accurate.
  • 2. Secure centralized storage of information: A major burden on organizations is that they often need to store paper records for around ten years (depending on local regulations.) But of late, government tax offices have slowly started to get on board with e-receipts instead of paper records. This means you no longer need to shuffle through your cabinets to find proof of purchases; every document is accessible wherever you are.
  • 3. Saves time: Whether an employee or accountant, completing bookkeeping or accounting-related tasks takes up valuable time. An accounting system can save you time by automatically entering information, checking your calculations, keeping your receipts organized, calculating your taxes, and much more. Just think of the domino effect this would have on all your other workflows.
  • 4. Improved cash flow management: Automation tools enable you to forecast cash flow easily. By giving you real-time data analytics, and reporting, you can access accurate cash flow metrics in just a click. This allows your accounting and finance teams to make data-back business decisions, always.

How to Get Started With Accounting Automation

How to Get Started With Accounting Automation

How to Get Started With Accounting Automation

Here are some core accounting tasks that you can automate easily:

Accounts payable and receivable automation

Automating your AP & AR is a great way to free up cash flow and reduce your dependence on human intervention. For example, all your invoices can be created, verified, submitted, approved, and paid for within a single platform. In addition, stakeholders can raise tickets for any problems in the process, enabling accountants to address challenges as and when they occur.

Payroll

Payroll automation helps you save time on processing direct deposits, filing taxes, and generating payroll reports. Additionally, the software instantly calculates each type of employee payment – salaries, overtime or double-time charges, bonuses, raises, deductions, commissions, and even hourly wages.

Expense management

Expense management automation helps accounting teams track business expenses, gain faster approvals on employee expense reports, and improve turnaround times for expense reimbursements. It also helps with accurate spend data that results in better financial decision-making.

If done manually, all the processes listed above would need tons of paperwork and multiple systems to ensure things are happening accurately and efficiently. With automation, organizations can eliminate much of the manual documentation these tasks would need, allowing their CPAs to focus on core business processes.

Before making your pick, ensure you are clear about your business and employee needs. This will give you a handy checklist of items your ideal accounting software would need. To help you out, we've compiled a list of features that we think are essential in a perfect accounting software.

Top features to look for in an accounting software

Top features to look for in an accounting software

Top features to look for in an accounting software

Ensure you go through different software in the market before making your final pick, as this will help you narrow down those that perfectly suit your business needs.


Here's a handy checklist of features to look for in a good accounting software:

  • Easy to use and intuitive UI
  • Cloud-based software that has a secure storage
  • Integrations with various other tools
  • Cross-platform mobile application
  • Multi-user access

And, of course, ensure the software can also take care of these core accounting modules with ease:

  • Invoicing
  • Time-tracking
  • Automated financial reporting
  • Quick customer support
  • Cash flow management
  • Inventory tracking

Finally, business owners need to remember that the accounting software you choose needs to have the ability to scale. This becomes important when your business expands and changes. How? Your accounting software would need to be able to accommodate more clients, send out more invoices, or even handle multiple projects that may have individual billable modules.

Now that you know what to look for in an accounting software, let's take a look at some of the most prominent accounting automation systems in the market so you can make your pick!

Top 6 accounting automation software for businesses to consider in 2023

Top 6 accounting automation software for businesses to consider in 2023

Top 6 accounting automation software for businesses to
consider in 2023

The following list of accounting software has been compiled by closely looking at reviews and ratings on G2 and Capterra. You'll notice each review followed by a relative rating on both platforms and a quote from a user.

Note: The order of this list in no way shows our preferences or their quality. The list just showcases a range of different softwares, some of which suit businesses at a particular stage or type. So read through the descriptions thoroughly and choose the software whose offerings seem best suited for you.

Quickbooks Quickbooks – the go-to software for SMBs

Quickbooks is easily the most popular accounting software in the market. With over 3.4 million SMBs on board, it's used by finance and non-finance professionals worldwide. Being quick to set up and reasonably priced, it offers tools and features beneficial for SMB accounting.

