With online accounting packages such as Xero, QuickBooks, BrightBooks, and Sage, you benefit from a host of automations and smart actions. Tedious manual data entry, laborious reconciliations, and never-ending paperwork are a thing of the past. Using solutions like these will help you save time, become more efficient, reduce errors, and reduce costs. Let’s look at how automated bookkeeping works.
1. Live bank feeds and bookkeeping
Bank feeds are useful for connecting your online banking to your bookkeeping system so that the transaction information from bank accounts and credit cards automatically flows in. When you log in to your account, all your receipts and payments are instantly available. Bank feeds are a huge time-saver because they get rid of the need for time-consuming manual entry! AIB, Bank of Ireland, and Revolut have bank feeds available that can be easily connected up to Xero.
2. Bank rules help with reconciliation
Bank rules are designed to personalise your automated bookkeeping requirements. For example, you might set up a bank rule telling your accounting software that every time there is a payment with the word “Vodafone” in it, it should be treated as a payment for telephone services with 23% VAT applied. You can get more specific and create bank rules which identify payments by amounts. This way, you teach your accounting system what different transactions mean and tell it how to deal with them.
Most businesses have a good proportion of routine payments that occur every month, such as rent, broadband, subscriptions, electricity, etc., that can be processed in a single click thanks to bank rules. We don’t recommend that you set up bank rules for credit items, though. These kinds of items are better posted as bills in the system and then matched to a payment. That means you are recognising the liability when the bill comes in, and not just when it is paid.
3. Automating repeat invoices
If you have regular customers, repeat invoicing saves a lot of time. There are a few ways of automating this process; for example, if you charge a client the same amount every month, all you need to do is set up this recurring invoice once, and it will continue to bill them on a monthly basis. But if your bill changes regularly, you can instead have the invoice automatically set up as a draft for you every month, and then you can simply open it up and make the necessary edits. Property companies tend to use this handy automated tool for when they are collecting rent, as do SaaS companies who have a subscription model.
4. Tracking expenses with an app
Most accounting systems, like Xero, have a phone app to help you keep track of your expenses on the go. Imagine you’re in a garage having just paid for petrol and now you have a receipt you need to keep so you can make an expense claim. Instead of stuffing it in your wallet with all the other receipts, the app enables you to take a picture of your receipt so that it automatically gets posted to your accounting system. Most accounting apps will also automatically pull the necessary information from the receipt, such as cost, date, VAT, etc., and send this categorised data to the accounting system. This feature is great for minimising errors, going paperless, and keeping track of spending patterns.
5. Catalogue your products and services
With automated bookkeeping, you can set up the inventory and services that you sell so that when you are creating an invoice, all you have to do is select a product rather than start from scratch every time. The description of the service, the VAT rate, the account code, the classification, and even the tracking category are all instantly pulled across into the invoice. You can still edit the details if you like, but the bulk of the information you need is there instantly, which makes your life a lot easier. It’s absolutely worth the time it takes to set up your products and services and make sure they are correctly configured because you’ll make the most of your cloud accounting system’s automation features in the long run.
6. Merchant services integration for online payments
Cloud accounting systems have integrations with payment providers such as Stripe. This means that when you send an invoice to your customers, there is a clickable link to secure online payment using a credit or debit card. This makes receiving money quickly from clients very easy, but it also means that you are alerted the moment your client has paid and your invoices are updated automatically as being paid. On top of this, your accounting system will then reconcile the receipt when it comes in through the bank feed with the payment that was received on the invoice.
7. Direct debit integration get you paid on time
Direct debit integration is convenient if people want to pay from their bank account rather than with a credit or debit card. GoCardless is a great tool for automating this kind of direct debit. Once it’s connected to your accounting software, a link in the invoice gives customers the option of paying by direct debit – all they have to do is provide their IBAN and authorisation, and the amount due will be collected automatically. The great thing about direct debit is it’s set up just once for all future invoices. This really is a great way to automate the collection of payments; the customer doesn’t have to do anything, you don’t have to send reminders or chase after payments, and you always get paid on the invoice due date.
8. Automated reminders for late payers
When customers or clients keep delaying the payment of their invoices, it can start to cause cash flow problems. Automated reminders nip this problem in the bud, providing the nudge some people need. You can send more than one if they don’t get the hint the first time. For example, the first reminder sent to a client could be very simple, informative and friendly, then the second and third reminders could be more persuasive. You can spread them out by the number of weeks you feel is appropriate, and you can turn reminders on and off for certain clients. Automated reminders are great for simplifying a process that could be rather tricky to deal with if you have to manually write emails for each individual client every time they are late paying an invoice.
9. Bill entry via email
This feature allows you to send bills directly to your accounting system via email. All you have to do is set up an accounts email address and forward bills and their attached PDFs to it, which your bookkeeper also has access to. The benefit of this is that data entry is not necessary. When you go into your accounting system, you’ll find the draft bill and PDF in there, and the system has probably already pulled some key information from it. Having these PDFs in your accounting system is very helpful when you are drilling down into your transactions and you’d like to have easy access to the original documents. Now they’re all in the one place.
10. Suggest previous entries
Most cloud systems remember how transactions were dealt with before and pre-fill fields like the contact, account code, and VAT rate accordingly when reconciling. You simply confirm or amend the suggestion rather than entering the details from scratch each time. Third-party tools such as Dext add further layers of OCR and machine learning on top of any of this for receipt and invoice capture specifically.
11. Find and recode
This is a term that is used in Xero specifically, but other cloud accounting systems have something similar. Find and recode allows you to highlight a batch of transactions and apply a change to all of them in one go. This is a great timesaving tool for bookkeepers. Why might this be needed? Let’s say a bookkeeper wants to move all the transactions out of “Travel and Entertainment” and instead put them against a trade show budget. Instead of having to go into each individual transaction to edit them, this automation does it in one go. Features like this allow bookkeepers to produce a lot of output in a very short amount of time.
12. Integrated payroll
Many businesses use a separate payroll system for their accounting, preferring to keep this kind of sensitive information separate from the main accounting function. At Beancounters, we use cloud payroll systems that post payroll information to the accounting system automatically. This is useful for reporting; for example, if we need to break down the cost of salaries for different departments. SimplePay and Parolla are two solutions we recommend for Irish SMEs.
A week’s work completed in only a few hours
As you can see, technology has really changed how bookkeeping works. A week’s work can be condensed into 3 or 4 hours. Automation makes accounting far more efficient than it used to be, but doing it right relies on knowing the right systems, setting them up correctly to begin with and having the appropriate expertise. If you want smart, efficient accounting without having to hire someone at a full salary to do it, consider what a team of modern bookkeepers can do for you!
Ready to level up your accounting by getting a Beancounter on your side? Get in contact with us today for a chat about what we can do for you.