“Automation” is easily a favorite word in any CPA’s dictionary. When you automate your processes, you not only save time (and money), you can increase your capacity to take on more work. Since automation in the accounting industry has been a huge win for CPA firms, it’s no surprise that most of us are automating many different processes. But there’s a difference between “automating” and “automating correctly.” Instead of assuming all of your automation processes are as good as they can be, take a moment to think about how you can boost your CPA firm’s accounting automation strategy.
Think More Broadly Robotic Process Automation (RPA)
Letting the robots loose is not always a bad thing, especially for CPA firms. Case in point: robotic process automation. Repetitive processes are the lifeblood of CPA firms. Whether it’s a repeating task that you have to do daily or one you need to do once per year, automating as many accounting processes as possible is a must.
That’s where robotic process automation, or RPA, comes into play. As the term suggests, RPA is the use of software that takes the place of and automates tasks that are typically done by humans. You’re likely already doing this but consider where you’re applying RPA.
A great example is when it comes to self-auditing your own accounting systems to stay compliant with Sarbanes-Oxley. The last thing you want for your business is to fail a PCAOB inspection because you lacked the time and capacity to audit your own systems.
With that in mind, think about how and whether you’re applying RPA in the following ways:
Automating the review of journal entries. You can use RPA to automate your regular reviews of journal entries. RPA tools can automatically extract data from your accounting software using predefined rules. From there, you can more easily identify journal entry irregularities.
Automate account reconciliation. RPA tools can easily automate account reconciliation by extracting data from different systems. Once those systems are all in a single location, you can compare them to ensure consistency and to more easily identify and fix discrepancies.
Automate testing of access control. A key part of the self-auditing process and account system compliance is user access. You can use RPA tools to test access control systems you have in place and verify who has access to key systems and data. This is essential to prevent unauthorized access to sensitive data and can increase the accuracy of your auditing process.
That’s only a small example. Take time to brainstorm and consider what tasks you have that are repetitive. Thanks to increasingly advanced algorithms and artificial intelligence tools, even tasks that could seem complicated can be automated.
Leverage APIs to Improve Your Operations
APIs, or Application Programming Interfaces, are protocols that allow different programs or software to communicate with each other by sharing data. When you use APIs, you can add functionality to the original program that’s not built into it by accessing its data storehouse and using it for different purposes.
CPAs can use APIs to do simple automated tasks, such as regularly updated spreadsheets, or more complex tasks, such as powering tools for visualization and forecasting.
For accounting firms, learning how to properly use APIs can be a total game changer. Here are a few ways you can (and should) be using APIs right now:
Importing client data into your accounting software. APIs can help you import client data into your account software. Automating this process with APIs will save your junior accountants time on a task they have to do regularly.
Get real-time data on clients’ financials. APIs can give you access to your clients’ real-time financial data. This can be used to help you make faster decisions and offer more actionable and timely recommendations.
Create custom applications for different clients. APIs allow you to be incredibly flexible with how you work with clients. With APIs, you can create applications that include customized features that offer unique insights for clients based on the unique needs of their industry.
APIs are not foolproof. Not every software platform that houses the data you need will have API keys readily available. That’s less and less of a concern, however. What you are more likely to encounter and need to consider are the costs and security concerns that may exist with using API integrations with customer data?
Get Creative with Accounting Automation
We covered the basics here. Robotic process automation and APIs are the fundamental starting point for automating accounting tasks. They’re also the most important and most effective places to start as you lean into automation.
While they are not the same thing, they’re two pieces of a complex whole for CPA firms. Most RPA tools will require APIs to work. And most APIs will allow you to create and run robotic automation tools, often with the flexibility to run multiple types of automation tools you may want to try.
Before you even begin considering automation, though, make sure you have a tech stack that makes automation possible. To learn more, download our virtual CFO tech stack to better understand what type of tech stack you need to create an efficient CPA team.