Top features
  • Integrations with financial institutions like PayPal, Square, Shopify, etc.
  • It has user guides to help you file quarterly and annual tax returns.
  • Automatically sorts expenses and transactions into their tax categories.
  • Tracks all expenses from one place.
  • Tracks miles using your smartphone’s GPS.
Pricing
  • Simple start: $25/month (1 user)
  • Plus: $80/month (up to 5 users)
  • Advanced: $90/month (up to 25 users)
Ratings
  • G2: 4.0 (out of 2,816 reviews)
  • Capterra: 4.5 (out of 19,046 reviews)

What users say about QuickBooks:

“Quickbooks has become an indispensable element of my business, and I'm still using it after 11 years. It simplifies payroll, AP, AR, and anything else my accountant would charge me to do.”

Speaking of which, Fyle has a native Quickbooks integration for expense management to export your spend data in just one click.

Xero Xero – loved by accountants and SMB owners

Xero has a robust and thorough platform for accountants and an interface that is easy to use and understand for even non-financial employees. With Xero, finance teams and accountants don’t need to recreate records for the rest of the organization; employees can simply log in and obtain the information they need.

Top features
  • Create expense claims and send invoices.
  • Integrations with financial institutions and other add-on apps like Hubspot and Square.
  • Real-time info on cash flow.
  • Accurate financial reporting.
Pricing
  • Early: $12/month
  • Growing: $34/month
  • Established: $65/month
Ratings
  • G2: 4.3 (467 reviews)
  • Capterra: 4.3 (2,077 reviews)

What users say about Xero:

“A bookkeeper's bookkeeping service!”

So Fyle also has a native Xero integration for spend management that helps you shorten reimbursement cycles and have all your expense data in one place.

Netsuite NetSuite – the most popular ERP for larger organizations

While Xero and Quickbooks were built keeping SMBs in mind, Netsuite is for larger organizations. Being one of the most prominent ERP (Enterprise Resource Planning) solutions available, it integrates seamlessly with other core business functions overseen by CFOs.

The full suite of features ranges across various business performance tools like HR management, inventory management, product management, purchase order management, vendor management, and many more. This, in turn, enables business leaders to manage all these aspects from one central platform.

Top features
  • AP & AR automation
  • Compliance management
  • Cashflow management
  • Fixed assets management
  • Payment and Tax management
Pricing
  • Base price: $999/month (unlimited clients)
Ratings
  • G2: 3.9 (1,860 reviews)
  • Capterra: 4.1 (818 reviews)

What users say about NetSuite:

“NetSuite is a scalable, customizable, and powerful software allowing you to run all ERP functions.”

Sage Sage Intacct – an AICPA favorite

Being the first and only provider for the AICPA, Sage Intacct ranks the highest in customer satisfaction on all prominent review platforms. In addition, Sage claims that their customers achieve a 65% improvement in productivity and payback within six months of adoption.

Top features
  • Payroll management
  • Access to various tax compliance tools
  • Inventory control
  • Share data with your accountant from any device in real-time
  • Create and send invoices
Pricing

Quote-based. Some factors that affect the cost include the number of users that need access to the software and the additional number of modules you’d need to add-on.

Ratings
  • G2: 4.3 (1,581 reviews)
  • Capterra: 4.2 (322 reviews)

What users say about Sage Intacct:

“For me, one of the best parts about Sage Intacct is the flexibility and the intuitiveness of the system. This system seems to have been built with the end-user in mind and has a very logical layout.”

Freshbooks FreshBooks – made for the service industry

Pitted against Quickbooks and Xero, Freshbooks is another major player in the cloud-based accounting ecosystem. Still, with one little difference – it takes particular care to build solutions for service companies.

From marketing agencies to therapists, if you’re creating value for your clients by applying your knowledge to their problems, Freshbooks is made just for you.

