Accounting is one of the most traditional industries in the world. For many years, the same accounting processes, systems and controls have been followed by businesses across the globe.
All has now changed! The transition to technology is the future for accounting, bookkeeping and finance services.
Businesses have already taken notice and are now reaping the many rewards of utilising modern tailored technology solutions.
There is now no doubt that by leveraging innovative technologies, businesses can benefit from much more efficient, transparent, cost effective and value-added accounting services.
So how exactly is technology changing the accounting industry?
1. Cloud Accounting
Cloud accounting is the most important element of the transition to technology for the accounting industry.
Cloud accounting is a solution that enables information and documentation to be uploaded, stored, processed and maintained on remote computer servers. All accounting, bookkeeping and finance related activities can then be performed and managed online without having to leave the office.
Activities that can be performed through the use of cloud accounting includes invoicing, collection of bills, tax and compliance, online bookkeeping, payroll services, budget forecasting, financial planning – and much more!
The cloud accounting solutions that we regularly utilise on behalf of our CloudCfo clients include Quickbooks Online and Xero. These solutions provide a flexible, resource efficient and cost effective alternative to traditional accounting and bookkeeping systems.
So what are the real benefits of cloud accounting?
- Process simplification and streamlining – For example, the bank reconciliation process can be made much more efficient by integrating bank accounts and bank statements with your cloud accounting solution in order to automate the transaction matching process.
- Exchange information in real-time – When your financial data is stored online, you can access it whenever and wherever you want. Executives and management can review regular and up-to-date financial statements in real time!
- Save on cost, time and resources – A cloud accounting solution can cost only a fraction of what a company would pay to build an in-house accounting team or implement a traditional Enterprise Resource Planning system or ERP. Check out our recent article on how cloud accounting can save your business time and money!
- Instantaneous communication with accountants – Whether you have an in-house accounting team or an outsourced accounting firm, cloud accounting creates a platform for much quicker and efficient communications for companies. Urgent queries can be uploaded, reviewed and answered without delay.
- Information is safe, secure and accessible – With the right checks, authorizations and security protocols in place, your important financial information will be more secure on a cloud accounting solution than on a physical premises where hardware malfunctions or other disaster events could lead to data being lost or corrupted.
2. Ecosystem of Online Solutions
Cloud accounting solutions such as Xero and Quickbooks Online are incredibly helpful for performing core accounting and bookkeeping tasks – booking receipts, managing ledgers, generating reports, bank reconciliations, etc.
There is, however, a growing ecosystem of online solutions that help to make the entire accounting and finance process much more efficient. This is particularly the case when these online solutions are fully integrated, usually through an API, with the cloud accounting solution!
There is quickly becoming an efficient online solution for businesses operating across every industry and with any business model. Here’s just a few examples:
POS (Point of Sales System)
In the retail or F&B industry, a really well optimized point of sales system (POS) is a valuable tool for management. A POS system is a modern day cash register – but does so much more than just record goods sold and payments received. StoreHub is one such POS solution that CloudCfo works with regularly for clients.
A POS can:
- generate data on key business metrics including best-selling products, daily sales reports and stock levels
- track and manage inventory levels to ensure the right products are in the right place at the right time
- reduce human error as the POS can transfer financial information to your online accounting solution, in-house accounting team or outsourced accountants and bookkeepers
- detect fraud.
For more information on accounting and finance in the retail or F&B industry, check out our articles on key finance processes and controls for the F&B industry and inventory in the Philippines.
Loan Management Systems
In the payments and fintech sectors, loan management systems or LMS are crucial for monitoring loans issued, managing repayments, applying interest and investigating defaults.
A well-optimized LMS can also help companies improve their customer service function.
In the fintech space, many companies seek to develop their own LMS which aligns fully with their business model and web or mobile applications.
Full optimization and best results are achieved when the LMS is mapped to the company’s online accounting solution. This means that, at regular intervals (depending on the business model), a company can have up-to-date and accurate information regarding all company loans transferred directly to their accounting books!
Inventory & Logistics Management
In any sector involving the manufacturing, production or delivery of goods or materials, companies must be able to track every element of each process and control.
