Finance tools & tech 3 min read

How finance automation helps you overcome 5 key business obstacles

Hadar Kiriati

Bookkeeping and finance processes are the foundations of every business strategy. Small businesses rely heavily on finance teams to help make decisions as varied as whether to develop new product lines, hire a new employee, or to pivot and target a different marketing audience. What’s more, without a healthy flow of cash, it’s impossible to invest in any growth – or even to keep the lights on.

Accurate and trustworthy finance data lays the groundwork for demand forecasting, market prediction, and other advanced analytics. But often these crucial tasks get pushed aside by important, yet basic, financial processing tasks. 

The fact is, financial processing is a time-suck even at the best of times. When something goes wrong – and it will at some point – you’ll waste even more time fixing errors, chasing late payments, and unraveling mistakes. As lean organizations, smaller businesses don’t have enough resources - human or otherwise - to waste on processes that could be automated. 

It’s beyond time for a digital transformation of your financial workflows. COVID-19 accelerated digital transformation among small businesses as well as in the larger business world, with 69% of SMBs saying they transformed digitally and 33% moving online for the first time.

However, most small businesses focused their digital workflows and tools on supporting remote work and delivering remote services. Financial processes might have gone under-transformed. 

It’s high time for that to change. Digital solutions are ready to help you overcome these five big areas of frustrating financial process friction.

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1. Manual errors in expense management

Absolutely nobody enjoys tallying expenses. Many of them are for small amounts which are all too easy to overlook, and it just takes one wrong digit to make you have to start the whole process all over again. 

On top of that, even though you trust everyone on your team, when attention to detail becomes impossible, some might find it tempting to sneak in claims that don’t exactly belong. This at best a mistake, and at worse expense fraud.

When you automate expense management, it helps prevent items from dropping off the ledger or suddenly “appearing” out of nowhere, giving you peace of mind and saving everybody a headache. 

Integrate it with the rest of your financial tools to automatically share data across all your bookkeeping system, so you don’t need to re-enter the same data multiple times.

2. Wasted time chasing up late payments

Your company relies on client payments to maintain healthy cash flow and keep the business alive. Late payments cramp the working capital supply and make it difficult to meet your own payment obligations – and they happen far too often. 

One study found that 40% of women and 23% of men who own their own business have to chase late payments. Another study reports that 28% of SMB owners say late payments have a significant impact on their cash flow. 

Automation-friendly small business management software like vcita can produce and issue automated late payment reminders, and keep following up until payment comes through, so you no longer have to spend your time hounding late payers. Tardy customers can’t slip through the cracks, and you’ll always be sure whether or not you really did receive payment.

Another option is to automate payment requests immediately upon booking, altogether removing the hassle of chasing payment later. 

3. Confused and opaque payroll calculations

It’s fiendishly difficult to calculate compensation, benefits, overtime, and more for payroll transactions, but it’s also critically important. If employees don’t receive their paychecks on time and in full, they’ll lose trust in you and by extension the company, and motivation and morale will plummet. 

They need confidence in the system, and thus transparency around payroll calculations. When payroll is automated, it removes any doubt that you might have missed some hours of overtime or made a mistake with your sums, which reassures employees. 

Additionally, automated payroll tools work much faster than human HR employees, drastically reducing the chances of late payments.

4. Lack of clarity in invoice management

Invoicing can be complicated, especially if your business is selling bundled services. You need to manage special offers, early deposits on booking, discounts for prompt payment, etc. Customers will be on it in a flash if you make a mistake

Chances are, you’ll also have to handle refunds or credit notes from time to time, plus invoicing can span more than one department, like sales, customer service, and finance. 

Automated invoicing helps bring order to the chaos of estimates, invoices, and promotional offers, ensuring that your documents are always accurate and up to date.

5. Delays in accounts payable

You need to pay your expenses on time, whether it’s for recurring expenses like rent and utilities, supplier invoices, or renewing tech licenses. And you also need to record transactions correctly at the same time. 

When you pay promptly and in full, you’ll get a better deal from your suppliers, but you also need to manage cash flow so the funds are there when you make the payment. Getting the timing right for accounts payable can be tricky; you definitely don’t want a bounced check or canceled payment. 

Automated payment management ensures that transactions only take place when the money’s there to cover them, while also making sure you don’t miss an invoice. 

Automation can lift the burden from SMB finance teams

Small businesses have a lot to juggle, and the more you can automate the better. Automation tools help you prevent late payments, keep payroll accurate, maintain order among invoices, control expenses, and stay on top of your own payment obligations.

So that you can make better strategic decisions and focus on running your business.

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Hadar Kiriati

Hadar is CFO at vcita, with more than 25 years' experience in CFO roles. Prior to vCita, Hadar was Partner & CFO for 15 years at Genesis Partners, venture capital fund, one of the most successful funds in Israel and 10 years the CFO of Oppenheimer Israel, the leading provider of U.S. brokerage and investment banking services to the Israeli market.