How Automation and Cloud Can Shift the Landscape of Traditional Bookkeeping and Accounting Services?
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We often use the words bookkeeping and accounting interchangeably as both these two appear to belong to the same profession superficially. Though there are functional overlaps as both bookkeeping and accounting deal with financial data and preparing financial reports, the job responsibilities of bookkeepers and accountants differ greatly.
As a business owner, you need to know the differences between bookkeeping and accounting as it can help you manage your business better ensuring profitability and growth.
Just like other areas of business, bookkeeping and accounting are also undergoing rapid transformation propelled by innovative technological developments such as cloud-based bookkeeping and accounting and, the day is not far when the traditional bookkeeping and accounting will be entirely replaced by online and automated versions and will demand professionals to be equally adept both in technology and accounting knowledge.
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The bookkeeping process involves identifying, measuring, recording, organizing and maintaining business records of all financial transactions of a business daily and in an orderly and consistent manner.
Bookkeeping precedes accounting and manages functions including generation of invoices, posting of debits and credits, payroll and reconciliation. A bookkeeper job description also documents functions such as handling petty cash, making payments to vendors, updating inventory data and maintaining cash receipts.
As management decisions are mostly based on records and data, a bookkeeper plays an important role in facilitating business and financial decisions e.g. business forecasting and strategizing by providing a well organized and accurate database to the management.
Bookkeepers must have an educational background in accounting and need to be well acquainted with the accounting functions that can help them discharge their duties of ledger balancing of companies and subsidiaries and, maintaining accounts with sales, purchases and expenses data.
Bookkeeping services have witnessed a lot of transformations over the centuries and more specifically over the last three decades primarily due to the introduction of personal computers enabling bookkeepers to a whole new way of keeping financial records and generating reports. Tedious and manual transfer of financial information into physical ledgers is no longer necessary and businesses can now use computers to transfer financial data into and from a computer leaving the ledger balancing to be carried out by software using machine learning algorithms. Cloud-based bookkeeping has become an emerging trend in today’s business.
Cloud-based bookkeeping software hosted on remote servers helps eliminate the need for on-premise data storage in a local server by an internal IT team and offers financial data access through the internet with the help of web-based cloud computing software made available by the Cloud Service Providers, the CSPs.
Greater and easier access also provide better control and data security including improved regulatory compliance through encrypted connections of cloud applications. The cloud also addresses bugs and security issues more effectively by keeping the applications timely and regularly updated, unlike most desktop applications.
Racks of files stacked on the office shelves can now be done away with and stored in the cloud online without any need of filing and searching manually saving time and improving efficiencies of the bookkeepers.
The bookkeepers can also customize their applications by integrating cloud-based bookkeeping applications with some other relevant ones available in the cloud and transforming their roles as a financial analyst from mere data entry operator. Syncing bank and credit card accounts provide the automatic download of transactional data and eliminate manual data entry to a considerable extent.
Recent lockdowns and social distancing imposed due to the coronavirus pandemic has made cloud adoption more relevant as coordination and collaboration is becoming much easier with remotely accessible financial data and applications hosted in the cloud. Real-time data and reports can be accessed through mobile apps in the bookkeepers’ smartphones at any time and from anywhere.
Even outsourcing of bookkeeping services from cloud accounting companies are becoming simpler, safer and more viable with the bookkeeping operations being moved to the cloud building better cohesion between a business and the outsourced bookkeeping services.
Both bookkeeping and accounting services date back to our ancient civilization and evolved as matured processes after experiencing many technological transformations over many centuries. Often known as “the language of business “, accounting is defined as the process of collecting, measuring and analyzing financial information and preparing financial reports for communicating to authorities and persons concerned to support business decisions and meet regulatory compliance.
Based on the objectives, different accounting practices are carried out including financial accounting, management accounting, cost accounting, auditing etc.
It has been for many decades that accounting professionals are using software for their accounting needs. Spreadsheets also are being used extensively for automating many tasks albeit on a small scale and capacity. Accounting automation from cloud accounting companies takes the manual bookkeeping and accounting works away from the accountants and performs them instantly and accurately.
Computerized accounting software can carry out the tracking of financial transactions including number crunching in the twinkling of an eye and doesn’t need complex ledger files anymore. Cloud accounting for small businesses can enable business owners to generate financial reports quickly and can streamline and smoothen the accounting process flow.
Some of the recent advancements in automated accounting are
The intelligence of Things, IoT plus AI
Seamless cloud storage
Accounting automation software procured from cloud accounting companies offers you lots of benefits such as
- Real-time reports
- Remote access of accounting data any time and anywhere on your smartphone
- Multiple user access
- Enhanced Data Security
- Reduced costs
- Higher productivity
- Easy collaboration
- Improved data accuracy
- Easy storage and retrievability of records
- Easy invoicing
Cloud accounting is an online accounting software hosted on a remote server that can be used for cloud accounting for small business as well as for large and medium enterprises. When business data is sent to the cloud, it is processed and returned to the user.
The software for cloud accounting services can be accessed by many users through the internet and the cloud service provider operates and maintains the remote server. By adopting cloud accounting services, a company does not need to invest in an internal company server or set up individual desktops with software as all employees can access the cloud on their smartphones.
Cloud accounting for small business has been specially designed so that the same account can be accessed by multiple users at the same time with automatic account update before the users’ exit.
It can be perfect if you need us to log in and help you with your accounts or if you have another member of staff that regularly needs to log financial information.
Can you be equally good at playing both cricket and football! Most probably not. Likewise, you may be good at planning however may find it difficult to handle huge data as in accounting. Besides, SMEs, in general, can’t afford and access the internal resource requirements for such jobs. So, as a small business owner, you must outsource cloud accounting services to reap the following benefits
- Reduced Cost
- Improved business focus
- Reduced Manpower cost
- Better regulatory Compliance
- Receive financial advice
- Improved financial decision Making
A lot has already changed and more changes and transformations are awaiting bookkeeping and accounting in future due to cloud accounting services and raising concerns amongst the bookkeepers and accountants if their roles would still be relevant five years down the line. Their concerns are unfounded though.
Cloud accounting for small businesses is fantastic for improving the operational productivity of the accounting system and the efficiency of the accountant-client relationship but it can not replace the analytical minds of accounting professionals. A bot can make the bookkeeping more streamlined however it cannot replace years of industry knowledge and experience of the bookkeeper.
Business accounting services:
- Journal entry
- General Ledger
- Assets /Equipment Ledgers
- Expenses Ledger
- Accounts Receivables
- Accounts Payables Ageing Report & Summaries
- Bank Reconciliation
- Financial Statements preparation
- Trial Balance
- Income Statement (Profit & Loss)
- Cash Flow Statement
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