So you want to take advantage of automation. Pump the brakes for a minute. What are your goals? To do less data entry, yes. But what else? To get the best return on investment in automation, you need to know what you’re looking to take advantage of.

This could be many things: Which of your products and services are the most profitable? How can you offer your clients the utmost value via convenience? What do you need to keep up with the growth of your business?

All these goals can be reached with automation, so read on to learn the path. If you have a specific goal and it’s not on the list, that’s great. Book a free consultation with us; we’ll listen to your unique situation before giving advice on how to make progress.

What You Need Before Automating Anything

Getting started: Bank accounts for business only

Getting started: Your business structure’s pros and cons

Canadian companies can vary in structure, but there are four main types. This matters because each structure has its pros and cons. Some business structures will be more suited to tax minimization, whereas another business structure will specialize in risk management, and so on. If you’re unsure which you have, do some quick research on which structure your Canadian business is categorized as.

#1: Connect your bookkeeping directly to your bank account

You don’t have to keep track of your financial data using a spreadsheet. You don’t have to keep track of it at all, if you use a cloud-based bookkeeping system.

If you connect your bank account with a program like Xero, the software is smart enough to collect and sort your transactions. You can customize which types of expenses go where, and see visual representations of your cash flow.

Instead of manually entering data, now you’ll only need to intervene if the software has a particular transaction it mistakes or can’t categorize. Don’t worry: Over time, it’ll understand more, and you’ll adapt as well, making your bookkeeping process organized and as automatic as possible.

#2: Saving receipts is as easy as taking a pic or forwarding emails

Every business owner needs to track their purchases; that’s no surprise. What’s unexpected is the sheer amount of receipts that need to be filed and sorted. If the process is too tedious, it often gets done several months later or not at all, which is the case with many people.

The consequence of that is you won’t have the information to work with as you make decisions for your business. And, of course, you want your accounts to match up in case tax authorities look your way.

So here are some receipt storing methods that aren’t time-consuming, confusing, or difficult. In fact, you’ll have barely anything to do after the setup, using a program like Xero File Manager or Receipt Bank.

Let’s take Receipt Bank as an example

If you take a photo of your receipt, or you forward an email of a transaction confirmation, Receipt Bank reads that and creates an entry in your accounting software. The entry will have a corresponsing date, amount, supplier name, and transaction description.

This tool can save you a ton of time, plus attach receipts to their corresponding transaction. That takes the guesswork out when, months later, you’re sorting through receipts — no more frustration figuring out which receipts were recorded where.

This illustrates how automation can save you time, especially as you scale up your business operations.

#3: When you sell services, invoice automation is the key to saving time

If you’re invoicing clients every month, week, or even day, your accounting software better specialize in handling that data. A program like Xero has features specifically for invoicing. Here are some examples that will help freelancers, agencies, and businesspeople in consulting and coaching — or practically anything in the service industry.

• Get paid quicker by offering convenience: Connecting your invoices to a payment gateway, like PayPal or Venmo, makes it easier for your clients to resolve the bill. Oftentimes, you can include a “pay now” button directly on your invoice; clients only need to click once or twice before you get your money.
• Track which projects are worth your work: Most accounting software can use category tags for data entries. If you tag income, hours, and expense entries for each individual client, you can quickly get a picture of which clients or projects are wildly profitable for you and which unfortunately aren’t. Now you can prioritize your time!
• Repeat invoices without lifting a finger: Many accounting softwares have a “repeat invoice” feature that will periodically create a bill and send it to your customer. This is so useful for ongoing clients.

#4: Selling products in-store or online? Automate your inventory management

Alright, so you’re knee-deep into ecommerce and you’re managing to make money with your line of products.

Here’s one of the most important questions you’ll ask yourself a thousand times: How much are you making from each specific product?

This will help you shed the burden of products that simply aren’t benefiting you, and to capitalize on products that will become your gold mines. But to differentiate from the two, you’ll need to organize your bookkeeping better — more specifically, separate each product into its own category.

It’s possible on an Excel sheet, but it’ll take you forever, especially if you need to reorganize existing data. Forget about that. Imagine you only need to set the categories once, then relax knowing that your accounting software is sorting and analyzing for you. Specificity is a huge benefit. Let’s explore this with another example.

If you’re asked what your gross margin was for last quarter or for last month, you could probably answer. But what about last week — or yesterday? Would you have to spend a half hour updating your spreadsheet before you could respond?

That illustrates the security of having an automated, responsive bookkeeping system that updates in real time. Your business decisions will always be made with the most current, accurate information.

This counts for a lot when people are picking up your products at all hours of the day (and night, thanks to the internet). As your business scales up, it’ll quickly become absurd to attempt logging all the purchases yourself.

Naturally, businesses transition to inventory management systems built into programs like Quickbooks Online, which automatically collects all the information you ask it to.

#5: Bonus tip: Don’t forget to separate your currencies automatically

As you link your PayPal bank feed to your accounting software, make sure to differentiate each currency you accept transactions in.

Basically, your cloud accounting software needs to be linked to a PayPal $CAD bank feed, a PayPal $USD bank feed, a PayPal $EUR bank feed, and so on.

Final Thoughts: Get Started — It Gets Easier

If you’re still feeling intimidated, pick one step and just jump into it. Google and YouTube will be your best friend here, guiding you through each step. For reference, here’s a recap of the main tips:

1. Connect your bookkeeping directly to your bank account.
2. Saving receipts is as easy as taking a pic or forwarding emails.
3. When you sell services, invoice automation is the key to saving time.
4. Selling products in-store or online? Automate your inventory management.
5. Don’t forget to separate your currencies automatically.
6. Book a free consultation with us; we automate your bookkeeping even further, catering to your unique situation and the goals you express.