Automated Bookkeeping: Why You Need These Four Tools (And Not Just One Great Bookkeeping Service)

Various services and companies claim to offer automated bookkeeping. Usually, what they mean is that they automate (or at least take over) some subsection of bookkeeping. It’s impossible to find one piece of software that will automate everything from expense categorization to record keeping to paying the bills. And if you’re on accrual basis rather than cash basis? Forget about it.

But if you really do want a bookkeeping solution that runs itself, you can get close with a combination of software and services. In this post, we’ll cover the exact suite of tools and services to use if you want automatic bookkeeping for your business.

It works for both cash and accrual basis accounting and will require minimal effort to keep it going each month. These tools will give you back the time to focus on strategic business decisions rather than fumbling around in your accounting software each month.

Before we dive into the stack, here’s the “why” behind the tasks and tools we chose.‍

At Pilot, we have a team of expert bookkeepers (with software superpowers) doing your books in QuickBooks Online. Let us take the bookkeeping burden off your plate: Try Pilot Now.

Why You Need Four Tools (And Not Just One Great Bookkeeping Service)

Bookkeeping isn’t a standardized service. There’s no one-size-fits-all list of tasks that a bookkeeper will do, although there are more or less common services offered. It’s always important to discuss what you want your bookkeeper to accomplish before making a hire. In general, bookkeepers will do some or all of the following:

   
• Categorize your transactions
   
• Reconcile your bank accounts
   
• Prepare key financial statements
   
• Handle bills and invoices.
 

The middle two — reconciling your bank accounts with your company books and preparing helpful financial statements — are tasks that just about any bookkeeper will offer. Categorizing transactions is something that some bookkeepers offer, but usually only with input from the business owner (or whoever is making purchases for the business).

Handling bills and invoices is something in-house bookkeepers will often do, but many bookkeeping services and outsourced bookkeepers won’t. And even when you’ve found someone to do all of those tasks, having the right automation and technology available means they can accomplish far more for your business than if the tech weren’t there.

The following four tools hit what we believe are the four biggest needs for business bookkeeping: a platform to keep your bookkeeping data in, a tool to automate expense categorization, a service to handle what the computers can’t, and a tool to simplify sending and receiving payments.

As a bonus, we tacked on our favorite option for automating payroll and other HR activities as much as possible. We chose each tool in this stack because we have personal experience with the tool and found that each one really helped the businesses we work with.

Without further ado, here’s our recommended bookkeeping tech stack.  

Step 1: Get Scalable, Robust Bookkeeping Software

Good bookkeeping software is like that friend in your group who helps everyone get along. You can’t build an automated bookkeeping software stack without something that plays nice with all of the other tools. The bookkeeping software you choose will serve as the foundation for everything that comes next. It’s where bookkeepers will reconcile accounts and build reports, and it’s where data synced from your other tools will live.

Because of its extensive integrations, scalability, and feature set, we recommend QuickBooks Online to small businesses, mid-size businesses, and startups. It may not be as exciting and new as some other software (looking at you, Xero), but QuickBooks really can do the most work for your bookkeeper.

 

Rather than rehash all of our reasons for loving the platform, we’ll refer you to an earlier post we created that compares three popular platforms: QuickBooks Online, Xero, and Wave. If you want to read more about other options before making a decision, you might find our guide to online bookkeeping software useful.

Step 2: Automate Expense Tracking  

The second key tool in your automated bookkeeping stack should simplify tracking and categorizing expenses. Why? Because expenses can be one of the most time-consuming and painful aspects of bookkeeping. It’s a real hassle. If you run a small company with little to no expenses, you can skip this tool. But if you do things such as…

 

   
• Manage inventory
   
• Take business trips
   
• Buy office supplies and furniture
   
• Eat out with clients
 

…then it’s good to get a system in place for tracking everything.

Bookkeepers can’t do all your expense tracking for you because they can’t read minds (especially if you make a habit of putting business expenses on a personal credit card or personal expenses on a business card). And you don’t need us to tell you it’s important to categorize expenses correctly — it makes a big difference come tax season.  

While computers aren’t good at reading minds either, they are good at identifying patterns and automating workflows. That’s why we chose Expensify as the second tool in this stack.