This is not just to ensure that customers receive orders on time and in good condition. It is also critical from a finance and accounting perspective. Companies must ensure that their inventory and logistics practices are aligned with their accounting and bookkeeping controls.
In short, operations must align with finance!
Unleashed Software is a cloud based SaaS solutions used by companies for inventory management. Unleashed Software enables customers to achieve control of their products and have oversight over their suppliers, production department and inventory levels.
SAP is another example of a solution that enable companies to monitor stock levels, place orders, track deliveries, identify bottlenecks and importantly, collect all relevant data for the purposes of a company’s accounting records. SAP is more generally utilised by larger corporates.
Expense management is a key accounting function – especially if the business has many employees incurring expenses on a regular basis.
With recent innovations in technology, employees can incur an expense, take a photo of the receipt and send it directly to the company’s accounting system. The uploading of the expense can also alert the payroll function, upon approval, to process a reimbursement.
The technology has become so advanced that many solutions don’t require users to manually input the details of their expenses. The software can scan a receipt using Optical Character Recognition or OCR, and the system will automatically upload the transactions into the system.
Concur, Xero and Quickbooks are just some of the online or mobile expense apps in the market.
Online payroll solutions enable a company to ensure that all employee-related payments are paid accurately and on time. An optimized payroll solution can help a business to:
- Calculate base salaries
- Automate government deductions (SSS, Pag-IBIG, Philhealth)
- Automate tax deductions (income tax)
- Calculate benefits and allowances
- Provide reports with key metrics for review by HR and management
- Calculate sick pay and holiday entitlements
While Client Relationship Management solutions, or CRMs, are a technology solution utilised primarily by the sales and business development functions of a business, they can also be valuable from an accounting and finance perspective.
CRMs such as Zoho enable companies to forecast new clients and customers along with the potential contract value at an estimated date. In turn, this enables companies to budget and forecast, plan recruitment and resources and develop marketing and business plans to align with the timing of their “new client” propositions.
3. Accounting – anywhere, anytime
It wasn’t so long ago that, in order to review your company’s financials, you needed to schedule a meeting with your accountant, visit their offices and take part in a meeting to discuss the financial information of the business.
It is now much easier and much more efficient!
Businesswomen and businessmen can now perform a large amount of their accounting and finance related activities through any number of devices, laptops, tablets or mobile, from anywhere in the world and whenever they want! Cloud accounting (see above) is a key enabler of this technological advancement.
Many of the top online accounting solutions have also developed mobile applications to make the service even more efficient and accessible.
In short, with advances in online solutions and especially cloud accounting technology, the entire accounting function can be reviewed, managed and maintained from anywhere in the world (provided there is internet) by any company representative (with user credentials of course) at any time!
If you are an executive, based in a company’s HQ, but responsible for various branches and representative offices around the world, you are unlikely to have the time to sit and meet with your accountants or accounting team in each country. By transitioning to cloud technology and mobile accounting applications, you no longer have to!
It’s not just about reviewing financial reports and information. Businesswomen and businessmen can now input financial data while on the move. This may be in the form of expense claims (see above), revisions to accounting books and records, inputting data into the accounting ledger, reviewing bank reconciliations and much more!
4. Big Data
More information is being generated by businesses than ever before. From marketing, to sales, to operations, to HR, to accounting and finance – this trend is not slowing down anytime soon!
As a result, executive and management teams now have a large amount of company data at their disposal – which if used correctly, enables more informed strategic decision-making.
Through the use of cloud accounting technology and online accounting solutions, all company financial data is collected and maintained securely. In most cases, online solutions do not impose any additional cost for storage – it is built in as part of the subscription package. This is a really valuable resource!
Data analytics and KPIs
As a result of having so much information and data to hand, accountants are now in a position to provide much more in-depth analysis and much more efficiently and accurately. Human input is still required however. Accountants need to understand how to piece all of this information together to provide their clients with value-added financial advice that includes key metrics and KPIs.
Having this wealth of financial data can give management an opportunity to make the best possible strategic and commercial decisions for the future of their business. Through automation and optimization of their online solutions, it is much easier for management to understand their business and use the available information to steer the company through a sustained period of growth.
