How To Start Automation In Your Accounting Firm

Do you need help to keep up with the increasing demands of work? Do you believe your accountants could be using their time more productively instead of processing invoices, reconciling errors, and chasing approvals by hand?

Manual invoice processing can cost up to $20 per invoice when factoring in time spent, error reconciliation, approvals, and fully loaded labor costs. However, by automating accounts payable (AP), the cost drops by 90%, leading to potential cost savings of up to $36,000 per month for firms processing 2,000 invoices. The benefits of automation are clear, but getting started can be overwhelming.

In this blog, we'll try to provide a step-by-step guide to help you navigate the options, simplify your workflows, and apply automation effectively. From identifying pain points and prioritizing processes to selecting the right tools and technology, designing and implementing automated processes

Step #1: Know Your Pain Points

It is easy to get carried away by a slogan or a magical solution with the most popular tool that everybody is talking about. However, simply automating a process without understanding how it fits into your core business functions and which specific areas need improvement is not enough. By focusing on your pain points and bottlenecks first, you can ensure that:

• The new automation can run smoothly into your workflow.
• Employees will find it useful.
• It will create a long-lasting change.

To achieve this, you need to map out your entire workflow. While you don't need to be overly thorough at this stage, it is important to identify bottlenecks such as too many steps for a simple task, manual data entry, duplicate documents, recurring errors, and endless validation circles. It is crucial to involve your team in the analysis as they can quickly recognize where they could save time and point out pointless tasks. They can also provide valuable insights into the daily challenges they encounter and help identify areas that require improvement.

Let’s see an example:

Let's say you run an accounting firm that specializes in tax preparation for small businesses. During the tax season, you receive a high volume of documents and information from your clients. One of the core functions of your workflow is to collect and organize all of the necessary information to prepare each client's tax return.

Your current engagement workflow may look something like this:

1. Your staff sends a list of documents and information required for the tax return to the client via email.
2. The client sends the documents and information to your firm via email.
3. Your staff receives the documents and information and manually logs them into your tax preparation software.
4. Your staff prepares the tax return using the logged documents and information.
5. The tax return is reviewed by a senior staff member.
6. The tax return is reviewed by a partner for sign-off.
7. The final tax return is sent to the client via email.

Now, point out your bottlenecks:

1. Employees need to remember when to send the requirements. This task involves using 3 tools: Calendar, an email platform, and cloud-based software tax details.
2. The client might take too long to send the document, misplaces them, or send them incomplete.
3. Manually entering data can lead to errors.
4. Reviewing and sign-off process is handled as they arrive, overlooking prioritization.

Step #2: Identify potential automation solutions

Once you have mapped out your process, assess each step one by one. But remember: slow and steady wins the race. To successfully eliminate bottlenecks, you must do it step by step, evaluating how it fits into your process and then proceeding to the next one.

In our example:

To improve workflow you can use a document collection and management tool like FileThis or Hubdoc. You can set up automated requests to go out to each client at the start of the tax season, requesting all of the necessary documents and information. The tool can automatically pull the documents and information from various sources (such as bank and credit card statements) and organize them into a central location for your staff to access.

Your staff can then use tax preparation software that integrates with the document management tool to automatically import the documents and information into each client's tax return. This eliminates the need for manual data entry and reduces the risk of errors.

To streamline the review process, you can use workflow management software like Karbon or Asana. This allows you to assign tasks to specific staff members and track the progress of each task. You can set up notifications to alert staff members when a task is assigned to them or when a task is completed. This ensures that the tax return is reviewed and signed off by the necessary staff members on time.

Step #3: Find The Right Tool (Or Exploid The Ones You Have)

You may already be using QuickBooks for general bookkeeping tasks like recording transactions and generating financial reports, but you may still be handling your bill payments manually. The truth is, many firms only use a fraction of their tool's potential, and you may be able to address problems without adding new software.

Before investing in new tools, it's important to explore the full capabilities of your current set of tools. You may find that your existing tools have enough features to solve many of your pain points, and you haven't tried them yet. In some cases, you may even discover that you have more than one platform or tool that can work together. If you need additional functionality, consider using tools like Zapier to connect your existing apps together or create custom-built integrations. This can help you maximize the potential of your current tools and streamline your workflow without adding new software.

If you are not already using these platforms and want to start, here is a comprehensive guide on our top 3 picks for cloud-based accounting software and when they are most recommended.

Why Automate?

Automation can be easily implemented in various areas of accounting firms, such as invoicing, accounts payable and receivable, expense management, bank reconciliation, and financial reporting. By automating you can:

• Cut cost and increase profitability
• Reduce human error and the risk of fraud
• Ensure consistency, reducing mistakes and information gaps
• Provide faster access to real-time key performance indicators for data-driven decisions

By automating financial processes, you can streamline operations, reduce manual errors, and allow your team to focus on more strategic tasks.

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Kevin Mitchell, CPA

Senior Manager and CPA with over 20 years of experience in accounting and financial services, specializing in risk management and regulatory compliance. Skilled in managing audits and leading teams to deliver exceptional services. Proud father of two.

🔗 Kevin Mitchell | LinkedIn

References:

Fuesz, B. (2023, January 9). The secret to automation – go slow to go fast - Sage Advice US. Sage Advice US. https://www.sage.com/en-us/blog/the-secret-to-automation-go-slow-to-go-fast/

workflow, J. (2023, February 23). 9 Ways Your Accounting Firm Can Utilize Automation in 2023. Jetpack Workflow. https://jetpackworkflow.com/blog/accounting-firm-automation/

The definitive guide to process automation for accounting firms. (n.d.). The Definitive Guide to Process Automation for Accounting Firms | Karbon Resources. https://karbonhq.com/resources/the-definitive-guide-to-process-automation-for-accounting-firms/