Accounting Automation: How to use AI to automate some ecommerce accounting tasks

24 July, 2023
Wayne Richard

Wayne Richard

5 minutes
accounting automation

Generative AI tools, like ChatGPT, are transforming how eCommerce business owners and accountants alike run their businesses. 

These tools are helping companies reduce human errors, increase efficiency, and improve data analysis with real-time data to help make informed financial decisions and forecast future trends.

By understanding how to use these forms of technology, eCommerce businesses can streamline their accounting practices — allowing the accountants and bookkeepers to focus more of their time on meaningful work involving higher-level skills and less on mundane, repetitive tasks.

What is accounting automation? 

Accounting automation refers to the use of digital tools and software to automate repetitive and time-consuming accounting tasks, thereby increasing efficiency and accuracy. This transformative technology can handle various functions such as invoicing, payroll, tax calculations, and financial report generation, among others. By minimizing manual intervention, it mitigates the risk of human errors and allows professionals to focus on strategic, analytical tasks. In the evolving business landscape, accounting automation is key to data-driven decision-making, enabling real-time financial insights and predictive modeling for businesses of all sizes.

Will AI and automation render accountants and bookkeepers obsolete?

No — it’s unlikely that AI and automation will completely render accountants and bookkeepers obsolete, especially for eCommerce businesses doing $100k or more in revenue. You’ll still want a real-life human to at least serve as quality control and complete tasks requiring human judgment and expertise, like complex tax planning or strategic financial advice. 

Pro Tip: Listen to this Small Firm, Big Impact podcast episode that Meryl did about generative AI in accounting. 

But these technologies are changing the nature of their work. For instance, accountants and bookkeepers can let AI and automation take over many repetitive and mundane tasks. As a result, accountants and bookkeepers can free up their time to focus on higher-level analysis, client management, and decision-making. 

That said, AI-assisted accountants and bookkeepers may replace those not using automation and AI in the next decade.

Understanding the benefits of using AI and automation for your eCommerce accounting

Using AI and automation as part of your eCommerce accounting can:

  • Streamline your bookkeeping processes
  • Improve your financial records’ accuracy and minimize human errors from manual entry 
  • Save you time and money on accounting tasks
  • Provide fraud prevention controls by rapidly analyzing large amounts of data in real-time to detect suspicious activity faster than traditional methods
  • Reduce strain and stress by eliminating mundane and repetitive tasks like data entry
  • Provide real-time financial insights for better decision-making
  • Help you better understand customer behavior and needs 
  • Identify patterns in large datasets

Understanding the key challenges of accounting automation

While accounting automation and AI can benefit ecommerce businesses, some key challenges you need to be aware of include:

  • Ensure systems are secure. Your accounting systems store sensitive financial and customer data. You’ll want to ensure you have robust processes in place so that your team and vendors don’t upload sensitive information into an AI tool. This ensures that you protect your IP and can help prevent data breaches and security threats. 
  • Understand privacy risks. ChatGPT, in particular, is a privacy nightmare. Most LLMs are a black box. So, it is best to avoid sharing confidential information, including sensitive financial details, with these tools.  
  • Determine how to implement the new processes. When deploying the new automation and systems, you’ll need to decide whether you’ll automate your current, existing workflow with minor alterations or if you’ll need to consider overhauling the entire workflow. Given that most people don’t like change, there are also change management tactics you’ll need to implement. 
  • Balance automation with human oversight. Accounting automation can increase your efficiency by streamlining tasks. But you’ll still want sufficient human oversight to catch errors, identify possible problems, evaluate the system’s effectiveness, and provide a system of checks and balances.

7 key eCommerce accounting tasks that can be (partially) automated

1. Accounts receivable

Maintaining an accurate account of your accounts receivable (the money customers pay your business) is critical to maintaining the profitability of your eCommerce business. 

Automation allows you to streamline your accounts receivable process by replacing the manual tasks involved, like invoicing wholesale vendors. 

This can also reduce billing errors, allow you to generate timely invoices, and simplify your payment-reconciliation process. As a result, you can generate faster payments, provide timely reminders for outstanding payments, and improve cash flow — all with less manual effort.   

