Technology has profoundly transformed corporate financial management. Previously, business managers had to hire accountants to record and process financial data manually. However, this way of doing things costs more time, money and effort. This also leads to more human errors.
Automation and digital accounting enable business leaders and their digital accountant to perform functional tasks faster and more accurately, as well as interpret and communicate data more effectively. This way, business leaders can focus on their strategic role and anticipate more complex topics, such as cash management.
But what exactly is digital accounting and why should you consider it? Keep reading to find out.
What is digital accounting?
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 carried out in a digital environment.
This concept arose from the need to establish a more efficient tax system. Digital accounting appeared in 2003 as a government project aimed at modernizing the tax and customs administration (PMATA). Then the electronic invoice (NF-e) and the digital accounting system (Sped) appeared in 2009. In 2015, the digital accounting system Taxes, social security and labor obligations was introduced.
To clear up a misunderstanding, digital accounting does not eliminate the role of an accountant, nor does it dismiss the importance of accounting routines. It values and empowers accounting professionals by making their work more efficient.
Advantages of digital accounting
Now that you know what it is, let's take a look at its benefits:
Remote access
We continued to move toward a more remote work environment. One of the main advantages of a digital accounting system is that it allows you to remotely access accounts data financial of your company.
This also means that fewer professionals are present in the office. They won't need to carry their laptop around to access essential information. Digital accountants offer cloud-based solutions and digital accounting software packages allow you to log into the system from anywhere and at any time.
This is particularly useful for managing cash flow. If your cash flow situation is unstable, you risk bankruptcy. Cash flow is therefore 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 QuickBooks, cloud-based, you can analyze your cash flow remotely and make quick decisions regarding payments, investments, etc.
By monitoring cash flow online, you develop a better relationship with your company's finance process. You thus have better control over collections and payments at the end of the month, from week and even day to day. The analysis of financial projections and financial indicators must 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 flows puts you in a much better position to decide the financial future of the company. You are better able to make accurate predictions and make rational long-term decisions.
Convenience and improved productivity pace
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, providing comfort and convenience to users.
The objective of accounting should be to maintain 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 from the past year to create an Excel spreadsheet with your cash flow and other financial statements.
The digital accounting offers the comfort of executing various automated financial processes on easily accessible data and allows your digital accountant to prepare financial statements in just a few minutes. Professionals save a lot of time by compiling and presenting reports and figures to speed up their financial processes .
Efficiency and productivity are increased. By automating many financial functions with digital accounting, you can dedicate staff to other essential functions such as business development or sales. This means you can potentially generate more income with the same amount of resources.
Security and flexibility
While paper accounting records aren't completely 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 storing and managing data in-house is that you can lose your data in the event of a system outage or failure. Unless you have solid data backup and recovery measures in place... Imagine losing accounting data obtained after years of hard work in the blink of an eye.
Cloud accounting applications such as Pennylane or QuickBooks are an effective solution. These apps come with 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 banks' financial information. With a digital accounting solution, you should be able to recover or back up your data even if things go wrong.
Easy billing and payment tracking
If you don't take care of invoicing and payment tracking on time, you also have no way of minimizing late payments for 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.
Better integration and synchronization
One of the biggest challenges with manual accounting management is poor compatibility with other tools and apps used in your business. The best solutions for digital accounting such as Pennylane or QuickBooks simply integrates with other business tools, such as the digital cash register system, payroll, banking or order processing of an e-commerce site, etc.
These applications include ecosystems of hundreds of business applications that allow data to be shared freely. Also, integration services such as OneSaas, IFTTT, Zapier or Make allow you to expand the number of applications with which your accounting software can connect.
When you connect one digital accounting software to another business application online, both can thus 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 pass data from one platform to another.
This explains why manual accounting processes fall behind schedule and lead to incomplete versions of the data you have access to. And, the simplest of mistakes, like an incorrect mailing address, can lead to customer dissatisfaction and lost sales.
Automatic synchronization of data from your finance process with the solutions of digital accounting means that you You can update an address or email in one place and it will automatically update in other apps.
As your business grows, these integrations will become increasingly important. Not all accounting software always 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 app.
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Makes tax preparation easier
Manual accounting practices make it difficult to collect tax documents and prepare future returns. They also lead to poor financial monitoring and make it difficult to set aside funds for the payment of taxes in particular. Failing to prepare for your tax return as the deadline approaches presents serious risks.