The emergence of big data is also helpful during audit season. Audits can be much more efficient and less cost and resource heavy! As data is uploaded and remains on the cloud server during a financial year, it is much easier for employees and accountants to search and locate documents on the server. It also helps to identify where issues may have arisen – e.g. missing documents, incorrect entries, human error and fraud.
Check out this article for more information on what is required during audit season in the Philippines!
Through proper understanding and collation of the large amounts of financial data being generated by a business, management and accountants are in a much better position to identify future risks and develop plans to combat these risks.
With increases in the levels of data being created along with the innovative technological solutions that can perform analytics on this data, companies have a much clearer overview of their business and an ability to manage risks before they happen.
What kind of risks might a company face? Check out our recent article on the key financial risks that a business needs to manage!
5. Filing taxes online
The tax systems of countries across the world are now also benefiting from advances in technology. For example, in the Philippines, businesses now have three options for filing their taxes. Two of these options, the Electronic Filing and Payment System (eFPS) and eBIRForms, enable filipino companies to file (and in the case of eFPS, pay) their taxes online. For more information on the 3 systems for filing taxes, check out our recent article on the taxation system in the Philippines.
eFPS is the online electronic tax filing system in the Philippines. The eFPS was implemented by the BIR to simplify and increase efficiencies for tax filing and payments. It is not currently mandatory for all businesses to use eFPS. However, taxpayers are entitled to use this system if they wish. Tax payments can also be performed online through the eFPS. You can pay online through electronic fund transfers on bank websites or even mobile apps.
eBIRForms is a method of tax filing in the Philippines where users complete tax forms offline. Users then only need to go online at the time of submitting the tax forms. Payments must then be processed separately through a designated bank account.
eBIRForms can be a more convenient system of filing taxes for smaller businesses, companies that do not have consistent internet access and/or once-off taxpayers.
So what are the actual benefits of being able to file your taxes online? There are quite a few!
- Time efficient – There is no longer a need to print off documents, collate documents, attend the local Revenue District Office (RDO), wait in line, submit the tax filings, return to the office and then file your tax records. It can be done online without leaving your office!
- Cost efficient – Tax computation software and tax filing software are not expensive. Storing your tax records on the cloud is also very cost efficient – no physical storage costs. The costs associated with tax filings should not be a barrier to full compliance for startups and SMEs.
- Record of Filings – Whenever you file your taxes online, you will have an automatically generated record of the filing. This is extremely helpful when it comes to reviewing your compliance or indeed if your business is subject to an audit by the BIR.
- Accuracy – Filing taxes online using specialized software programs can greatly reduce errors arising from typological mistakes, incorrect computations, or inaccurate schedules. Also, certain of your tax filings will be repeat filings either monthly, quarterly or yearly, so some information used from a prior filing can then be regenerated for the next filing – ensuring consistency!
- Remote filing – You can now file and pay taxes without even being in the country! This helps management and executive teams who are constantly travelling. It also assists with filings and payments that need to be processed urgently.
- Payments – Not only can companies now file taxes online – they can also pay online! Through integrated payment processing platforms, the tax payment process can now be much easier for companies.
The accounting industry has traditionally been a bit of a dark hole for individuals without any specialization or expertise in the area.
It was often the case that only the accountants knew what was really happening with the accounts and finances of a company. If an issue arose, only the accountants could explain it!
This has all changed!
With the emergence of user-friendly accounting solutions and accounting-related solutions, business managers and owners can have much more knowledge about and oversight over their finances and accounts. They can have a much better idea of what is going on!
With the click of a button on an online accounting solution or process management system, management can now easily see and understand what their accountant has done, what they are doing, what tasks need to be performed, what filings need to be made and where the issues are.
In short, the introduction of user-friendly technology solutions has provided companies with a real-time and accurate oversight of the status of their accounts and finances – whenever it’s needed!
This is a really welcome progression and advancement in the accounting industry and great news for businesses seeking to understand more about their finances, accounting books and records.
Many traditional accounting and finance tasks can now be fully automated through the use of technological solutions.
This means that much less time and resources are wasted performing tasks manually. Instead, tasks can be completed, adding real value, through a well optimized and automated software solution.
