As more businesses move towards digital technologies to streamline their processes and to create more efficient working practices, the same can definitely be said for accounting as well.
Digital accounting transforms how businesses carry out administrative and financial tasks. No longer will your office be full of filing cabinets, stacks of unorganised paper or loose receipts. Digital accounting digitalises all your documents for you, creating a more efficient, better quality and structured accounting system.
But does the transition to digital accounting sound like a difficult one? Digital accounting does require a few steps to move away from paper-based, manual processes. But once the steps have been taken, the time and effort required for accounting tasks are greatly reduced.
In this first part of our new four-part blog series, we are helping you understand the steps you need to take. We will highlight potential obstacles you may come up against and the solutions to combat them. Read on to learn more.
What is digital accounting?
Digital accounting consists of the creation, proof and transfer of financial information in an electronic format.
Digital accounting is the end result. All of your documents, transactions and accounting processes will be completely digital. The first step towards this goal is to start with the digitalisation of your administration.
Just like most businesses, you have a requirement to keep a financial administration. This consists of your receipts, invoices, bank statements and any other proof of income and expenditure, just to name a few. These documents serve as the basis for your accounting and they must be available for five years if you are self-employed and six years for limited companies.
Save time and energy!
Organising your current accounting documents may seem simple. You may have filing cabinets, folders and a system in place knowing there any document over the last six years can be found.
But how much time and effort does it take to keep this organisation in place? Not even considering time and effort, but think about the space all of those documents can take.
A good accounting digital solution, whether or not in combination with an accountant and / or tax specialist, can save you a lot of time, space and hassle. No longer would you need to spend time sourcing documents through stacks of folders, or constantly archive any new document that comes into play. A digital solution can take care of all this. Meaning that more of your time is better spent growing your business with your team and customers.
Digital is also safer
Transitioning from paper-based on digital invoices quickens and makes your accounting processes safer.
An invoice’s start date doesn’t begin until the invoice is received. When this is a paper invoice, sent by post, this can add a few days onto your invoice. If you transition to digital invoices you remove these few days completely. Invoices land with your customers in seconds, your invoice start date begins immediately, meaning you get paid quicker.
A digital invoice also is also safer in terms of audit trails and reducing the amount of mistakes. A paper invoice demands manually inputting data, more than once along the whole invoice chain. Digitalising the invoice reduces the need for data-inputting, meaning that less chances of human error happen along the way.
Also benefit from a digital invoice’s audit trail. Distribute your invoice and see when it has been opened, viewed and even paid.
Does digital seem like the way forward for your business?
In short, digitalisation really only has advantages. Once you have discovered the benefits, digitalisation becomes a simple and smart transition for any business. Once your administration has been digitalised, you are ready for step 2 of our blog series. Take a look for the next piece of advice.