5 Things You Can Do Today To Automate Your Bookkeeping
If you’re a small business owner, there is a good chance you are spending more time than necessary on your accounting tasks. And if we are being honest, these tasks shouldn’t even be on your radar. The good news is that a lot of these manual, repetitive tasks can be automated. The even better news is you don’t have to buy expensive software or add headcount to do so. You likely already have these tools handy - now you just need to let them do what they were built to do.
Here are the five highest-impact process changes you should look into first:
Invoice follow-up
Arguably one of the most important aspects to a healthy cash flow - managing receivables. Sending out constant reminders, text, and phone calls is draining and uncomfortable. The solution is two-fold: automate reminders and simplify the payment process.
Most bookkeeping software solutions (QuickBooks Online, Xero, etc.) have an invoice reminder function built in that allows you to specify the cadence you define. For example, you could set a reminder to be emailed to the customer every week past the due date. The second part to automating collections is to reduce the barrier to pay. It’s common for customers and clients to delay payment simply because they are busy. By setting up a payment link within the invoice (or an automatic ACH payment), you make it a one-click solution and reduce the friction of getting paid on time.
Transaction categorization
The process of categorizing transactions is often the source of errors in the financial statements and delays month-end close. Again, most bookkeeping platforms have the functionality to connect directly with your bank. This allows your transactions to automatically pull into your system without spreadsheets and import errors.
With the ability to set matching rules and with introduction of AI, these platforms now learn, over time, how you categorize transactions for specific vendors, customers, etc. For example, every rent payment will go to Rent Expense without you having to manually categorize. What used to take multiple days can now be done in a quick review session.
Receipt & expense capture
If you are still collecting receipts in your desk drawer or have them stashed in your glovebox to “look at later”, that stops today.
Every major bookkeeping software has the ability to add receipts (and even create expenses) straight from your phone - snap a picture and upload it into the mobile app. Ramp does this plus has the ability to pull receipts directly from an email. While you should institute a review process, the ultimate goal is zero-touch expense capture.
Bill approval
If you have multiple people reviewing bills, there is an increased risk of bills being paid twice (or not at all) and confusion on the team when deciding who is responsible for what. While there are several solutions, one of the easiest is to set up a dedicated email inbox for payables. Anything that relates to bills flows right to that inbox and allows for easy reference. Another option is to use a solution like Bill.com or Ramp to set up an approval workflow. Remember earlier when I said Ramp can generate a bill from an email? Well, take that one step further and include an approval process. The vendor bill hits the inbox, Ramp creates a bill, the initial approver is notified, and once approved, the secondary approver can process payment. Rather than a meeting, bill pay takes less than a minute.
Payroll
Last, but certainly not least, is payroll. Payroll is one of those things that feel daunting. With the red tape of tax withholdings, filings, garnishments, and time approvals, it may seem complicated. This may have been the case 20 years ago, but there are dedicated payroll platforms that handle all of that for you.
Platforms such as Gusto or QBO Payroll allow for automatic payroll - you enter your employee information once upfront, schedule pay cycle, and you’re off to the races. They also handle the payroll tax withholdings, filings, and W-2 processing - all without you having to fret.
The biggest advantage that payroll systems have is their cost. Do me a favor - next time you are running payroll, calculate the time it takes for each step. Then, factor in the intangible cost of offloading the compliance liability to the payroll company.
If you read this thinking to yourself none of this is setup yet - don’t worry! Take a step back, audit your time, then prioritize based on where you could get your time back. For example, if your clients or customers pay on time, forget automating invoice reminders. Instead, if you are spending way too much time processing payroll every two weeks, start looking into payroll providers.
If you aren’t sure where to start or need help getting any of the above in place, please do not hesitate to get in touch! This is exactly what we do.