Automating Finance: What to Automate and When
A practical guide to finance automation for startups—which tasks to automate first, what tools to use, and how to implement without disrupting operations.
Finance teams spend enormous amounts of time on manual, repetitive tasks: entering transactions, chasing receipts, copying data between systems, and formatting reports. Much of this work can be automated, freeing your team to focus on analysis and strategic work.
But automation isn't free—it requires time to implement, ongoing maintenance, and sometimes significant software costs. The key is knowing what to automate, when to automate it, and how to do it without creating more problems than you solve.
The Goal of Automation
Automation should help you close the books faster, reduce errors, improve visibility, and let your team work on higher-value activities. If automation doesn't achieve at least one of these goals, reconsider whether it's worth the effort.
Why Automate Finance?
Before diving into what to automate, let's understand the why. Automation isn't just about efficiency—it provides multiple benefits.
Time Savings
Automated expense categorization, reconciliation, and data entry can save 20-30+ hours per month. That's time your team can spend on analysis instead of data entry.
Reduced Errors
Manual data entry introduces errors. Automation eliminates transcription mistakes and ensures consistent categorization and calculations.
Faster Close
Automated reconciliation and data flows mean you can close the books in days instead of weeks. Faster close means faster decisions.
Real-Time Visibility
Automated data feeds mean you can see cash, revenue, and expenses in near real-time, not just after month-end close.
The ROI Case
Example: A startup spending 10 hours/week on manual expense management and reconciliation.
Plus reduced errors, faster close, and better employee experience.
What to Automate
Not everything should be automated. Focus on tasks that are: (1) repetitive, (2) rule-based, (3) time-consuming, and (4) error-prone. Here are the highest-impact areas for finance automation.
High Priority: Automate First
Expense Management
Replace manual expense reports and receipt collection with automated capture and categorization.
What to automate:
- Receipt capture (photos → records)
- Expense categorization
- Approval workflows
- Sync to accounting software
Tools:
Ramp, Brex, Expensify, Airbase
Time saved:
5-15 hours/month
Bank Reconciliation
Automatically match bank transactions to accounting records instead of manual line-by-line reconciliation.
What to automate:
- Bank feed import
- Transaction matching
- Categorization rules
- Exception flagging
Tools:
Built into QBO, Xero, NetSuite
Time saved:
3-8 hours/month
Payroll Processing
Automate payroll calculations, tax withholdings, and payments instead of manual spreadsheet calculations.
What to automate:
- Payroll calculations
- Tax withholdings and filings
- Direct deposits
- Accounting entries
Tools:
Gusto, Rippling, Deel
Time saved:
5-10 hours/month
Accounts Payable
Automate invoice processing, approval workflows, and payment execution instead of manual invoice management.
What to automate:
- Invoice capture (email, scan)
- Data extraction (OCR)
- Approval routing
- Payment scheduling
Tools:
Bill.com, Ramp, Airbase, Tipalti
Time saved:
5-15 hours/month
Medium Priority: Automate Next
Revenue Recognition (SaaS)
For SaaS companies, automate the calculation of recognized vs. deferred revenue instead of manual spreadsheet tracking.
Tools:
Stripe Revenue Recognition, Maxio, Chargebee
Financial Reporting
Automate the generation of standard financial reports and dashboards instead of manual Excel manipulation.
Tools:
Mosaic, Runway, Jirav, or accounting software built-in reports
Metrics Dashboards
Automate the collection and display of key metrics (ARR, CAC, runway) instead of manual spreadsheet updates.
Tools:
Mosaic, ChartMogul, Baremetrics, Metabase
Automation by Stage
The right level of automation depends on your stage. Don't over-invest early, but don't fall behind as you scale.
Seed Stage
Focus on basics. Don't over-engineer.
Should Have
- Cloud accounting (QBO/Xero)
- Automated bank feeds
- Payroll service (Gusto)
- Corporate card with basic tracking
Probably Overkill
- Dedicated FP&A software
- Complex approval workflows
- Revenue recognition tools
Series A
Add automation as pain points emerge.
