How to Automate B2B Accounting: A Comprehensive Guide

Automated work has taken the world by storm. Every day, the business landscape continues experimenting and seeing how far we can go from offloading tedious, time-consuming work to automation. Hence, to pursue more productive endeavors at work. The accounting function has perhaps seen the most automation integration out of any business function. Accountants are looking to automate away all the time-consuming data entry-esque tasks and focus on their core responsibilities: financial consulting and advanced accounting operations (such as audits, budgeting, and planning.) 

Sage Practice of Now 2020 reports that 45% of accounting professionals plan on adopting automation in some form. The number has only risen with the recent successes of language learning models. We briefly discussed the advent of AI and its impact on accounting a few weeks ago here. Let’s learn how entrepreneurs can automate a wide range of accounting activities in the B2B context.

Business-to-business, or B2B accounting, involves some of the heaviest workloads in accounting. Hundreds of transactions go through regularly in such businesses. These need to be recorded, properly invoiced, filed, and double-checked. With so much unnecessary clutter and busy work taking up an accountant’s time, the business finds itself paying for a CPA while extracting the services of a regular bookkeeper.

CPAs are an unbelievably powerful asset to any business. Why keep them hunched over the books of accounts when they can do so much more at the planning and decision-making table? 

What Can You Automate in B2B Accounting?

Automate Accounts Payable (AP) for Improved Debt Management

Accounts payable is ripe to automate. Using any software on the market, like NetSuite, businesses can set up their AP function to require minimal human input. The AP function’s primary concern is ensuring all due payment obligations are fulfilled on time to avoid defaulting. Especially in the B2B context, it is paramount that payments are released promptly, as a poor payment track record can lead to other businesses avoiding collaboration.

Think about it:

Would you want to do business with a business that pays late and negatively affects your cash flow?

The details are logged into the automation software when the business makes a transaction. When the due date approaches, the system can either send a reminder for a payment to be initiated or, even easier, it can be programmed to initiate the payment process. It is only at the final stage it notifies the accountant or entrepreneur in charge to verify and release the payment. The program will keep track of your due payments and start paying them automatically, and all you or your accountant need to do is confirm the payment when prompted. 

Automate Accounts Receivable for Improved Cash Flow

Automated accounts receivable is a blessing for businesses of all sizes. One of the biggest pain points in accounts receivable, as reported by Versapay, has been the manual collections systems and disorganization of traditional accounts receivable.

The key thing to note is that these AR pain points are all rooted in the same fundamental problem: manual processing. All of the inefficiencies and the high DSO reports are due to the (long) time it takes for the collections process to go from invoicing to payment receipt. With automation, these issues are almost eliminated. Once an invoice has been generated for sale, the system automatically takes notes and issues collection notices to concerned parties. Digital payment integration is also a big benefit when you automate accounts receivable. It allows customers to quickly pay bills through various avenues and ensure the cash does not stop flowing. ‘

Automate Bookkeeping for Accurate and Timely Record Management

Automated bookkeeping is wonderful. When you automate bookkeeping, you’ve essentially set it up so that a transaction is immediately noted in the books of accounts. There are details like how much was credited, how much is due, and the like. All of this information then flows into other automated accounting processes, such as automated AR and AP. Those functions, in turn, update the books once they have carried out their tasks. So, if you make a sale and expect payment in two weeks, your automated bookkeeper will take note. The automated AR process will use that information to initiate automated collection. Once the collection is completed, the books will be adjusted and updated.

A Step-by-Step Guide on How to Automated B2B Accounting

Identify Your Needs

The first step is reviewing your accounting workflow and seeing where problems occur. Perhaps your collections have been sloppy, or your accounts payable process has too many extra steps that can be eliminated. Sometimes, entire workflows can be consolidated into one streamlined task that can be addressed via B2B automation.

In all of this, you also have to be cognizant of regulations and compliance and ensure your processes are up to code. The key task here is to take stock of the situation and find places that can be streamlined, whether with automated assistance or by just cutting out superfluous excess work. Thus making everything simple, fast, and efficient. 

Market-Research and Find the Right Software

After you have identified your workflow problems and the appropriate automated solutions, the next step is to start searching for the right software. This is a delicate matter because there are hundreds of options. All of these also happen to cover a wide variety of B2B automation applications. So, the distinction comes down to which one can offer all the required automation tools at the best price.

Speaking of price, set an appropriate budget for the search before heading into the market. A great idea is to try to secure collaboration with a software provider. Negotiate a deal that offers you a better price for the software in exchange for product promotion or a discount on services. Whatever the case, just remember to explore thoroughly. Try out the trial versions for all the popular options. Finally, see what fits your workflow the best without draining your wallet.

Implement, Assess, Adjust

The next phase is all about monitoring. Remember, you did all this work to see some tangible difference in your business’s financial performance. This is where the rubber meets the road, and the true effects of automation start to emerge. The best way to track performance is through KPIs, some useful ones in this case being: 

  • Days Sales Outstanding (DSO)
  • Average invoice processing cost
  • A/R turnover ratio
  • Frequency of errors or discrepancies

If you see tangible progress, this means that things are working. You have begun the journey toward digitization and process optimization. But your work is not done yet. After implementation, constant assessment and evaluation must be conducted. Optimizations have to be considered regularly to keep improving. Complacency is stagnancy; do not be satisfied. Always strive to achieve better efficiency. There is always room to grow and improve.