Technology is creating changes across every industry, but the financial services industry is one that has undergone rapid change in the last 5-10 years. Accounting & bookkeeping services now look extremely different to what they did 10, 5 and even two years ago. Things are changing at a rapid pace and it’s important that as a business owner you keep on top of the technology that can help your business save time, cut costs or improve performance.
Let’s look at how technology has changed some of the key financial management processes both internal and external to your business:
Often the bane of any business owner, reconciling your business accounts was a time consuming & manual process of literally ticking a list of transactions in your accounting file and the corresponding transaction on your bank statement. You were lucky if you got around to reconciling your accounts every month and when you did it was a pain staking process.
Bank feeds have turned this process on its head and now allows business owners to have reconciliations undertaken daily. That means as a business owner you have access to far more accurate business information that’s readily available.
Processing payroll for many business owners was once an enormously time-consuming task. Collect the paper time books. Re-enter the time sheets into your payroll system. Make sure you apply the correct overtime/Saturday/Sunday/Public Holiday rates. Process payments at bank. Print out payslips and put them in pigeon holes for employees to collect.
Realise you’ve made a mistake and spend more time fixing it. Repeat.
With time & attendance software like Deputy & Tanda you can seriously reduce the leg work from your payroll processing and it’s now realistically achievable to process a pay run of 100 staff consisting of both full time, part time & casual employees in possibly half an hour.
Award interpretation is automated, so employees are always paid at the correct rate. Payslips can be emailed directly from your accounting/payroll software. Export an ABA file and import into your online banking to make payment.
Paying your employees super was another monthly/quarterly task that just took hours to reconcile and then process the individual payments to the individual super funds. Clearing houses made life easier but it still involved extracting the information and entering it into another system which can easily result in errors.
Xero’s inbuilt superannuation is Super Stream compliant and allows you to process all your employees super for a given period in just a few clicks and payment is direct debited from your nominated bank account.
Suppliers would post or email their invoices and you would then take that invoice & manually re-enter that data into your accounting software. Line item by line item you would tediously code that invoice to the correct code in your accounting software. It was a mind numbingly boring, laborious task.
Now you can almost automate the entire process using software, including line item data extraction. Apps like Invitbox, Datamolino, Hubdoc and AutoEntry have built platforms for automatically extracting invoice data that pushes into your accounting platform including a copy of the invoice.
Surprisingly, this is one business process that hasn’t moved that far in the last 10 years. ABA files that can be exported from your accounting system & imported to your online banking have been around for quite a while.
But it’s about to get quite the shakeup.
A couple of years ago Tyro created the Tyro Smart Account. It’s just like any other bank account except when you pay an invoice in Xero, it automatically creates that payment in your Tyro Smart Account ready for authorisation!
Now we hear that NAB and Xero are working together to allow a similar function between Xero & NAB internet banking platform.
Invoicing your clients doesn’t mean that you actually get paid. As such, you waste time chasing debtors. You manually send emails, SMS’s or even make phone calls just to try and get some money in the door.
Including an online payment function when you issue your invoices allows you to get paid quickly and allows your suppliers to make payment easily.
If your business operates on account with your customers, consider using an add-on like Chaser or Invoice Sherpa to manage the debt collection process including emails & SMS’s both pre-& post your invoice due dates.
Getting regular financial information or reports from you advisors used to involve providing a back of your accounting file once it was reconciled, then waiting another couple of weeks until the report was completed before you eventually had a meeting to review the financial information. By which time that information was out of date and effectively obsolete.
Cloud accounting tools and reporting add-ons like Spotlight Reporting make it easy for your advisor to access your information remotely and prepare timely & meaningful financial reports in real time.
Tax & Compliance
The whole process of tax & compliance work is painful for everyone involved. Accountants need to verify your financial information which means providing a list of source documents the length of your arm. Accountants would usually take your financial information from you accounting software and re-enter it into their accounting system in order to prepare your financial statement & tax returns.
The single-ledger of which Xero is based on means that accountants, bookkeepers and their clients are all operating on the same ‘file’. For those accountants utilizing Xero Practice Manager (XPM) and the inbuilt financial reporting within Xero, you can now quickly and easily generate financial statements within week of end of financial year.
That information can then also flow into XPM tax returns directly from your clients Xero file.
Looking to make the most of technology in your business to speed up your financial processes? Contact us today.