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November 28, 2022
Technology has profoundly transformed the way companies manage their finances. Previously, business leaders had to hire accountants to record and process financial data manually. This costs more time, money and effort. It also leads to more human error.
Automation and digital accounting allow business owners and their staff to perform digital accountant to perform functional tasks faster and more accurately, as well as interpret and communicate data more effectively. As a result, business leaders can focus on their strategic role and anticipate more complex matters, such as cash management.
But what exactly is the digital accounting exactly and why should you consider it? Read on to find out.
The digital accounting (or digital accounting) refers to the creation, representation and transfer of financial information in an electronic format. Instead of using paper documents, all accounting transactions are performed in a digital environment.
This concept was born out of the need to establish a more efficient tax system. Digital accounting emerged in 2003 as a government project to modernize tax and customs administration (PMATA). Then came the electronic invoice (NF-e) and the digital accounting system (Sped) in 2009. In 2015, the Tax, Social Security and Labor Obligations digital accounting system was introduced.
To clear up a misunderstanding, digital accounting does not eliminate the role of a CPA, nor does it dismiss the importance of accounting routines. It values and empowers accounting professionals by making their work more efficient.
Now that you know what it is, let's look at its benefits:
We have continued to move towards a more remote working environment. One of the main benefits of a digital accounting system is that it allows you to access your company's financial data remotely.
It also means that fewer professionals are in the office. They won't need to carry their laptops to access critical information. Digital CPAs offer cloud-based solutions and digital accounting packages allow you to log into the system from anywhere at any time.
This is especially useful for cash flow management. If your cash flow situation is unstable, you risk bankruptcy. So cash flow is a vital part of your business.
For an efficient cash flow, decision making plays a crucial role. With an accounting application, such as Pennylane or QuickBooksyou can analyze your cash flow remotely and make quick decisions about payments, investments, etc.
By monitoring cash flow online, you develop a better relationship with your company's finance process. You have better control over cash receipts and payments at the end of the month, week and even day. The analysis of financial projections and indicators should be clear and reliable, and you can be sure that cash will be available when your supplier payments are due.
Real-time access to cash flow puts you in a much better position to decide on the financial future of the business. You are better able to make accurate predictions and rational long-term decisions.
Ease of use is another advantage of digital accounting systems such as Pennylane and QuickBooks. Unlike manual accounting practices, accounting software applications are very easy to use, offering comfort and convenience to users.
The goal of accounting should be to keep annual, quarterly or monthly business records and analyze the data to make strategic decisions. With manual accounting, you can spend hours or days gathering information about the past year to create an Excel spreadsheet with your cash flow and other financial statements.
Digital accounting offers the convenience of running various automated financial processes on easily accessible data and allows your digital accountant to prepare financial statements in minutes. Professionals save a lot of time by compiling and presenting reports and figures to speed up their financial processes.
This increases efficiency and productivity. By automating many financial functions with digital accounting, you can free up staff for other critical functions such as business development or sales. This means you can potentially generate more revenue with the same amount of resources.
If paper accounting records are not totally secure (they can be stolen or destroyed by fire or natural disaster), data security becomes a more pressing concern if you move to digital accounting.
The problem with in-house data storage and management is that you can lose your data in the event of a system failure or breakdown. Unless you have strong backup and recovery measures in place... Imagine losing years of hard-earned accounting data in the blink of an eye.
Cloud-based accounting apps such as Pennylane or QuickBooks are an effective solution. These apps feature cloud storage backed by multiple data centers for backing up your data. Many rely on SSL technology for data encryption, such as those used to secure financial information for banks. With a digital accounting solution, you should be able to recover or backup your data even if things go wrong.
If you don't keep up with invoicing and payment tracking, you also don't have the opportunity to minimize late payments from your customers. And, this can have a negative impact on your cash flow.
A digital accounting system is the best solution to this problem. It automates the process of sending invoices and payment requests.
One of the biggest challenges with manual accounting is the poor compatibility with other tools and apps used in your business. The best digital accounting solutions such as Pennylane or QuickBooks simply integrate with other business tools, such as the digital cash register system, payroll, banking or e-commerce order processing, etc.
These applications include ecosystems of hundreds ofbusiness applications that allow data to be shared freely. Also, integration services such as OneSaas, IFTTT, Zapier and Make extend the number of applications your accounting software can connect with.
When you connect digital accounting software to another online business application, the two can update each other in real time, daily or on demand by automatically synchronizing data. This is a useful replacement for the tedious export and import routine used to manually transmit data from one platform to the other.
This explains why manual accounting processes lag and lead to incomplete versions of the data you access. And, the simplest of errors, such as an incorrect mailing address, can lead to customer dissatisfaction and lost sales.
Automatic synchronization of your financial process data with digital accounting solutions means that you can update an address or email in one place and it will automatically be updated in other applications.
As your business grows, these integrations will become increasingly important. Not all accounting software offers flexible integrations and two-way data synchronization. Some only pull or push data, while others do both, such as Pennylane or QuickBooks. Consider these features carefully when choosing an accounting application.
