How integrations and automation tools can help make accounting quicker and easier for small businesses

When you're running a small business, it's easy to get bogged down by the minutiae of day-to-day tasks, whether it’s managing inventory or handling customer inquiries. However, it’s important to regularly zoom out and evaluate the big picture, especially when it comes to your financial health.

What is accounting automation?

Automation in accounting refers to using software to perform routine, repetitive tasks that traditionally require manual input – think data entry, invoice generation, and financial report preparation.

For example, an online fashion retailer might use automation to streamline its entire billing cycle. When a customer places an order, the system automatically generates and sends an invoice, updates inventory levels, and records the sale in the financial ledger, with no manual intervention needed.

What are accounting integrations?

Accounting software integrations refer to technologies that connect various applications to allow seamless communication and data exchange between them.

Take a small bookstore, for example. If it uses a POS system integrated with its accounting software, every sale at the cash register can immediately be reflected in its financial accounts. This ensures that the inventory levels on the bookstore's management system are automatically adjusted to match sales data, keeping records consistent and updated.

What are the benefits of integrations and automation?

More than 70% of today’s small business owners rely on accounting software or apps to manage their finances.¹ Meanwhile, 48% of accountants expect to invest in and adopt automation tools in 2024.²

So, why the strong trend toward digital transformation? Here are some of the top benefits of integrations and automation in accounting:

• Reduced manual data entry. Automation tools are designed to handle repetitive tasks, such as entering transaction details into accounting software. This frees up time for small business owners and their teams to focus on more strategic tasks instead of routine paperwork.
• Higher accuracy. 71% of small business owners still rely on pen and paper or spreadsheets to manage some parts of their finances — leaving them susceptible to human error, whether it’s miscalculations or typos from manual data entry.¹ Automated systems can help reduce these risks.
• Improved financial oversight. Automated reporting tools can generate financial reports in near real time, providing businesses with up-to-date insights into their financial health. In one survey, 89% of accountants currently using automation in their operations said it made their organization more profitable and efficient.³
• Scalability. As your business grows, integrations and automation can easily scale to handle increased volumes of data and more complex processes, supporting your business expansion without the need for proportionate increases in manual work or staffing.
• Cost efficiency. Automating financial processes can reduce the costs associated with accounting and financial management. By minimizing the need for manual labor, businesses can lower payroll expenses and reduce errors that may result in financial losses.
• Faster customer service. Automation and integrations can speed up operations like billing, invoicing, and customer queries about their accounts and payments. Quicker responses can improve customer satisfaction and can help increase customer retention rates.
• Compliance and security. These technologies help your accounting practices comply with continually changing tax laws and financial regulations. Additionally, automated systems often come with security features to help protect sensitive financial data against unauthorized access and cyber threats.
• Enhanced decision-making. With real-time data processing and integrated systems, business owners gain access to timely and comprehensive financial insights. This improved data visibility supports more informed decision-making, helping owners strategically steer their businesses based on current financial landscapes.
• Environmental sustainability. By reducing the need for paper-based processes, automation contributes to an organization's green initiatives.

Examples of how integrations and automation can help with accounting

From streamlining invoicing processes to maximizing the benefits of your POS system, read on as we explore ways to reduce errors and save time.

Integrate billing and invoicing to streamline accounts receivable

Accounts receivable is key to maintaining a healthy cash flow – by keeping a tight rein on this process, businesses make sure they get paid on time and can continue to invest in their business's growth.

Here’s how integrating and automating billing and invoicing can automate accounts receivable:

• Easy invoice templates. Modern invoicing software offers customizable templates that make it easy to create professional and consistent invoices quickly. This saves time otherwise spent on creating invoices from scratch for each transaction.
• Automatic invoice sending. Instead of manually sending out each invoice, invoicing automation allows for invoices to be sent automatically upon completion of a service or sale. This helps with timely billing and reduces the administrative burden on staff.
• Integrating invoicing and payments. Some invoicing systems allow clients to make payments directly from the invoice. Not only does this provide more convenience for clients and customers, but it can also speed up the payment process, improving cash flow for your business.
• Tracking payment status and scheduling automatic payment reminders. Invoicing software can track which invoices have been paid and which are still pending. It can also automatically send reminders to clients about upcoming or overdue payments, reducing financial uncertainty.