Should Have
- Expense management (Ramp/Brex)
- AP automation (Bill.com)
- Automated reconciliation rules
- Basic approval workflows
Consider
- FP&A tool for forecasting
- Revenue recognition (if SaaS)
- Metrics dashboard
Series B
Comprehensive automation to support scale.
Should Have
- Full expense/AP automation
- FP&A platform
- Automated reporting
- Revenue recognition automation
Consider
- ERP upgrade (NetSuite)
- Advanced analytics/BI
- Treasury management
Tool Recommendations
Here are tools we commonly recommend to startups at different stages. This isn't exhaustive, but represents well-proven options.
| Category | Seed/Series A | Series B+ |
|---|---|---|
| Accounting | QuickBooks Online, Xero | NetSuite, Sage Intacct |
| Expense/Corporate Card | Ramp, Brex | Ramp, Airbase, Navan |
| AP Automation | Bill.com, Ramp | Bill.com, Tipalti, Coupa |
| Payroll | Gusto | Rippling, ADP |
| Payroll (International) | Deel, Remote | Deel, Papaya Global |
| FP&A | Spreadsheets, Runway | Mosaic, Jirav, Cube |
| Revenue/Billing | Stripe Billing | Maxio, Chargebee, Zuora |
| Metrics Dashboard | ChartMogul, Baremetrics | Mosaic, Metabase, Looker |
Integration Is Key
Choose tools that integrate well with each other and with your accounting software. The value of automation is diminished if you're manually transferring data between systems. Check integration capabilities before committing.
Implementation Tips
Implementing automation successfully requires planning. Here's how to avoid common pitfalls.
Start with One Process
Don't try to automate everything at once. Pick the highest-pain process, implement it well, then move to the next. Expense management is often the best starting point.
Document the Current Process First
Before automating, understand exactly how the process works today. What are the steps? Who does what? Where are the handoffs? Automation should improve a defined process, not create one.
Run Parallel for One Month
When implementing new tools, run the old and new process in parallel for at least one month. Compare results, catch issues, and build confidence before fully switching over.
Train the Team
Automation only works if people use it correctly. Invest time in training, create documentation, and identify power users who can help others.
Maintain Exception Handling
No automation handles 100% of cases. Design clear processes for exceptions and edge cases. Someone should be reviewing what automation can't handle.
Timing Warning
Don't implement new finance tools during month-end close, quarter-end, or right before a fundraise. Schedule implementations for relatively calm periods. The first two weeks of a month are usually best.
What Not to Automate
Some things should stay manual—at least until you're at significant scale.
Strategic Decisions
Automation can provide data and analysis, but pricing decisions, investment choices, and resource allocation should involve human judgment.
Exception Review
Unusual transactions, large payments, and edge cases should have human review. Don't fully automate payment approval for high-value items.
Vendor Relationships
Negotiations, relationship management, and vendor selection benefit from human interaction. Automate the transactional, not the relational.
Board and Investor Communication
While you can automate report generation, the narrative, analysis, and presentation to stakeholders should be human-crafted.
Complex Judgments
Revenue recognition for unusual contracts, capitalization decisions, and accounting estimates require professional judgment, not algorithms.
Measuring Success
How do you know if your automation investments are paying off? Track these metrics:
Time to Close
How many days does it take to close the books? Good automation should reduce this over time. Track month-over-month progress.
Error Rate
How many corrections do you make post-close? Track adjusting entries and restatements. Automation should reduce these.
Team Time on Manual Tasks
How many hours does your team spend on data entry and reconciliation? Track this and aim to shift time to analysis.
Report Turnaround
How quickly can you answer ad-hoc questions? If automation is working, you should be able to pull data faster.
Benchmark Targets
| Metric | Seed | Series A | Series B |
|---|---|---|---|
| Monthly close (days) | 15 | 10 | 5-7 |
| Manual data entry (hrs/mo) | 20+ | 10-15 | <10 |
| Post-close adjustments | 5+ | 2-3 | <2 |
Related Articles
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Fractional CFO Guide
Getting expert help with finance
Need Help with Finance Automation?
Eagle Rock CFO helps startups implement the right finance tools and processes. Let's discuss what automation makes sense for your stage.
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