Here’s how it works: Whoever spends company money (anyone from employees to CEOs to small business owners) snaps a picture of the receipt via the Expensify app. Expensify turns those receipts into a report and offers one-click approve/reject buttons. That information is automatically synced in real time with your QuickBooks account. It even has automatic reimbursement.

So while Expensify does require a few moments of effort on your part (snapping a photo of the receipt or pressing yay/nay on approvals), it streamlines the vast majority of expense-related business tasks.

Step 3: Arrange for Automatic Bookkeeping

As wonderful as it would be if QuickBooks just generated perfectly accurate, understandable books each month, it doesn’t. Bookkeeping software exists to be used by someone, and if you want that process to be automated, you’ll need the help of computers and humans.  

Think about it: Bookkeeping essentially tracks and elaborates on how money has moved into and out of your business. To figure out what happened each month, you have to look at a number of data sources (your bank statement, your payroll statement, your credit card statement, the invoices you’ve sent, etc.). How you record that information is fairly standard and lends itself well to smart automation.

But other parts of bookkeeping — such as making sense of that data, handling unexpected use cases, and explaining everything — are better done by experienced, human bookkeepers. That’s the premise behind why Pilot even exists.

At Pilot, we give computers the tasks that computers do best while leaving the rest in the capable hands of our bookkeepers. Computers take care of all the simple, error-prone, repetitive bookkeeping tasks, while our bookkeepers have more time to spend directly on client questions and concerns (and not on manual data entry).

In short, we employ expert bookkeepers and empower them with software automation. They track everything in QuickBooks Online so you’ll have easily accessible, readily transferable, and accurate data, all on a platform that integrates well with other awesome financial tools.

Whether you’re preparing for your next round of funding or trying to build next year’s budget, you’ll always have the information you need in a simple, easy-to-access format. We provide monthly, quarterly, and yearly financial statements such as balance sheets, P&L, and cash flow. And if you want to know something specific, your dedicated bookkeeper will be able to provide that information anytime.

P.S. You didn’t really think we’d put together a bookkeeping tech stack and not recommend ourselves, did you? Try Pilot Now for one month.  

Step 4: Automate Accounts Payable & Receivable  

Accounts payable (sending invoices and reminding people to pay them) and accounts receivable (paying bills) are an integral part of doing business. But someone has to do the work of actually sitting down, determining what needs to be paid, and making sure money changes hands when it’s supposed to.

Some bookkeepers will do this task and some won’t. Regardless of who’s handling it, much of the tasks needed for invoicing (generating invoices, reminding clients to pay, getting payment approvals from the right person, updating the books when money leaves or hits your account, and so forth) can be done more efficiently by a computer. For that job, we recommend Bill.com.  

As with all software on this list, Bill.com requires some time to use. But it greatly simplifies accounts payable and accounts receivable. From sending automatic invoicing reminders to syncing bank account data with your chosen bookkeeping software, it completes a number of tasks better left to the computers.

Their drag & drop feature for bills saves time for whoever is running AP/AR, and you can set up an approval workflow so that anyone who needs input can press one or two buttons to get it done.

Combined with QuickBooks, Expensify, and Pilot, Bill.com is the final piece you need for an automated bookkeeping solution that’s as close to hands-off as you’ll find.

(Bonus) Step 5: Make Benefits & Payroll Way Easier

 

Payroll and other HR tasks⁠—like managing employee insurance plans⁠—is something most bookkeepers will never touch. But, it’s another important back-office function that can be improved by automation. Many of our clients have tried and liked Gusto, so we’re happy to recommend it to anyone looking for a payroll solution.

Gusto makes sense for small to medium size businesses and startups. While it would be deceptive to claim that Gusto automates HR, it is accurate to say that they automate many annoying tasks and greatly simplify running payroll.

How long does it take you (or your team) to run payroll currently? Gusto claims that most customers can run payroll in 10 minutes or less once Gusto is set up. They also automatically file and pay your payroll taxes and provide assistance with benefits like healthcare.

If you’re serious about automating back-office tasks, Gusto is a good addition to the list.

Conclusion  

In 2019, there isn’t just one piece of software that completely automates your back office. But by combining the tools outlined above, you can get as close as possible to automatic bookkeeping.

If you liked these tools and want more recommendations, check out our recommended financial stack.

At Pilot, we have a team of expert bookkeepers (with software superpowers) doing your books in QuickBooks Online. Let us take the bookkeeping burden off your plate: Try Pilot Now.