2. Accounts payable

Staying on top of your expenses is critical to help you avoid late fees and maintain a good relationship with suppliers. 

Fortunately, you can automate much of your accounts payable process to avoid delays.

Automating this process can help you:

  • Record transactions automatically to your accounting software for accurate tracking
  • Automate the approval process for invoices
  • Initiate payment to suppliers
  • Collect bills in a central location
  • Automatically signal the sign-off process for payments

3. Chart of Accounts 

Your eCommerce business’s chart of accounts categorizes all transactions and expenses — providing you with a comprehensive overview.

As you grow, maintaining this can become time-consuming and cumbersome. However, you can and should use automation to help you efficiently categorize, record, and track transactions, so you can maintain an accurate, up-to-date chart of accounts. This can also save time and reduce errors from manual data entry.

For instance, you can leverage automation to do the following:

  • Flag missing or double entries
  • Match your bank statements and books
  • Resolve inconsistencies within cash records
  • Attach receipts to expenses 

Additionally, the automated process can be completed in significantly less time than if done manually.

Related Reading: Why Bank Reconciliations are Critical 

4. Fraud prevention 

Accounting automation can play a critical role in fraud prevention by offering precision and vigilance that human accountants may not consistently catch.

For instance, AI tools, like Xbert, can automatically flag any bills that lack a corresponding receipt. This not only aids in maintaining a robust documentation trail for audit purposes but also deters fraudulent activities by highlighting transactions that lack appropriate proof of purchase. This feature can save a significant amount of time that would otherwise be spent manually scrutinizing each transaction, and it enhances the level of control businesses have over their financials.

Additionally, Xbert can alert your accountant if an employee and a supplier have the same bank account in your system, which is a major fraud red flag.

5. Tracking inventory

Tracking your inventory helps you understand how best to manage it so you don’t overstock or run out of items. Fortunately, you can use automation to help with tasks like managing stock levels, creating purchase orders, and inventory forecasting.  

Using automation helps reduce manual errors and saves time, especially as your business grows. You’ll also be able to monitor and track stock movements and inventory levels, with many programs letting you view information across multiple warehouses or sales channels.

You also can gain insights into your sales trends, letting you make more informed decisions about consumer demand patterns, purchases, and stock levels for different items. 

6. Sales tax

If you sell items in multiple states or countries, keeping track of sales tax calculations can get complicated — fast. 

Fortunately, most accounting and bookkeeping software lets you automatically calculate the sales tax rate for each sale, help with document/receipt management, and/or provide end-to-end compliance. 

For instance, you can take this a step further using Xbert to conduct tax registration checks, a crucial capability to prevent illicit tax practices. It can alert a business when a supplier, who is not registered to charge sales tax, does so, thereby safeguarding your company from inadvertently participating in tax evasion. 

7. Syncing data

As an eCommerce business, you’ll want to make sure the data from your sales channels can automatically sync with your accounting software. This step eliminates the need for manual data entry, reduces errors, and saves time, which is important as you grow your business and expand into different marketplaces.

For instance, A2X provides integrations between Quickbooks or Xero and major sales channels like Amazon, Shopify, eBay, Walmart, BigCommerce, and more. So, you can sync transactions from any channel you sell on to your cloud accounting software in a more readable format. 

Key Takeaways 

In a nutshell, leveraging accounting automation, including AI tools, can reduce errors, boost efficiency, and help with data analysis. They can automate routine tasks, freeing your accountant and bookkeeper to strategize and steer your business toward success.

Posted By

Wayne Richard

Wayne Richard

Wayne is a management accountant who forged a 15-year career with tech heavyweight Hewlett Packard before starting his own cloud accounting firm in Tucson, Arizona. Fate (and the Internet) brought him to discover Bean Ninjas via a blog post. Two years later and Wayne’s involvement with Bean Ninjas had grown from a blog comment to contractor to equity partner. When Wayne isn’t managing a global team and equipping entrepreneurs with the financial tools they need to enjoy business success and lifestyle freedom, he’s being an everyday superhero to his wife and five children. Wayne is Bean Ninjas resident e-commerce expert.

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