Blog Details
Automation in Accounting: Friend or Foe? Unveiling the Risks of Automation
May 22, 2024
Is accounting automation a safe solution for businesses? Automation can bring efficiency and speed to your accounting workflow, while also often lowering costs. However, it may also introduce risks that business owners should be aware of. Here are some risks of automation in accounting that businesses should be careful to avoid.
Over-Reliance on Automated Systems
One significant risk associated with accounting automation is over-reliance on automated systems. Automation can handle repetitive tasks like data entry and calculations with ease. However, this convenience may lead businesses to become overly dependent on these systems, and not provide enough human oversight. Regular human oversight can be crucial for catching errors that automated systems might miss or misinterpret.
For instance, automated accounting software can process invoices and manage payrolls, but it may not recognize errors that are not typical or outside predetermined parameters. If these errors go unchecked, they can result in significant financial discrepancies. Human oversight helps ensure that the data feeding into automated systems is accurate and that any anomalies are addressed promptly.
Vulnerabilities to Cyber Threats
Another risk concerns cybersecurity. Some automated accounting systems may store vast amounts of sensitive business data on the cloud, off your business premises. This can make them an attractive target for cyberattacks. If your accounting automation provider does not implement the latest cybersecurity practices, this may put your data at risk.
If your automated accounting solution keeps your data on onsite servers at your offices, you may also be at risk for a breach. Any sensitive data on a device connected to the internet needs to be protected through stringent cybersecurity measures. Without adequate protection, data breaches can occur, leading to the loss of confidential information as well as financial and reputational losses.
Businesses should invest in advanced security measures and continually update them to guard against potential cyber threats. Regular audits and updates to security protocols are a necessary part of maintaining the integrity of your automated systems.
Compliance and Regulatory Challenges
Automated systems must also adhere to evolving compliance standards and regulatory requirements. As financial regulations change, automated accounting systems need regular updates to remain compliant. If a business does not have a human accounting professional on staff who keeps up with changes in regulation and knows when to update the automated systems, it may end up non-compliant.
If your business is using an outdated solution without realizing it, it can result in penalties and damage to a company’s reputation. Businesses must monitor regulatory changes closely and ensure their accounting automation tools are configured to comply with these updates. For businesses that do not have the infrastructure to do this, it can be a good idea to outsource accounting management to a trusted partner.
Skill Gaps and Training Challenges
Implementing accounting automation in-house successfully may require a shift in the skill sets of your accounting or technology teams. To address this, businesses often have to invest in training and development programs to equip their teams with the skills to handle the set up of these automated systems. This transition can be resource-intensive and time-consuming. However, it is be essential to ensure that automated systems are implemented properly.
Outsourcing Prevents Automation Pitfalls
One of the best solutions for businesses that want to make their accounting workflow easier and more efficient is to partner with a trusted outsourced accounting provider. At Quatrro Business Support Services (Quatrro), we have the experience and technology knowledge to ensure that your business accounting needs will be taken care of safely and efficiently.
Our seasoned professionals are adept at managing a spectrum of accounting needs from basic bookkeeping to complex financial reporting, with meticulous adherence to process and technology standards and best practices. Connect with Quatrro today to discover how our outsourced accounting services can give you more to go on to transform your business.
