Most of the work in bookkeeping is the same few decisions repeated: this payment matches that invoice, this supplier always goes to that account. Software handles those repeats well. The unusual items, the missing documents and the month-end check still need a person, which is why the steps below end with a review routine.
How to automate accounting processes, step by step
Automating accounting processes works best in a fixed order: move to software, connect the data sources, teach the software your patterns, then keep a review routine. Each step builds on the one before.
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Move the books into cloud accounting software
Use software such as QuickBooks, Xero or Odoo, which can pull in bank data and apply rules. A spreadsheet can be partly automated, but only so far.
Done when: Every business account is set up in the software. -
Connect bank and card feeds
A bank feed imports each account's transactions every day, so nothing is typed in.
Done when: Every bank and card account shows new transactions without an upload. -
Create rules for repeat transactions
A bank rule tells the software how to categorize a transaction it recognizes, such as the same software subscription every month.
Done when: Regular payments are categorized on arrival. -
Capture receipts and bills automatically
Forward bills to the software's inbox or photograph receipts in its app, so the document is read and attached to the transaction.
Done when: New transactions arrive with their documents. -
Connect sales, payments and payroll
Link payment platforms, online stores and payroll software, so sales, fees and wages post as summarized entries.
Done when: No sales or payroll figures are keyed in by hand. -
Schedule the recurring entries
Set repeating journal entries for costs that follow a fixed pattern, such as monthly depreciation or a prepaid expense.
Done when: Each month's fixed adjustments post on their own. -
Review weekly and close monthly
Automation still needs a person to check suggestions, clear exceptions and reconcile each account at month-end.
Done when: Nothing is left uncategorized and every account is reconciled.
What bookkeeping software automates, and what still needs a person
Bookkeeping software automates collection and repetition; people handle exceptions and judgment. Knowing the split shows where to set up automation and where to keep checking.
| Task | What software does | What still needs a person |
|---|---|---|
| Getting transactions in | Bank feeds import them daily | Accounts with no feed need statements uploaded |
| Categorizing | Rules and suggestions handle repeat items | New or unusual transactions need a decision |
| Receipts and bills | Apps read and attach documents | Missing documents need chasing |
| Matching payments | Software proposes matches to invoices and bills | Partial and combined payments need checking |
| Month-end close | Recurring entries and reports run on schedule | Reconciliations and the final review need judgment |
How to automate the accounting ledger
The accounting ledger, or general ledger, is the full record of every transaction by account. Automating the ledger means feeding it from connected sources and scheduled entries, so very little is typed in by hand.
- Tidy the chart of accounts first. Rules can only be as clear as the categories they post to.
- Post integrations as summaries. A daily or per-payout summary from a sales platform keeps the ledger readable.
- Use recurring journals. Depreciation, prepaid expenses and regular accruals can repeat each month.
- Lock closed periods. A lock date stops automated entries from changing a month that has been checked.
How to automate the accounts payable process
Accounts payable is the money a business owes its suppliers. Automating the accounts payable process means bills arrive, are read, approved, paid and matched with as little typing and chasing as possible.
How to set up accounts payable automation
Give suppliers one bill address
Ask every supplier to send bills to a single inbox connected to the accounting software, such as QuickBooks receipt capture or Hubdoc with Xero.
Done when: no bills arrive in personal inboxes.Let the software read each bill
The software pulls out the supplier, date, amount and due date and creates a draft bill.
Done when: each bill appears as a draft with its document attached.Set approval rules
Decide who approves which bills, for example by amount or department, before anything is paid.
Done when: every bill has an approver.Schedule payments by due date
Pay approved bills in batches on set days, close to their due dates.
Done when: no bill is paid late or twice.Match payments to bills
When the payment clears the bank, match it to the bill so the supplier balance goes to zero.
Done when: the unpaid bills report shows only bills not yet due.
How to automate bank reconciliation in Excel
Bank reconciliation in Excel can be automated with formulas that flag which statement lines already appear in your records. Put the bank statement on one sheet and your records on a sheet named Books, each with the date in column A and the amount in column B.
=IF(COUNTIFS(Books!A:A,A2,Books!B:B,B2)>0,"Matched","Check")
Put the formula in column C of the statement sheet, copy it down, then filter for "Check": those lines are missing from your records or recorded with a different date or amount. Run the same formula the other way round to find items in your records that have not yet cleared the bank. Excello's free bank reconciliation template sets out the finished reconciliation.
The same formula works in Excel and Google Sheets. Matching on both date and amount avoids false matches between two payments of the same amount.
How to automate your finances as a founder
Automating your finances goes beyond the books: it sets money moving on a schedule so cash, taxes and reporting take care of themselves between reviews.
- Set aside tax automatically. Move a fixed share of each payment received into a separate account for tax.
- Schedule regular bills. Pay rent, payroll and subscriptions on fixed dates from the business account.
- Send invoice reminders automatically. Most accounting software can email customers before and after a due date.
- Schedule the monthly reports. Have the profit and loss statement and cash position sent to you after each close.
- Review runway monthly. Compare cash with monthly spending so decisions are made early.
Common bookkeeping automation mistakes
The most common automation mistakes automate a mess, trust the software blindly or count the same money twice.
- Automating before tidying. Rules then post to vague or duplicate accounts. Clean up the chart of accounts first.
- Rules that are too broad. One rule for a large supplier can miscategorize different kinds of spending. Match on more than the name.
- Never reviewing. Software suggestions are sometimes wrong. Review every week.
- Counting sales twice. A payment platform's sales and its bank payouts can both post as income. Record the sale once and treat the payout as a transfer.
- Letting receipts lapse. A matched transaction without a document is still incomplete. Keep document capture switched on.
Related reading
- How to do bookkeeping, the routine automation speeds up
- What is a month-end close?, the monthly check automation cannot skip
- Accounts payable automation, bills handled from capture to payment
Automating bookkeeping means software handles the routine while people review the exceptions. Excello runs that mix for startups: bookkeeping automation matches transactions daily and accountants review weekly, with each month closed within five business days as standard.