Why People Are A Crucial Link In Every Automated Accounting System
These days, no business operates without technology of some sort. Automation has permeated the very fabric of our world, and it’s become a staple for streamlining many of the processes that support business success. Accounting systems are no exception.
In fact, automated accounting systems are extremely popular and widely used across companies of all types. They enable both large and small businesses to create major efficiencies in the way of accounting functions, and they help to minimize the human error associated with manual processes.
When people talk about the “finance stack” in a business operation, they’re often referring to this kind of technology: automated accounting and other related software systems. But
Using the Automation Properly
Technology may be automating more and more human tasks, but there is still the need for people to set up, train on and run those systems effectively. An automated accounting system requires individuals who can learn the software and interface with it successfully.
Top-of-the-line technology does nothing for the business if the people responsible for using it don’t know how to do so properly and consistently. So remember that hiring the right personnel and training them to leverage your accounting system properly is essential for success.
Applying Skill and Judgement
There are some incredibly useful systems for automating a small business’s accounting functions and keeping track of financial data. Even technology-driven reports and diagnostics, however, can’t transform that information into decision-making insight. Here again, people are the special ingredient.
Those monthly financial statements produced by the software, for example, won’t serve much purpose without the expertise of a person trained to translate those statements into meaningful and actionable language. Technology can do wonders for keeping the data robust, organized and up-to-date, but it’s the human element that turns these financial data mines into business gems.
Regularly Reviewing Accounting Activity
Sure, automated accounting software can churn out invoices like a pro, but what happens if you’re not reviewing these items and keeping up with all the monies owed? Or if you neglect to have someone go over the state of your books on a regular basis to spot mistakes and prevent problems?
You may quickly find the business facing cash flow issues, regulatory trouble or other impediments to achieving financial goals—all of which are extremely damaging to small businesses. This is another reason why technology requires human oversight. Having the right people on top of these review steps makes it possible for the business to stay efficient and profitable.
Staying Current on the Changing Regulatory Landscape
Accounting practices are continually evolving, which makes attention to regulatory obligations extremely important. And while automation can do a lot of things for your accounting processes, it can’t serve as your resident expert on the changing regulations set forth by the Financial Accounting and Standards Board (FASB) or the SEC.
To stay compliant, your business needs human attention to these matters. It’s an ongoing responsibility for most small businesses, but it is vital to compliance and long-term success.
Forging and Maintaining Relationships
Healthy accounting supports healthy financial outcomes, but the process involves more than just the creation of line items and reports. There’s an element of relationship-building inherent in the management and implementation of successful accounting systems.
For example, maintaining positive personal relationships with vendors is key to ensuring that a business’s accounts payable have the necessary fluidity when required. A small business struggling to make payments to a vendor will have a much easier time working out solutions and extension plans if they have the right people navigating and nurturing those relationships. Be sure to recognize the critical role your people play in supporting external financial relationships that will affect your accounting realities.
Reducing Overhead with Outsourced Pros
When it comes to efficient and effective accounting systems—even the ones streamlined by first-rate automation—there’s never an equivalent replacement for the experience, insight, consultative skill and relationship finesse that comes from qualified people. The truth is some small businesses overlook this crucial link because they think they can’t afford the right people for the job.
It costs money to staff in-house accounting, bookkeeping and other financial operations, even with excellent technology in place. And it can prove impractical for small business owners to hire, train, pay and maintain all the right people to fulfill the crucial human elements outlined above. For many of them, outsourcing their accounting functions is the ideal solution.
By outsourcing these needs, you get the best of both worlds: the people necessary to implement your accounting system successfully, and the reduced overhead associated with hiring, training and retaining full-time staff.
Finding the Right Balance
In the end, small businesses should keep the following equation in mind:
solid technology + the right people = accounting system success
You must invest in BOTH sides of the equation to produce the financial outcomes and business goals you’re seeking. But it’s OK to think outside the box. If hiring internal people to carry out all of the functions necessary for the successful management of an automated accounting system just isn’t in the cards for your business right now, don’t forgo the people aspect altogether. Instead, consider alternative options.
With the right balance of technology and people—whatever that looks like for your company—you can stay focused on running and growing your business, all with the security of knowing you have accurate books and the financial data you need to achieve long-term success.