Top features
  • Automated payment reminders
  • Online credit card payments
  • Automatic sales tax calculations
  • Time tracking with chrome extension
  • Set up recurring payments with bank integration
  • Easy integrations with S-Suite and Gusto
Pricing
  • Lite: $15/month (5 billable clients)
  • Plus: $25/month (50 billable clients)
  • Premium: $50/month (unlimited)
Ratings
  • G2: 4.5 (645 reviews)
  • Capterra: 4.5 (3,659 reviews)

What users say about FreshBooks:

“What I like best about Freshbooks is it's a simple and easy-to-use time tracking and billing solution for a small business. It makes sending out invoices easy and provides an easy method for clients to make payments via credit card.”

Wave Wave – easy to use with a free version for freelancers

Wave is an excellent option for SMBs – typically startups with 1-9 employees, freelancers, or solopreneurs. Its most significant benefit is that customers can manage unlimited expenses and incomes, connect to their bank accounts and credits, and do all essential accounting functions for absolutely no charge.

The only fee you’d have to pay is for credit card transactions through the platform. And that’s it.

Top features
  • Unlimited expense and income tracking
  • Fixed asset / Tax Management
  • Organize income and business expenses into tax categories
  • Access profit and loss statements and cash flow reports regularly
Pricing
  • Accounting, receipt scanning, and invoicing come for free without hidden charges
  • For credit card processing:

    - 2.9% plus $0.30 for Via, Mastercard, and Discover

    - 3.4% plus $0.30 for Amex cards

  • Bank Payments (ACH): 1% per transaction and has a minimum $1 fee
  • Payroll: $35 base fee plus $6 per active employee
Ratings
  • G2: 4.4 (265 reviews)
  • Capterra: 4.4 (1,207 reviews)

What users say about Wave:

“I love how easy Wave is to use, how I can track all expenses, and run reports whenever I need them. Super easy to send invoices, get online payments and now even add payment links to websites.”

Combine automated accounting with a smart expense management software

Combine automated accounting with a smart expense management software

Combine automated accounting with a smart expense management software

There’s more than one reason to love accounting automation – the above platforms help you automate invoices, bookkeeping, payroll, payments, and taxes. Now wouldn’t you like the same level of control when it comes to managing your business expenses?

New age expense management softwares such as Fyle enables you to track all your business expenses from within one platform. Additionally, the software makes it easier for accounting departments to close their books on time, giving them access to real-time spend data.

Ensuring that your business financials are safeguarded is essential in a post-pandemic world. By combining automated accounting with an innovative expense management system, you’re creating a finance function that’s systematic, precise, and doesn’t cause dread at the end of every quarter to close books on time.

The future of business credit card management with real-time spend management

Some Frequently Asked Questions (FAQs)

Some Frequently Asked Questions (FAQs)

Some Frequently Asked Questions (FAQs)

How is RPA different from regular automation?

RPA is a technology used to improve the efficiency of business processes by automating repetitive tasks with data processing that otherwise would take a chunk of your employee’s time.

Traditional automation differs significantly from RPA in many ways:

  • Traditional automation solutions are integrated into the existing software system or interact with the system via APIs. RPA can work across all types of applications.
  • Traditional automation can only execute predefined instructions, thereby limiting the scope of tasks that can be automated using it. RPA, on the other hand, swiftly starts working by mimicking a user’s actions, thus letting employees focus on more important tasks.
  • Waste time to manually match the receipts against the card statements.

Will Accounting Automation Replace CPAs?

As mentioned earlier, accounting automation is like a superhero’s suit. It’s present only to help accountants and finance professionals do their tasks efficiently. However, the onus of analyzing and generating valuable insights generated by the software will always be on the accountants themselves. So no, accounting automation will not replace CPAs.

Automation, however, will change the scope of an accountant's work. By minimizing the time taken to work on various manual processes, accounting automation will give accountants and finance teams more time to work on high-impact business tasks. These include creating budgets and strategies, assisting the CFO in making critical financial decisions, and significantly increasing overall business profits.

Rahul Radhakrishnan
Rahul Radhakrishnan Author

Rahul believes everyone has a story to tell.
If he isn't writing one, he's hearing one from
someone.

Shruti Kesavan
Shruti Kesavan Editor

Shruti Kesavan leads Content Marketing at Fyle. When not convincing people to automate their expense management, she loves to read, travel, and explore the world with her pup.

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