Accountants are changing the way they process payments.
Outdated manual accounting tasks that delay your business from collecting payments and slow down your accounting workflow—such as manually reconciling invoices, entering transactions into multiple platforms, and updating accounting software—are being replaced by automated accounting software and cloud-based payment technology.
According to the 2018 RHI Benchmarking Survey, 75% of firms are either currently using or plan to be using cloud-based technology in their accounting and finance roles.
If your business is part of the 25% of firms who are still unsure about automating their payment process, it might be time to reconsider so that you can stay on top of innovations and remain competitive.
By 2020, artificial intelligence will be able to fully automate accounting tasks. (Source)
Shifting from manual accounting tasks to automated payment software helps keep your business current. Here are four reasons accountants need automated payment software.
1. Reduce human errors
Manual accounting is a time-consuming and tedious process prone to errors. You have to manually keep track of paper ledgers and invoice, which could be lost or stolen and impossible to replace.
You can also run into errors when manually entering payment data into your accounting software. Data could be entered incorrectly, customers could be charged the wrong amount, or the wrong customer could be charged for a transaction. Even the best accountants are bound to make mistakes that need to be fixed, and that takes time.
Automated payment software enters payments directly into accounting software and applies them to the general ledger or credits them to an invoice. This simple process lowers the chance of human errors, eliminates double data entry, and helps your business function more efficiently.
2. Increase cash flow
In an ideal world, customers would pay invoices immediately, and you’d never have to worry about cash flow. Unfortunately, that’s just not realistic.
Cash flow measures how quickly you move money, and positive cash flow is an essential part of staying in business. In fact, 90% of small businesses that fail do so because of poor cash flow. (Source)
Manual accounting hurts cash flow because it requires a lot of repetitive manual data entry—you have to bill the same customers the same amount on the same day every month. This process can delay businesses from receiving invoice payments for several days and negatively impact your cash flow.
An automated payment system will speed up your cash flow and put more money in your bank account by making it easier to set up and collect recurring payments. You can automatically process payments on a schedule, which increases your cash flow and reduces the likelihood of late payments.
A customer payment portal, such as EBizCharge Connect, can also help you get paid faster by simplifying the invoicing process. EBizCharge Connect integrates with your accounting software, sends email payment reminders to your customers, and posts payments to your accounts receivable and general ledger. With a customer payment portal, you’ll get paid faster and more efficiently.
3. Strengthen security
Automated payment solutions are typically hosted in the cloud. Cloud-based accounting software runs on remote servers, providing a more secure method of managing finances.
Cloud accounting gives businesses better security by keeping sensitive data off of their private systems. Unlike a traditional accounting system, which is stored on a hard drive, a cloud accounting system is stored off-site on secure servers, so the data can’t be stolen from the office or removed on a thumb drive.
Cloud accounting also increases security by regularly and automatically backing up data, a time-consuming and manual process with traditional accounting systems. Cloud accounting providers back up data in multiple locations, so if one server goes down, there are always more to take its place.
Finally, cloud accounting protects businesses from the potential loss of a natural disaster. If a fire, flood, mudslide, or other disaster caused damage to an office, the accounting system would still be intact and accessible from any internet-connected device. With cloud accounting, businesses can keep moving even when disaster strikes.
4. Streamline your accounts receivable
Poor accounts receivable management can drain valuable time, resources, and productivity from your business.
To avoid this pitfall, the accounts receivable process should be optimized and streamlined to reduce debt and prevent current profits from going to waste. Ideally, this means applying payments to open receivables as soon as possible. Payments must be applied to the correct customer and invoices, and they should be applied quickly so you know which accounts are current and which are past due.
An automated payment system streamlines this process by automatically posting payments to invoices and reconciling your accounts receivable and general ledger.
And because this whole process is automated, you spend less time on accounts receivable management and more time on essential tasks.
For most people, change is uncomfortable. Accountants can become set in their ways, but it’s never too late to adjust and streamline your workflow. Automated payment software will help eliminate the hassle of manual accounting. If you stay open to new technology, and move with change instead of against it, you’ll collect payments faster and bring in more revenue.