Although you can't avoid taxes, digital accounting systems simplify the preparation and filing process for you. Digital accounting not only helps you organize and segregate funds for tax payments proactively, but it also simplifies tax calculations. This should relieve you of the agonizing stress of taxes.
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.
On this subject too, your digital accountant Blendy will be able to support you in meeting legal deadlines and planning your taxation optimally.
Easy bank reconciliation
Your manual records can be effective for day-to-day transactions, but the numbers also need to remain consistent with those on the bank statement. Digital accounting solutions come with useful reconciliation tools that make it simple to spot transaction and processing errors and help detect theft and fraud, among other things.
You can thus connect your traditional or online bank accounts Qonto for example, but also your payment solutions such as Stripe. And even your expense report management tools, such as Dext or Expensify.
There too Blendy helps you configure and connect all of your financial and business applications to your digital accounting solution.
Specialized functions
The technology industry seems to want to create an application for every business function. Hundreds of niche apps have been developed to meet the needs of different industries, from agriculture to retail to architecture.
Depending on the complexity of your activity, a digital accounting solution may suit you more than another. Online retailing, for example, involves seamless inventory management requiring the use of an accounting application that has or is compatible with your inventory management system.
To make your choice, Blendy digital accountant , knows perfectly the software and applications that meet your needs to set up an efficient financial process. And we also support you in the integration and configuration of your accounting apps such as Pennylane and QuickBooks with your other business applications.
A simplified data storage system
As we discussed earlier, one of the disadvantages of financial management is that it is often difficult to store information in one place. In a manual accounting system, you will need to store your data in different locations. Recording information and managing your accounting records does not have to be a challenge. On the other hand, gathering the information and using it correctly to create a comprehensive report is.
Even if your manual accounting system is well organized, it's often difficult to organize data and make sure everything falls into place correctly. Balancing entries and trial balances may seem like a relatively easy task on paper. In reality, it takes a lot of work.
The digital accounting solutions also store information in a dedicated online space, giving managers real-time access to essential details and information. Important data can be accessed with just a few clicks in digital accounting applications. Flows of cash flow to balance sheets , all will be accessible.
Accessibility to important financial information
In a business, interdependence is key, because each department in your company is linked to the others to move the entire company forward. This is one of the main reasons why some companies perform better than others. A company where all departments are linked together in a solid finance process is destined to outperform other competing companies.
This interdependence means that management and all departments must have access to the company's essential financial indicators . When you need to grant an additional budget to a specific department, for example, it is essential to be able to easily access all of the financial data and performance indicators business and financial. With manual accounting, it can be difficult to present the required information based on departmental needs. Additionally, an individual will need to spend additional time accumulating the required data and processing paperwork.
With easily accessible financial figures and indicators, the team and the relevant department can make quick decisions. Because the longer a company takes 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 performance of the company and its long-term sustainability.
With a digital accounting system, the time taken to process information and make decisions decreases considerably, making your company competitive again.
And to make your decision-making even more reliable, at Blendy digital accountant you can benefit from the expertise of our Coach Success. Dedicated to the growth of your company, they know the financial indicators to analyze and provide you with their financial expertise for decision-making informed decision.
Reliability and scalability
The most sought after feature of accounting apps like Pennylane or QuickBooks is that they do not do not make mistakes. Data accuracy makes automated applications and services much more reliable than traditional accounting practices.
When we compile data, human error is virtually inevitable. Even though humans can produce accurate data, compiling that data takes much longer than a machine. However, the accumulation and analysis of accurate and rapid data is crucial because your business must be able to rely on reliable data to make strategic decisions.
Besides 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 many upgrades to support the increase in the number of transactions to be processed and to be counted.
When you have accounting software digital reliable, all you need is a simple software upgrade to meet the growing needs of your business. Obviously, your digital accountant such as Blendy will also be able to help you adapt your process finance to your growth .
To conclude
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 remains 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 app that best suits your business and your business. financial processes .
Whether you are a 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 help you transform your finance process in strategic development tool for your company, book a call right now!
Book a call to find out how we support your business and which apps will help to develop your business!
With Blendy , French digital accountant take advantage of digital accounting to accelerate your finance process and develop your business.
Pennylane , Dext , QuickBooks and Stripe experts, we support digital and IT service companies, e-Commerce, SaaS, SMBs, in France and internationally.