Automated accounting software and tools used to cost a fortune. We were typically reserved for large corporations with money to burn. Thankfully, accounting systems have come a long way. In recent years and are more cost-effective than ever. Businesses that rely on manual accounting processes are wasting time, resources, and money that could be resolved with the right technology.
From wasted labor hours to costly accounting errors, manual accounting processes can negatively impact your bottom line. If you are not yet using automated technology and accounting tools. Keep reading to learn just how dangerous your manual practices may be.
You’re wasting employee time
How much of your employees’ time is spent on bookkeeping and accounting tasks. Daily tasks like collecting data, compiling paperwork, and entering data wastes precious hours. that could be better spent on other projects. The biggest asset for your business is human capital, which can be your biggest revenue driver. With the right accounting technology, your employees can reduce the time spent on their tasks and focus more hours on high-level work that can drive revenue.
You’re not tracking time accurately
Punching time cards, manually tracking time off and PTO accrual, and keeping employees informed of their time is a major drain on any business. From answering the same questions about PTO again and again to improperly tracking time, manual processes require a lot of labor hours.
Accounting systems and various available integrations enable you to automate time tracking for your business, including PTO accrual, usage, and benefits. Data is easily accessible to quickly inform employees of the time and benefits, freeing up your HR team for higher level tasks. These systems also provide valuable insights on your human capital, helping you build a robust strategy for growth, including payroll, scheduling, and time off management.
Nobody is perfect, which unfortunately means that manual accounting processes lead to unreliable data. You may not be able to count on your business data or trust that is it current if you are relying on slow and inaccurate manual processes. This will create significant challenges when it comes to making business decisions.
Your accounting processes should generate actionable reports based on reliable data. This data is then used to make decisions, improve your strategies, and adjust your operations as needed. If you are still relying on manual accounting processes, you are losing employee time and creating messy data. Once things get too out of hand, you will have to pay even more to have a financial professional clean up your books and correct errors. On the other hand, automated processes are considerably more reliable and provide actionable data you can use to run your business.
You are at a greater risk of fraud
Manual accounting processes are not as reliable as automated bookkeeping. You likely have solid checks and balances in place for your business, but that is not enough to keep your organization safe from fraud. Both internal and external fraud risks are greater when manual accounting processes are in place.
For small businesses and startups, the significant losses that come with fraud risks are not feasible. One issue could set your business back too far to recover. Instead, relying on automated bookkeeping systems helps place internal controls and reliable checks and balances to improve your overall security. Fraud risk is minimized with automated accounting processes, and it is harder for bad actors to take advantage of your accounting systems.
Your payables are timed poorly
You have to pay your bills on time to protect your credit, reputation, and business relationships. If you are using manual accounting processes, you are at a greater risk of incurring late fees, accruing late payment interest, and missing opportunities to save money. It is more expensive to hire a full-time employee to manage all of your payables, and it is a difficult job to do manually.
With automated payables, you can ensure you pay your bills on time and optimize your payables. These tools enable you to take advantage of early payment discounts and help you save money by paying your bills electronically.
Your invoicing is sloppy
Timing invoices perfectly is almost impossible for a single employee to do, and do efficiently. Manual receivables processes often lead to inconsistencies, missed late fees, and limited cash flow. If sales invoices are outstanding for long, it can be difficult to operate your business.
Relying on automated invoicing creates a streamlined approach to billing and collecting payments. You can save employee time, set standards for late fees and penalties, and optimize your cash flow. With integrated electronic billing, you can even receive your money sooner.
Your expense management is clunky
Fraud and errors occur when expenses are tracked manually. Expense management shouldn’t be accomplished with spreadsheets or manual reimbursement approvals. Too much time is required to enter, track, and organize all of the data and paperwork associated with expenses.
Accounting apps available today can streamline your expense management. Employees can easily complete expense forms, submit documentation, and receive approvals. These tools also provide complete insight into your expenses. So you know where your money is going without spending valuable employee time on tedious tasks.
You have tax reporting errors
Tax laws change on a regular basis, and requiring your employees to keep up with local and federal regulations only sets you up for failure. Manual tax reporting and 1099 reporting drains your employee time and often leads to inaccuracies. Your business can’t afford to get tax reporting wrong, and you definitely can’t afford the labor hours required to get it right.
By automating your tax reporting, you can protect your business from errors and avoid noncompliance. Save yourself the headache and potential losses of tax reporting inaccuracies, and save employee time that could be better spent on other tasks.
Your hires are timed poorly
If you are using manual accounting processes, then you cannot accurately predict employee retention or business growth. Accordingly both of those metrics are crucial to determining the best time to hire new employees. Presently a lack of reliable data makes it impossible to decide which departments to expand, how many new employees to hire, and when to hire.
Obviously you can help to make your company’s growth smoother by transitioning to automated accounting systems. With the right data in place, you can quickly determine the best times to hire in order to avoid unnecessary overhead costs, lagging production, and overworked employees.
Your cash flow forecasting is lacking
Basically cash flow is a major factor that leads to business failures. It is also crucial to have a clear picture of your company’s cash flow and cash flow. However the forecast available at all times. Manual accounting processes make it difficult to get accurate data. And gain the necessary insights into cash flow to make decisions.
Automated bookkeeping systems ensure your company’s cash flow state is accurate and reliable. With the data you need, you can confidently make decisions for the future of your business. And strategically plan for your goals.
Streamline Your Accounting Processes with K-38 Consulting
While automated accounting processes seem to do it all. You still need the right people in place to manage your systems. At K-38 Consulting, we can help determine which accounting tools and software. They are right for your business and assist with implementation. With our financial consultants by your side, your employees will learn the ins and outs of accounting systems. And how to maintain them for business growth.