As technology advances, many executives are discovering the enormous benefits of digitization. Rather than relying on manual methods like paper records and spreadsheets, digital record-keeping is a more accurate, efficient, and transparent way to understand company finances.
With advanced technologies like cloud storage, ERP integrations, accounting automation, and artificial intelligence, digital accounting can provide invaluable insights that manual systems can’t.
Accounting digitization should be at the top of your to-do list if you’re part of an enterprise-grade company looking to optimize financial processes.
Accounting and reporting are two of the most critical elements in expense management. Manual expense tracking can put an organization at risk of inefficiencies, fraud, lack of accurate expense reports, and loss of financial control. Manually managing finances is also a complex, time-consuming process, and as a result, you need more efficient record accuracy and end up wasting human resources.
There are two main problems with manual accounting processes:
Since manual bookkeeping is a resource-heavy process prone to human error, achieving 100% accurate manual accounting reports is almost impossible. Moreover, if an error does occur — it would be complicated to trace back the source of the mistake due to the lack of visibility in accounting processes.
More traditional business owners may hesitate to invest in digital accounting systems and prefer to keep their books on paper. But, the problem here is that the modern business climate is too fast-paced to reconcile books manually:
With hundreds of different transactions daily, manually keeping everything on track poses a considerable challenge. Having a digitized accounting system is crucial for the success of your business since it can help you streamline your expense management and save time and resources.
An excellent example of such an accounting evolution would be Coca-Cola, which managed to move 40% of the team involved in manual and routine reconciliations to do more important tasks.
And on a slightly smaller scale, our very own customer, Essentia Analytics, managed to reduce the time required by their financial controller by 50% (thanks to Payhawk automation), meaning that she can now support revenue generation instead by acting as a part-time SDR.
The good news is that you can help your organization overcome these problems with an effective enterprise-grade expense management solution. This will provide for greater expense visibility, enable real-time analytics, and streamline the expense reporting process, keeping financial risks to a minimum.
As a finance team, you can make decisions more quickly and confidently when you can access and assess all your expenses individually. But when you do your books manually, this is impossible. Without the proper financial control tool and reporting insights, it’s hard to get stakeholders on the same page and reconcile budgets, resulting in a lack of growth for a business.
To ensure success in short-term planning and long-term management, business owners must understand their current financial health, forecast future cash flows, track budgeting accuracy, and have automated systems to help reduce errors. That’s where digital accounting software comes in handy.
Accounting software makes the process of managing finances effortless and efficient. There are two main types of software:
Cloud-based accounting software offers a myriad of benefits, such as improved communication between users, automatic synchronization across devices, no downtime for maintenance, simple accessibility for remote employees, and complete visibility of all the expenses within the company.
Despite that, many companies prefer the familiarity of desktop options (since they are often more powerful and customizable to the organization's needs). With offline installation, they don't need to build trust or engage another vendor - they need to choose the system and purchase a license.
When choosing an accounting solution that fits your organization's needs, assess how you run the business first.
The rule of thumb is that smaller firms are better off with cloud-based software subscriptions with lower entry barriers (accounting software solutions like Xero and QuickBooks). At the same time, large organizations prefer an enterprise-grade solution like NetSuite (cloud or desktop) customized for them.
Once the company management approves your accounting digitization plan, you could use the following five steps to implement the updated systems in place:
Now that we’ve established the benefits of accounting digitization and the steps you need to implement it, you might ask yourself: “Now that I have an accounting solution in place, how do I ditch my old manual workflows?”
Transitioning from manual accounting to a digital strategy is no easy feat, but the benefits far outweigh the cost and effort. To ensure a successful transition, meet with an experienced IT consultant to develop a plan and understand how your new digital system will work with existing processes.
Once you have all the necessary information, implement the new system slowly and methodically so employees can become comfortable using it. When training, give employees time to learn before taking on additional tasks and provide continuous support throughout the learning process.
Furthermore, use backup systems and continual tests to ensure correct data entry during this transitional period. According to Zoho.com, the transition may take between a month (for smaller companies) to several quarters for bigger organizations, so make sure to plan the move ahead of time.
These steps can make transitioning from manual accounting to a digital system much smoother and more efficient.
Now more than ever, businesses realize the value of digitizing their accounting processes. A modern accounting system will help you save time, reduce human error and make data more secure. To get started, determine which accounting processes can be automated with software within their organization.
Then, look for experienced accounting software professionals who can help you integrate their software with these systems. When executed correctly, digitizing accounting operations can unlock insights into cash flow management, profit modeling, and other financial functions to ensure long-term success.
Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.