This article is taken from our quarterly bulletin, Canadian Overview, published by Canadian member-firms of Moore North America. The articles in our bulletin are a part of our mission to become the ultimate ally in your success by keeping you informed about current events.
Today’s accounting department should be a lean mean operating machine. How, you ask? By moving to the 21st century; integrating and automating processes and using cloud-based applications.
Accounting departments have gone from paper ledgers to computerized activities and can now move to automation. Such a move needs to be carefully planned and executed to ensure that required information smoothly moves through an organization. In the past this type of set up was only available to large organizations mostly due to the program costs involved in set up and maintenance. Not anymore!
Today’s accounting applications are cloud-based versus downloadable programs. This has allowed for updates and program fixes to be efficiently rolled out and require no action on behalf of the user. Using cloud-based applications mean a user can be anywhere on any device (i.e. computers, laptops, mobile).
Historically, processing accounting records meant processing paper. Today everything from vendor bills to sales invoices and payments are sent or received electronically. Very little is received in a paper format with no alternative available – almost any document type can now be digitized with a simple scanner or an image quickly captured on a mobile device.
So how does all this change make for a leaner accounting department? The efficiencies are found in reducing human manual data entry and in effect reduces human error. The next step is to have an application read (via OCR), understand, and post the transactions. Many of the applications can be set up with parameters that allow for repeat transactions to be processed automatically and this includes considering sales tax appropriately.
Will there be mistakes? Of course, no system is infallible, but instead of looking at every piece of supporting documentation to validate an entry, today’s systems are designed to provide an analysis of the end result. Once all data entry is complete including bank and credit card reconciliations, the next step is to pull a detailed profit and loss report that shows the expenditure accounts. One can quickly scan the accounts looking for anomalies much faster than manually entering all that data.
To further find efficiencies, a review of where all the accounting information comes from must be made. Do all third-party applications connect with the end accounting software application? If not, can they be? If not, then maybe rethink what applications to use to ensure all information is seamlessly connected. Today, many of the applications available will connect to the commonly used full general ledger accounting software.
Another paper area to contend with are cheques! Again, with today's technology, cheques can be replaced with electronic file transfers of payments. Many companies use their banks platform to accomplish this which do not connect to the accounting software and are expensive. There are other platforms that can connect and tend to be cheaper, resulting in savings twofold.
What about payroll? Payroll over the years has moved to auto deposit and employee portals – so for the most part has become paperless. The last stumbling block would be to connect the payroll to the accounting software if it is a third-party service. If the current service does not accommodate this, then maybe it is time to move to ones that do.
Cloud-based accounting and related applications have revolutionized the industry of bookkeeping. It is high time that traditional accounting departments have an overhaul and automate! More time can now be spent on analysis of results and in real time.
Written by Dianna Thorne, CPA, CA – Targeted Accounting in partnership with Segal LLP. This document was written for our quarterly bulletin, Canadian Overview, published by Canadian member-firms of Moore North America.