The introduction of Microsoft Excel was an important resource for accountants and finance experts. While Excel is still an extremely valuable tool for companies, particularly within the finance function, the market has now built upon the success of Excel and has generated tech solutions for a much wider range of accounting-related tasks and activities. This can range from the most basic and routine tasks such as number crunching to more detailed analytics of key pieces of information and the preparation of reports.
Here are some well known accounting and bookkeeping tasks that can now be fully automated:
- Expense entry – Mobile apps now enable the uploading of expense information instantaneously upon incurring an expense. This can be done by taking a photo of a receipt and uploading it directly to the centralised system. Some apps collect information from the photo automatically and enter it into the system without the user having to do anything but take the photo!
- Bank reconciliations – There is no longer a need to manually search, review and match business transactions. Many online accounting solutions can now perform the end-to-end bank reconciliation process (once the correct information has been uploaded) and identify areas for review.
- Depreciation and interest calculations – This can be a routine and repeated task which all accounting solutions should now be able to perform. Just input the % values, identify the interval periods and then benefit from having accurate calculations included in your regular financial reports and statements.
- Generation of Financial Reports – Using the information uploaded during a particular time period, online accounting solutions can now generate value-added reports that include detailed analytics about the finances of a business.
- Payroll – There are various payroll solutions being developed and upgraded regularly within the accounting and bookkeeping ecosystem. Payroll is a key example of how technology can help to perform an entire function – almost end-to-end.
- Tax Calendar monitoring – Through optimized process management systems, accountants and businesses can now integrate a tax calendar into their schedules and ensure that they are always notified of upcoming tax filings, deadlines and delayed filings! Check out our Tax Calendar, which is updated for every month!
Even with the advancements in technology and increasing ability to automate tasks, we don’t see the role of the accountant and bookkeeper becoming obsolete!
Accountants and bookkeepers, however, will have to become more knowledgeable about what tech solutions can add value for them and their clients. Accountants will therefore need to become more tech savvy. This requires continuous upskilling, immersion in technological solutions and advising on innovative systems, processes and controls for clients.
A key aspect of the advancement in technology is the cost efficiencies that tech solutions can generate for businesses and accountants.
Here are just a few examples:
Solution costs – The monthly cost of subscribing to an online cloud accounting solution can be in or around $20-$40. This price does not include the top level/premium subscriptions packages. Such solutions also regularly have discounts throughout the year. This is a small price to pay for a solution that can be used to manage your company’s entire accounting and finance function!
Operational costs – With the ability to process the accounting and bookkeeping function online, staff can now perform their tasks remotely without having to attend the office – reducing electricity, furniture and other daily office-related costs.
Personnel Costs – As technology becomes more and more advanced, the need for personnel resources at the levels of administration and data-entry will decrease. However, the need for more specialized staff to perform higher level analysis and in-depth strategic reviews is likely to increase.
Administrative costs – Through the use of internet, email, video conferencing and online document exchange, the costs of stationary, printing, ink, paper, etc, are all greatly reduced or eliminated. Phone costs can also be reduced as communications can be performed online via web conferencing or messaging services through the online solution.
Travel & courier costs – Cloud accounting means no more couriers for exchanging physical documents back and forth between accountants and businesses. With advances in tax filing and tax payment software, taxi costs and administrative expenses relating to attendance at government offices are also significantly reduced – it can be done online!
CloudCfo helps clients transition to an integrated ecosystem of tech solutions to add real value for businesses
As mentioned above, the transition to technology is very much the future for accounting, bookkeeping and finance services. Cutting-edge technology combined with an ecosystem of solutions all working together creates a much clearer, cost efficient and transparent accounting service for companies.
CloudCfo is an outsourced accounting, bookkeeping and finance services provider in the Philippines. We are not traditional accountants and bookkeepers. We utilise and leverage online accounting software, cloud technology and smart solutions across all of our services.
As a result, the CloudCfo team are experts at helping clients transition from the traditional way of doing accounting to the new age of accounting related-technology.
Whatever your industry, sector or business, we will advise you on the best technology to align with your business needs, advise on implementation and most importantly, develop processes and controls to ensure you get the most value out of your systems!
Visit us at cloudcfo.ph or contact us at firstname.lastname@example.org for more information on how we can help your business transition!