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6 reasons why companies should digitise their accounting processes
Businesses all across the globe have suffered from the recent social and economic events. The hardest hit sectors include tourism, logistics and retail while other industries are reeling from the knock-on effects resulting from massive disruptions to supply chains and markets, and weak business sentiments.
Regardless of the sector you're in, keeping close tabs on your company's cash flow movements and inventories has become ever so important.
There are two ways of making it easier to track and manage your finances and merchandise or goods held in stock: Firstly, by ensuring that you have a sound cloud accounting platform in place; and secondly, by maximising efficiency so that you can free up time and money to focus on the value-added tasks and more important things in business.
A single, seamless digitised accounting platform can help you to achieve both and more. Online accounting softwares such as Xero are a good option: Xero offers multiple tools to manage cash flow, generate financial reports, assess business performance, send invoices and more, as well as to share these data with employees on a single platform that's accessible from the office, home or even on the go via a mobile app.
Having a real-time overview of your business operations — and performance — allows business owners and their advisors to plan ahead, strategise the next moves and remain agile so that businesses can better ride out economic challenges.
Now is a strategic time to migrate your accounting process to a cloud-based one like Xero. It offers, among others, the following six benefits for businesses across different sectors:
1. Greater real-time visibility
Management should always have full visibility of their accounts in order to be able to assess their organisation's financial health. This will allow the management to make sharp and timely decisions to keep the company stable and stay agile to respond to a fast-changing business environment.
A digitised accounting process with Xero, for instance, allows for a real-time view of the cash flow movements and company's liquidity status. Easy-to-read charts can also be retrieved any time — from any device — so long as there is an internet connection. This essentially means that the status of a business' operations can be laid out on a single interface, and business owners and accountants can get a bird's eye view of the company’s finances in real time whenever they need.
2. Reduce manual and repetitive tasks
With more companies having to activate their business contingency plans, including work-from-home arrangements or even voluntary unpaid leave for their employees, reducing the amount of manual and repetitive tasks can help to counter the manpower disruption. Online accounting also frees up employees' time so that they are able to focus on more value-added tasks and work more efficiently amid disruptions to business operations.
Having a one-stop platform that is able to integrate with other business applications will allow staff to automatically retrieve and reconcile data in a fraction of the man-hours required to enter and update the information manually. The Xero app marketplace currently has over 800 app partners to offer a variety of business applications to suit your company’s needs, and can certainly help facilitate the streamlining of your accounting processes and workflow.
3. Shorten the payments cycle
Cash flow becomes even more crucial during periods of economic uncertainty. It's imperative that you don't miss invoices and that you are able to track outstanding payments easily. Suppliers are probably more likely to be seeking upfront payments to ensure liquidity for their business operations.
Businesses with an automated platform, like Xero, that offers invoicing features to not only track outstanding invoices, but also automatically remind clients when payment is due will be in a better place to maintain a healthy cash flow position. Xero's other features also make payment effortless and convenient for clients. These include a "Pay now" icon that encourages clients to close the transaction as soon as they receive the invoice, as well as many payment options from debit and credit cards to PayPal and Stripe accounts.
Free up time and resources to focus on more important tasks and strategic growth areas instead. Photo: Xero
4. Explore more value-added services
Companies may currently feel the pinch due to the economic downturn, but this just highlights the importance of adapting quickly in order to stay responsive to the fast-changing and sometimes unpredictable market.
With online accounting that frees up time from manual and repetitive tasks such as traditional bookkeeping, users will have a greater ability to focus on developing new areas of potential growth in their businesses. Having more time for strategic thinking and identifying new opportunities could make a difference in the near future, as businesses tide through this period.
One way is to use data analytics tools like those offered by Xero, which offer insights that can be used to generate performance reports, scenario modelling and so on. These insights are especially useful as they allow companies to monitor the current situation closely, predict future trends, identify potential markets, and manage risks associated with poor performance, and even detect fraud.
By shifting accounting processes to the cloud, business owners can make more informed decisions based on real-time information — while reducing potential costs due to unknown risks.
5. Greater data security
Cyber attacks, such as malware and phishing, and data breaches can wreak havoc to business operations and result in massive losses for companies during boom times. This impact can be exacerbated during periods of high volatility.
One of the benefits of having a cloud-based platform is that it offers greater information security than downloadable programs. Business owners and executives can control who is given access to the company accounts, track the activities and transactions in real time, and not have to worry if the physical computer is misplaced, stolen or corrupted when employees are working off-site.
While shifting to a cloud-based accounting platform would not prevent digital attacks or fraud, it offers more layers of security compared to the old-school way of working.
Some of the safety features on Xero include data encryption that rivals the level of security used by banks to prevent data breaches, as well as regular security audits, two-step authentication and round-the-clock monitoring of data centres and servers.
6. Cost-effective way to migrate to the cloud
For companies considering switching to a digital accounting process but are unsure of where to start, Xero offers the necessary support to make the transition a smooth process.
The last thing any business owner would want is to spend more than what is necessary. With Xero, there is zero upfront costs, compared with traditional systems such as hardware, system administration, installation, version upgrades and so on. The cloud solution is scalable, meaning businesses can customise based on the functions or features they need, add on or unsubscribe as the business operations evolve. Businesses can also sign up for a risk-free trial to evaluate the suitability of Xero's cloud accounting platform.
Ready to make the most of a digital accounting process? Try 30 days for free at xero.com