How to Digitize Accounting Function of your Business in 2024
Accounting in some form or another affects everybody’s life –it might be the accounting of food stock, or, the expenses of an organization. Without accounting no business can survive.
As per the business directory, the definition of accounting is “ It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm’s assets, liabilities, and owners’ equity.”
To further elaborate on the definition, accounting gives information regarding the finances of a business, which thereby helps the leadership team in crucial decision-making. Considering the importance, one of the first fields to be digitized has been accounting. Using computers for accounting probably started with the invention of the tabulating machine by Herman Hollerith in the year 1890.
Thereafter, calculating machines evolved. Software entered the seen later. In the year 1978, the first spreadsheet software Visicalc saw the light of the day. During the same year, Peachtree Software introduced an accounting software package for the early personal computer. In 1998, Quickbooks was launched. Today, over 4.5 million companies use Quickbooks, making it the most popular accounting software in the U.S.
Does accounting automation help and how? Yes, of course, the following are the reasons:
- Time-Saving: The most tangible impact. Its just a question of a few clicks of the mouse and accounts can be balanced.
- Higher productivity: With the time saved improves productivity. More work can be done in a limited amount of time.
- Data accuracy: Humans are prone to errors. Computers can calculate thousands of entries with no risk of miscalculation
- Fast data retrieval: Gone are those days of lugging huge ledgers to check your current balance. With systems in place, books of accounts can be retrieved faster.
- Real-time integrations: Multiple accounting systems can be integrated, to provide a seamless accounting processing.
How much of accounting is digitized?
A study conducted by KPMG says:
- The digital solutions in accounting so far essentially only cover the “basics” of digitalization. The adoption of emerging technologies is still lacking.
- Prior digitalization projects were primarily aimed at improving data quality and data consistency. Computers have been implemented mostly to improve and check the quality of data.
- Optimization of existing digitized processes is considered to be an extremely laborious process.
- Decisions regarding improvements in accounting automation still lie with the top management.
The above pointers make it quite clear – a lot of latest technology is yet to make full use of in digitizing accounting. Emerging technologies like Artificial Intelligence (AI), Machine Learning (ML), IoT (Internet of Things), Quad computing etc are yet to make concrete inroads. The potential is immense:
- With ML and AI in place, predicting patterns can be established, allowing early detection of financial frauds
- AI can enforce better compliance with organizational policy and/or government norms. This will also help in focused actions and improved productivity.
- AI can streamline data entry and analysis, by automating data extraction from multiple pdf’s, documents spread across a system.
Each process can be digitized, step by step. The first step in any accounting process is ‘Data entry’ – it can surely be automated easily.
Automating the first stage
Data entry of invoices and bills is probably the first step in any accounting process. Even today, many organizations do it manually. Manual operations are prone to introducing errors resulting in unnecessary rework.
KlearStack is an AI-based data extraction platform. Klearstack extracts actionable data from unstructured documents. Klearstack can be in implemented within 7 to 10 weeks.
KlearStack assures 90% accuracy in 90 days flat – the accounts payable team data entry operation will be automated within 3 months. KlearStack can also be used on a pay-per-use model.
Taking advantage of emerging technologies is the best way forward. Be ready with the right tools at hand when the next big economic boost arrives at your doorstep.
Conclusion :
It’s high time that organizations across all domains irrespective of the organization size adopt such AI-based tools to reduce the wastage of resources and leakages in the cash flow.
