Whether you do your own bookkeeping, have an internal accounting department or outsource your accounting completely, it is worth evaluating how to effectively make use of machine learning and artificial intelligence offered by today’s financial technology platforms.
The Limitations with Traditional Bookkeeping
Most small businesses today have not changed their accounting and bookkeeping processes in several years.
Typically, entrepreneurs in small businesses print off their bills, invoices and bank statements and give them to a bookkeeper. The bookkeeper then manually enters all that data into a desktop accounting system that the entrepreneur has limited or no visibility into.
When the bookkeeping is complete, the information is passed to an accountant to produce financial statements and a tax return. Sound familiar?
For many business owners, the main reason that bookkeeping is not a high priority is that your accounting process is not easily integrated into to the way you work. As a result, your financial reporting often lags far behind the point at which it is useful to make informed business decisions.
Your business is dynamic and there are dozens of processes at work including sales, receivables, receipts, purchases, payables, payroll and CRA tax filings. The goal of cloud accounting is to become fully integrated into the way you work by increasing the level of collaboration with your accounting partner to identify opportunities for improvement.
Cloud accounting seeks to answer the following questions and put appropriate processes in place:
- What is your sales process and how do you invoice customers?
- How do you keep track of your business expenses and how do you pay your bills?
- What types of reports do you want to see and how frequently?
- What systems are you using and what internal processes are you struggling with?
- What are your financial goals?
Under the cloud accounting model, that bill that has been flagged in your email for weeks can simply be forwarded to an email address. Your expense app will extract the data and match that bill with banking data that is being downloaded directly from your bank. The system then learns your transactional patterns which subsequently reduces the need for data entry and manual review.
From there, you have login access to your accounting system to bring your books up-to-date, see who owes you money, what bills are outstanding and generate an up-to-date report to be utilized in analyzing the business’s performance and reaching your financial goals.
Cloud Accounting Systems
There are dozens of bookkeeping systems on the market for small business including Xero, QuickBooks, Sage, Wave and more. There are also dozens of financial apps that may integrate with your chosen system to extend its functionality such as the following to name a few:
Point-of-Sale Processing: Square, Shopify, Stripe
Time Tracking & Payroll: Wagepoint, Payment Evolution, Knit, Tsheets
Expense Management: HubDoc, ReceiptBank, Expensify, Concur, Ledger Docs, Neat
Accounts Payable: Plooto, Waypay, Veem
Reporting: Spotlight, Fathom, Qvinci, LivePlan, Chata
It can be daunting to start your search for the appropriate technology stack, especially if technology and accounting are not part of your core areas of expertise. If you’d like to schedule a free consultation with one of our experts for a quote for accounting system setup or full-service cloud accounting services, drop us a line here.
If you do not seek answers to the questions above, then your accounting process may not be able to move and grow at the speed of your business. We are here to help!