Getting the most from your POS System

Point of sale (POS) systems are more than just tools for processing transactions – they’re integral to simplifying the accounting process for small businesses. By integrating your POS system with your accounting software, transaction data is automatically transferred and synced between the two systems.

The benefits of a POS accounting integration can be massive – you avoid the manual entry of sales figures, reduce the labor involved, and minimize the chances of human error. You also guarantee that financial records are up-to-date and accurate, providing a real-time overview of the business's financial health.

A particularly useful feature of some modern POS systems, like PayPal Point of Sale, is the integration of geolocation data. Since ZIP codes do not always align precisely with sales tax jurisdictions, relying on them can lead to inaccuracies in tax calculations. Geolocation data, however, pinpoints the exact location of a sale, ensuring that the correct sales tax is applied based on the specific jurisdiction.

This capability can be invaluable for businesses operating in multiple locations, such as vendors at festivals or pop-up shops.

How shipping integrations can make accounting more efficient by streamlining the order fulfillment process

Shipping is one of the biggest challenges that can sour a customer experience – today’s shoppers expect speed, accuracy, and transparency in delivery. It’s not just about receiving their packages at their doorstep swiftly; they also want to know where their package is at any time. Failing to meet these expectations can lead to dissatisfaction and lost business.

While shipping logistics might not be the first thing that comes to mind when thinking about accounting efficiencies, it plays a pivotal role in streamlining ecommerce operations. Here are several ways that shipping integrations can significantly enhance accounting processes:

• Consolidating order and shipping information. By integrating shipping software with ecommerce platforms, businesses can centralize all order and shipping details in one location. This makes it easier to track and manage transactions across various platforms, reducing the time spent navigating between different systems and minimizing the risk of data discrepancies.
• Automatically calculating and tracking shipping costs. Integrated shipping solutions can automatically calculate shipping costs based on variables like destination, weight, and package size. The result isn’t just speedier order processing but also higher billing accuracy, which is vital for precise accounting.
• Integrations with payment systems. Combining shipping information with payment systems in a single interface can streamline the reconciliation process. By verifying whether a payment has been canceled before an item is shipped, you save time while helping to prevent friendly fraud and protect revenue.
• Direct transfer to accounting software. Some shipping integrations allow for the direct transfer of detailed shipping costs and order information into accounting systems. This feature simplifies the recording and tracking of sales and expenses, so you can rest assured that financial reports are accurate and up to date.
• Package tracking to reduce disputes. Disputes with customers over delivery issues can complicate the accounting process. Clear tracking information informs both parties about the package'’s status, leading to fewer discrepancies and smoother resolution of potential conflicts.

Make going paperless easy

You’re probably aware of the benefits of going paperless – from eliminating the need for physical storage to reducing clutter to streamlining record-keeping. That said, the transition can still be daunting, especially if you’ve spent years relying on legacy processes that have worked well or if you’re wary of adopting new technologies.

Luckily, with the right accounting integrations and automation tools, embracing a paperless system is achievable. Here are some key aspects of paperless accounting:

• Electronic receipts and invoices. Automation tools in accounting software make it easy to create and send receipts and invoices electronically. All documents are stored securely online, where they are easily accessible. This maximizes organizational efficiency and ensures that records are easy to retrieve during financial audits or customer inquiries.
• Electronic payments. Integrating contactless payment options like NFC and online payment gateways into accounting systems simplifies revenue collection. This reduces the reliance on paper checks and can lower the risk of payment fraud. It can also speed up the transaction process to allow you to receive funds quickly and securely.
• Automated expense management. Beyond big expenses like rent and salaries, do you know where your money is going? By leveraging automation for expense tracking, businesses can digitize receipts and log expenses without manual data entry. These systems often come with mobile compatibility, allowing employees to upload receipt data directly through their smartphones, further enhancing the convenience and accuracy of expense reports.
• Cloud-based document management. Modern accounting systems often include or integrate with cloud-based document management solutions. These systems organize and store all business documents – whether it’s tax forms or contracts – in a secure, searchable digital format.

One way to streamline this digital transition? With PayPal.