13 September, 2016

How technology is transforming the world of accounting

There was a time when a firm’s books were managed using quills and huge hand written ledgers. Thank God those days are over. Technology has certainly changed things for the good in every aspect of business and in the accountancy sector specifically, to a massive degree.

Computers have revolutionised the way we all work. The introduction of spreadsheets in the 1970s was the first ‘big’ change for accountants. Suddenly, hours and hours of paper based work was eliminated and formulas made consolidating the books quick and simple.

The last 10 years has seen technology advance at a relentless pace. Now we are at the stage where the minutia of accounting has been removed. There is no need to deal with mass amounts of data entry or transactional work as systems have been created which enable data to be posted directly into the ledgers. The accountant is now able to access vast amounts of data quicker and easier than ever before.

The introduction of ‘Cloud Computing’ and ‘E-commerce’ have been the most recent revolutionary advancements in the accountancy sector. The modern e-commerce suites which many online retailers use as the basis of their business, automate the conversion of a customer transaction on a website into a posting on the ledger. This leaves the modern accountant with much more flexibility. Rather than being bogged down in transactions, they can spend their time thinking more strategically for the benefit of the business.

The accountant is no longer a bean-counter

In the old days, an accountant’s daily workload focussed heavily on administrative duties such as managing transactions and inputting sales data. Small, transactional detail is now becoming automated, meaning accountants have had to change the way they provide value to a business. Accountants now have the freedom to take a step back from the daily grind and provide a true strategic service to their clients. Accountants now spend more time being business consultants, providing information to support the decision-makers of the business, and helping to hone and achieve strategies and objectives.

More time is now spent on analysis of the transactions rather than the logging of the transactions themselves. The focus is shifting from recording what has happened to developing strategies to help drive the business forward. Technology has given us the tools to make accurate projections and forecasts and reduce the amount of time we spend actually recording historical data.

Xero: Beautiful accounting software

At Sanders we use cloud based accounting software called Xero. Using Xero means we can seamlessly access our client’s financial information in real time. It provides a totally flexible business platform that can be expanded with over 400+ different Xero add-ons including receipt back, which enables our clients to scan receipts and paper work straight into the platform, saving hours of tedious data entry.

By using Xero we can simply log in to our clients’ accounts and process the end of year adjustments. This is then updated in real time, all with little interruption to the client. Everyone who requires the information, such as the client’s team or book keeper can access the information straight away so there’s no need to send files back and forth. We can review our clients operating results at any time and provide proactive and timely advice on issues impacting the business. This enables us to help our clients keep the business on track and comply with tax obligations.

How technology has improved working methods

• Efficiency: Everything can now be done much quicker. Advancements in accounting software has enabled us to generate strategic financial reports at the touch of a button. The information is presented in a format that is ready to be used, with all the information we need to produce targeted advice for our clients. This is not only more efficient than the old manual systems of paper-based records, but the software itself is getting better and better, giving us more tools, all the time, to improve our service to our clients.

• Accuracy: Automating procedures has eliminated human error which has resulted in far fewer mistakes and discrepancies. Cross-checking is much easier and automated controls can be put in place to make sure the information is correct every time. In the unlikely event that errors do occur, we now have the ability to locate errors automatically to save wasting client’s valuable time.

• Control: More control over a company’s finances is provided to the accountant. For example, purchase ordering systems enable all operational purchases to be tracked. They can be matched to invoices and the subsequent payment, and it is all logged and managed through a central system. This also helps auditors, as the audit trail is readily available and much more accurate than the previous manual systems.

• Quality: Huge amounts of information are now available to the accountant. There is a vast volume of financial data available to us and in minute levels of detail. This means any analysis performed by an accountant can be extremely precise, and trends can be identified.

• Flexibility: The accountant doesn’t even have to be in the building, which wouldn’t have been the case with either paperwork or with a fixed server. This means that businesses can outsource their accounts function much easier to ensure they are receiving the best service at a competitive rate.

• Security: Accountancy software is some of the most heavily protected software available. They use the same hardware and super secure encryption used for secure payments and online banking. On top of that they use uncompromising antivirus and enterprise grade firewalls so you can sleep in the knowledge that you’re completely protected.

• Environmental: The advancements in technology has almost eradicated the requirement of paper based working procedures. This is more secure, more efficient and far better for the environment.

How do advancements in technology help small businesses?

• E-Commerce means that a lot more accountancy procedures can be automated.

• Even the supply-chain can be managed through may modern systems.

• Cloud computing means that there is no need to invest money on in-house servers and expensive equipment.

• Simple daily tasks such as recording expenses or mileage claims can now be done in seconds using various applications.

Small-business owners can now concentrate more on what really matters to them – running the business. They can use their accounting function to add real value in ways such as supporting decisions, appraising investments and improving profit.

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