Small businesses are always on the hunt for ways to free up useful resources to allocate them more optimally. Fortunately, the advancements in modern technology have allowed digital processes to become a norm in the business world.
It is especially true for finances, where various tools exist now to make conventional processes swifter, more accurate, and less time-consuming. The need for small businesses to automate the range of tasks that would previously be done manually is imperative for future growth and sustainability.
According to recent statistics, 94% of small businesses still perform time-consuming, repetitive tasks manually. However, times are changing as 67% of companies in the market today utilize business process automation tools to some extent, ensuring that their daily repeatable tasks can be streamlined. In businesses using automation, on average, 26% of their efforts are for their finance division. Surveys reveal that the benefits of automation are highest for finance as well. For instance, 57% of finance automation is implemented in order-to-cash processes, particularly in eCommerce.
Automating various finance functions is the simplest and most efficient way to free up your firm’s time and other valuable resources. These efforts, in turn, can be directed toward more productive tasks. Here are some of the elements of finance that your company can automate for the best results:
1. Lease Accounting
A lease accounting tool is the most prudent automation tool for businesses. It pays to have one of the best lease accounting software out there because it offers your business the technical horsepower to ensure regulatory compliance and mitigate losses from human errors. Late payments, missed deadlines for renewals, surcharges, and non-compliance to FASB regulations are some challenges a lease management firm can encounter when its processes rely on manual entry. With a fast and efficient tool, these simple tasks can become a breeze and relatively error-free.
The time your team saves on repetitive and redundant tasks daily can be allocated elsewhere to grow the business effectively.
2. Basic Accounting and Bookkeeping
In the past, bookkeeping was carried out manually, which meant that each revenue or expense item for a business had its record, and accounts were totaled regularly. This procedure took a long time.
In two main stages, modern technology has revolutionized bookkeeping. First, the speed and ease at which these assignments can now be completed were significantly improved with the introduction of simple tools like Microsoft Excel.
Second, and perhaps more significant, is that readily available access to specialized accounting software has further reduced the hassle of core bookkeeping tasks. Numerous businesses have found life easier, and their owners have greater control over their finances by making bookkeeping more approachable and simple.
3. Accounts receivable and invoicing
This function is the foundation for any business operation. It is the company’s main revenue stream, and without proper documentation, the entire operation can go under before it even gets off the ground.
To mitigate such risks and ensure sustainable growth, companies are encouraged to try a accounts receivable automation software. This technology-driven tool simplifies and enhances the invoicing and collection processes, allowing for accurate record-keeping, seamless communication with clients, and proactive tracking of outstanding payments.
Conventional invoicing and recording practices require manual entries that are cumbersome, time-consuming, and prone to substantial human error. On top of that, proper invoicing may require multiple departments like sales, finance, and customer service to sit together, which, when done manually, can be a recipe for disaster.
Fortunately, the software and technology to automate these tasks are available to every business, whether large or small. Modern tools streamline invoicing and accounts receivable tasks and allow active cross-referencing between different teams, making the entire process more efficient and productive.
It also pays to know that for small businesses, unpaid or late invoices cause losses of roughly $800 million yearly, and the median wait time until payment is received? A staggering 72 days!
4. Compliance and reporting
This is where things start to get complicated. Historically, businesses needed assistance from a skilled and sometimes expensive professional before determining their tax liabilities. In addition to being tedious and complicated, this process frequently seemed to be one spoken in a completely different language that you, as a business owner, could comprehend.
Fortunately, accounting software has been a godsend for finance teams striving to automate their tax responsibilities. Now, specialized accounting tools can determine the tax obligations for each transaction, such as Xero for Making Tax Digital. Moreover, numerous platforms can assist firms in properly and swiftly understanding their tax liabilities for transactions across international jurisdictions. It reduces time spent and aids in getting businesses ready for audits.
5. Payroll management
Typically one of the most repetitive finance tasks is payroll generation. It also carries high stakes internally because your employees put in considerable effort. Their motivation can falter when they don’t receive their paycheck on time or get inaccurate amounts. These errors can frequently occur when payroll management is manual because human attention spans mean that after doing the same task over and over the entire day, they are bound to miss something. Once again, there are readily available automation tools out there that small businesses can easily afford. This software can save your business substantial time and stress when generating monthly payrolls.
6. Inventory management
If your business sells a product and holds an inventory, you may have found inventory management extremely troubling, especially regarding finances. Manually keeping track of hundreds, if not thousands of product items can be challenging for even the most efficient employees. On top of that, being able to note how much stock is leaving accurately, what it needs to be replaced with, and the raw materials that need to be ordered from suppliers can be tedious. And then there are the payments that must be made or received in lieu of these products.
You’ll be surprised that modern automation tools can handle this entire process for you with minimal human interaction and errors.
Conclusion
Finance automation saves businesses thousands of dollars in terms of valuable time and effort that would otherwise be dedicated to manual tasks. The business can utilize these resources in more efficient ways, which can eventually help to expand the business while also ensuring sustainability in the long run. If you’ve not automated manual finance operations as of yet, it is high time to start now.