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Manual accounting practices make it difficult to collect tax documents and prepare future returns. It also leads to poor financial tracking and makes it difficult to set aside funds for tax payments and other purposes. Failure to prepare for tax returns as the deadline approaches is a serious risk.
While you can't avoid taxes, digital accounting systems simplify the preparation and filing process for you. Digital accounting not only helps you proactively organize and segregate funds for tax payments, but it also simplifies tax calculations. This should relieve you of the stressful task of tax preparation.
The poor financial tracking inherent in manual accounting can cause you to miss out on depreciation or tax deductions for your business. To avoid overlooking payments that you can use for tax deductions, consider switching to a digital accounting system.
Here too, your Blendy digital accountant will be able to help you meet the legal deadlines and plan your tax affairs in an optimal manner.
Your manual records can be effective for day-to-day transactions, but the numbers must also remain consistent with the bank statement. Digital accounting solutions have useful reconciliation tools that make it easy to spot transaction and processing errors and detect theft and fraud, among other things.
This allows you to connect your traditional or online bank accounts from Qonto for example, but also your payment solutions such as Stripe. And even your expense management tools, such as Dext or Expensify.
Blendy also helps you configure and connect all your financial and business applications to your digital accounting solution.
The technology industry seems to want to create an application for every business function. Hundreds of niche applications have been developed to meet the needs of different industries, from agriculture to retail to architecture.
Depending on the complexity of your business, one digital accounting solution may be more suitable for you than another. Online retailing, for example, involves fluid inventory management requiring the use of an accounting application that is equipped with or compatible with your inventory management system.
To make your choice, Blendy expert-comptable digital, knows perfectly the software and applications that meet your needs to set up an efficient financial process. And we also accompany you for the integration and the parameter setting of your accounting apps such as Pennylane and QuickBooks with your other business applications.
As we saw earlier, one of the drawbacks of financial management is that it is often difficult to store information in one place. In a manual accounting system, you will have to store your data in different places. Recording the information and managing your books of account may not be a challenge. Gathering the information and using it correctly to create a complete report is.
Even if your manual accounting system is well organized, it is often difficult to organize the data and make sure everything falls into place correctly. Balancing entries and balances may seem like a relatively easy task on paper. In reality, it takes a lot of work.
Digital accounting solutions also store information in a dedicated online space, giving executives real-time access to critical details and information. Important data can be accessed with a few clicks in digital accounting applications. From cash flow to balance sheets, everything will be accessible.
In a business, interdependence is key, as each department in your company is linked to the others to move the company forward as a whole. This is one of the main reasons why some companies are more successful than others. A company where all departments are linked together in a solid financial process is bound to outperform other competing companies.
This interdependency means that management and all departments must have access to the company's key financial indicators. When you need to allocate additional budget to a specific department, for example, it is essential to have easy access to all financial data and business and financial performance indicators. With manual accounting, it can be difficult to present the required information according to the needs of the department. In addition, a person will have to spend extra time accumulating the required data and processing the paperwork.
With easily accessible financial figures and indicators, the team and department concerned can make quick decisions. Because the longer it takes a company to make a decision, the more it indicates its inability to adapt and react to changes in their competitive environment. And this can have a direct impact on the company's performance and long-term sustainability.
With a digital accounting system, the time required to process information and make decisions is considerably reduced, making your company more competitive.
And to make your decision even more reliable, at Blendy digital accountant you can benefit from the expertise of our Success Coach. Dedicated to the growth of your company, they know the financial indicatorsto be analyzed and bring you their financial expertise for an enlightened decision making.
The most sought-after feature of accounting applications such as Pennylane or QuickBooks is that they do not make mistakes. The accuracy of the data makes automated applications and services much more reliable than traditional accounting practices.
When we compile data, human error is almost inevitable. Even though humans can produce accurate data, compiling that data takes much longer than a machine. Accurate and timely data accumulation and analysis is critical because your business needs reliable data to make strategic decisions.
In addition to accuracy, digital accounting systems are popular among executives because of their scalability. For a startup, manual account management is acceptable in the beginning. As the business grows, your accounting system will require numerous upgrades to support the increased number of transactions to be processed and accounted for.
When you have a reliable digital accounting software, all you need is a simple software upgrade to meet the growing needs of your business. Of course, your digital accountant such as Blendy will also be able to help you adapt your financial process to your growth.
Digital accounting is no longer an option for your business! If you are looking to grow your business, you need to replace your manual accounting procedures with digital accounting.
With a digital accounting system, your data stays up to date, you save time and can finally make the right decisions at the right time.
So, now that you know the answer to the question"What is digital accounting?", it's time to find the accounting application that best suits your business and finance process.
Whether you are an ESN, start-up, eCommerce or any other digital player, Blendy, digital accountant helps you find the right accounting solution. To learn more about the benefits of digital accounting and how we can help you transform your financial processes into a strategic business development tool, book an e-RDV today.
Want to know more about our services, our support and our favorite apps? Ask us all your questions!
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