Home > Accounting and Tax Guide
Maximizing Efficiency and Accuracy in Accounting: The Role of Technology
Yesterday’s business models are evolving as today’s technology advances. For example, software tools and other technologies can streamline and automate accounting processes, resulting in greater efficiency and accuracy. According to a 2020 survey of CFOs, 90% of finance functions will be fully automated within five years.
Stay tuned as we explore three ways technology transforms the accounting profession and how businesses can benefit from it.
The Role of Technology in Accounting
Modern accounting relies heavily on technology. Businesses can achieve greater efficiency and accuracy by utilizing the latest software tools and other technological solutions. Specifically, research shows that robotic process automation (RPA) in financial reporting processes can save finance departments from 25,000 hours of avoidable rework caused by human errors.
Here are some of the best benefits of using technology in accounting:
- Automation of repetitive tasks, freeing up time for more critical accounting activities
- Reduction of human error, leading to improved accuracy and decision-making
- Streamlining invoicing and billing processes allows faster payments and improved cash flow
- Improved tracking of financial transactions makes monitoring and controlling expenses easier
- Enhanced security and privacy when handling sensitive financial information
- Making informed business decisions easier with real-time financial data
Embracing technology in the accounting arena can help businesses reduce human error, streamline communication, and optimize their financial operations, allowing accountants and finance professionals to provide better services to their clients.
Capitalizing Software Development Costs
Software development is a vital component of modern business operations. But it can be expensive and complicated. Luckily, the accounting world has a way to handle these costs: software development cost capitalization.
Software development cost capitalization allows companies to spread software development costs across multiple accounting periods. As a result, businesses can gain a more accurate picture of their financial performance by not paying these costs simultaneously.
Today’s technology makes automating software development time and expense tracking easier than time-recording apps or other manual processes.
Capitalizing software development costs does have some disadvantages, though. Costs can be difficult to track without the right tools and can be easily over or undercapitalized. The resulting potential for accurate financial statements needs to be revised.
Tips for successfully capitalizing software development costs include:
- Ensure your company has a software development cost capitalization policy in place.
- Use automated time-tracking software to accurately capture and report the time spent on software development activities.
- Regularly review capitalized software development costs to ensure an accurate balance sheet that complies with accounting standards.
Streamlining Invoicing Processes
Managing invoices can be a challenge for businesses. For example, when multiple customers owe different amounts on different payment schedules, it can be nearly impossible to remember when each payment is due without an automated system.
Fortunately, technology can streamline invoicing processes. By automating invoice management, businesses can enjoy the following benefits.
- Automated invoice management helps businesses save time and money by eliminating manual processes.
- Improved accuracy in invoicing reduces the risk of overpayments, underpayments, and other errors.
- Efficient invoice management enhances cash flow and allows businesses to pay vendors on time.
- Streamlined workflows and automated approvals help to avoid invoice payment delays and disputes.
- Enhanced visibility and tracking of invoices provide better insight into business spending and help with budget planning.
Maintaining Secure Communication
Despite the growth of automation, businesses often overlook maintaining secure communication during invoicing. A lack of secure communication can put companies at risk of fraud and data breaches, resulting in significant financial losses and reputational damage. Businesses can reduce these risks and maintain secure communication with the help of technology.
Sender Policy Framework (SPF) allows businesses to specify which servers are authorized to send emails on their behalf. In addition, SPF prevents unauthorized third parties from sending emails that appear to come from their domain, reducing phishing attacks.
In addition to SPF, businesses can follow other best practices to ensure secure communication.
- Encrypting emails and protecting confidential information.
- Implementing two-factor authentication to prevent unauthorized access.
- Using password managers to generate and store strong, unique passwords.
- Training employees on best practices for secure communication, such as avoiding public Wi-Fi networks and avoiding sharing sensitive information over email or text.
- Regularly reviewing and updating security protocols and software to stay current with the latest threats and vulnerabilities.
By implementing these tips, businesses can enhance invoicing processes and protect sensitive financial information.
Boosting Efficiency and Accuracy in Accounting
Technology is revolutionizing the accounting profession. By capitalizing on software development costs and streamlining invoicing processes, businesses can save time and money, improve accuracy, manage cash flow, and gain better insight into their spending. Secure communication is also essential for protecting sensitive financial information and preventing fraud.
By embracing technology, businesses can optimize their financial operations, reduce human error, and provide better client service. We recommend accounting professionals stay informed and adapt to the changing landscape as technology advances.
Are you looking to maximize efficiency and accuracy in your accounting?
Check out more tips on streamlining your processes and utilizing the latest technology to enhance your financial operations.