It's the 21st century, and for businesses that are keeping with the times, bookkeeping is no longer a source of headache.
Streamlining the bookkeeping process has helped businesses avoid the dreadful and time-consuming process of sorting through thousands of financial data, making brain-numbing calculations, and validating balance sheets.
As a business owner, you want to avoid costly disorganization and overbearing workloads, both of which are typical characteristics of not having an optimized bookkeeping system.
You want to avoid spending too much time, money, and energy on your accounting and still be able to stand up to even the most stringent financial audits.
You want to approach your suppliers, partners, investors, clients, and customers with a clear confidence and knowledge of your financial situation.
You can grant all those wishes by learning how to streamline your bookkeeping.
Automating Your Bookkeeping Process
It's a digital world and accounting systems have simply evolved past the need for tangible paper. Using automated accounting software really improves and simplifies the process of recording all levels of transactions.
More businesses are starting to realize this and are taking the progressive route.
Source: Mordor Intelligence
With this software, you can avoid having to organize multiple, untidy strips of paper invoices, receipts, and bank statements.
With the use of optical character recognition, automated systems let you scan and capture your invoices and subsequently process them as electronic documents, saving your employees and accountants the labour-intensive and error-prone method of manually searching for, routing and filing paper documents.
By automatically organizing and indexing all financial data received into a secure, traceable system, accounting software makes sure your employees can access any level of financial information in only a matter of seconds.
You won’t have to worry about lost documents, missed payments and inaccurate accruals because a cloud-based accounting system typically has reliable data backup and has been programmed to automatically process accounting transactions.
Accounts Payable has to be the highest source of financial data for most businesses and therefore usually contains the most intensive processes. By matching invoices with purchase orders, routing invoices to relevant departments and various stages of approval, and returning reviewed and approved invoices to the Accounts Payable module for payment, an accounting software would have automated a lot of the key processes for generating the AP balance.
Even if disorganization isn't an issue and you have great confidence in the manual effectiveness of your employees, you still need automated systems to create a better workflow within your team.
It's easier for personnel to circulate the relevant information among themselves because these software provide interfaces that simplify the process of looking for or updating financial data and also make it possible for teams to interact, access important documents, and share any level of data for approval and collaboration.
It doesn’t stop there, automated accounting systems can account for incoming cash by reviewing billing documents, contracts, and integrating the process of recording sales and orders.
Since they can be accessible by all levels of personnel in a business, these systems can allow customer service reps to access payment and delivery information, agreements and other relevant data that may be needed in attending to customers.
Legal professionals can access contracts and financial records to help determine and speeden legal proceedings.
If you’re a digital business that makes money online, or you do most of your transactions digitally, then going paperless with these systems is a no-brainer and even a necessity.
Even if you have not taken your transactions digital for some reason, automated systems are still your best option if you want your accounting to be as easy and streamlined as possible.
Choosing Your Accounting Software
The first part of streamlining your bookkeeping process is not using an accounting software, but deciding what you need an accounting software for. Accounting software can vary in functionality and complexity, so you must first determine what services or features you need before stepping into the market.
Since your focus is to streamline your bookkeeping, you need to ask relevant questions of what processes you need to improve or speeden. Avoid acting based on general evaluations or observations but make sure you analyze your current accounting methods to specifically assess the areas you must take into account.
Bookkeeping is a mangrove system that can cut across several areas and departments of your business. Keep this in mind as you evaluate the needs of your accounting system in trying to determine what features your projected accounting software should have.
Ideally, you should choose your software based on its level of relevance to solving your problems. You want a system that can automate all your needed processes or at least integrate functions that can deliver these processes.
5 Tips for Streamlining Your Bookkeeping Process
After you must have chosen your accounting software, you now have to focus on the task of having it efficiently integrate your workflow and data.
Working with an automated system doesn’t complete the streamlining process. Blending it into your company’s culture is an important factor you would have to consider. These 5 tips would help you with the process of streamlining your bookkeeping with an accounting software.
1. Categorize Your Data
It's easier to sleep when you have an appropriate label for every type of transaction and all the money going in and out of your business.
It also becomes easier to work with your automated systems as you would have pre-modified the system to recognize the appropriate category for each level of transaction. It then appropriately files each financial data as such, doing the work for you in that regard.
Getting it wrong from the start or not having enough categories especially if you're a business going for scale can very easily unleash an accounting nightmare. It then becomes increasingly hard to go back and correct this error from the source the longer it goes on.
When it comes to categorizing your financial information, you make use of a chart of accounts. This chart is used to segregate and nominate every financial transaction your business makes.
Basically, the chart of accounts consists of 5 main categories or account types: Assets, Liabilities, Equity, Income, and Expenses.
Accounting software would process these forms of transaction in practical segments like the accounts payable, accounts receivable, general ledger, journal entries, payrolls and trial balance.
2. Centralize Your Accounting
Accounting software are not only automated, they're centralized. This means you can fully integrate all your financial processes and generate all your financial data from a single platform. This gives another dimension to streamlining.
By reading all your data from one place, you avoid the workload of sorting through several soft files and emails from different sources. A standard accounting software will allow you to create and deliver invoices, generate receipts, manage your inventory and keep track of your bills. It can help manage your employees’ wages and your taxes by integrating your payroll service or even better, payroll software.
Accounting software will do all the calculations for you and generate your financial reports and even your bank statements as these systems can integrate the services of third parties like your bank.
The level of convenience they provide takes the burden of you and your team, granting you the allowance to better manage your employees’ time and focus productivity on other vital areas of the business.
3. Orientate Your Team
Making sure everyone in your team knows how to use the software is part of the streamlining process.
No matter how functional the software might be, they won’t deliver needed applications if their handlers don't have the right knowledge and approach.
Some employees might find it hard to adjust to the change of system. Factoring this, you can’t disregard your company’s established culture when introducing the new software. Staff members who are used to paper and manual processes would be less motivated.
To avoid drawbacks and very likely friction, your team management skills have to be top-notch so you can deliver the right motivation to your employees and make sure everyone adapts to the new process with the right mindset.
Giving reluctant employees time to adjust and acclimatize, organizing interactive and productive meetings to communicate the relevance and advantages of the new system are advisable strategies.
You must also consider getting an expert in automated accounting systems to wean your employees till they're able to handle the systems expertly on their own. Corporate learning management systems are also a way to engage and educate staff on new practices.
4. Do Consistent Maintenance
It's not just enough that you and your employees are well versed in operating the new automated system. Your team's approach to using these systems and tracking your accounts also matters.
Updating your financial data is something that should be done regularly. You have to set strategic and consistent schedules for this. And your employees must have the work ethic to meet these schedules and submit accurate financial data.
It's quite easy to want to de-prioritize your financial maintenance especially if you're embroiled in day-to-day organization and customer fulfillment. But you must consciously steer clear of this mentality or you're only going to create inconvenient future crises.
Regular tracking helps you avoid the trouble of having to deal with missed financial updates that may have piled up.
It also helps you save much needed time and improves your task management by avoiding massive, time-draining workloads.
5. Track and Nurture Your Clients
Your clients are an integral part of your financial operations, and they can make your streamlining process easier if you orientate them.
Clients that stay up-to-date with digital systems will vastly help the process of updating financial data.
It'll be easier to integrate your accounting system for any transactions you have with them. They're also much more likely to have very accurate and transparent books than old-school clients.
Naturally, you should strive to work with progressive clients when, and where you can, but you should also scan your list of clients and identify the ones that are more likely to welcome digital advances. Then tactfully work on converting them into software system users.
Use the successful conversions as examples to inspire more of your clients to make the same choice.
The more clients you convert, the easier your overall bookkeeping becomes.
You can't overestimate the importance of a convenient and effective bookkeeping process to the health and productivity of your business.
Being able to generate accurate and complete financial data with a click is at the core of this process. To make the most of this convenience, you and your employees must develop the habit of regularly maintaining your financial situation.