4 Tips to Improve Your Accounting Practices
Accurate budgeting, tracking expenses and timely payment of bills are always important to business success. Fortunately, accounting system automation has come a long way in the last few years. Automation makes it easier than ever to monitor your budget, to improve cash flow and to track expenses. Here are 4 tips for taking advantage of accounting automation:
1. Pay attention to tracking
Most accounting systems provide variance reports which show actual expenses, budgeted expenses, and the variance between actual and budget. Generate and review this variance report at the close of each budgeted time frame (e.g., monthly). Make sure that all expenditures have been entered before generating the report.
Once all budgeted expense categories are reviewed and analyzed, work with management to determine and implement any actions necessary to address the overage(s). Properly tracking and managing expenditures ensures that they are accurately reported in proper categories, and paid in a timely manner.
2. Manage electronic invoices
Most invoices are now generated and sent electronically, often through email or from accounting system to accounting system. Many accounting systems allow the invoice document, usually in PDF format, to be attached to the accounts payable entry in the accounting system. To streamline the receipt of emailed invoices, set up a special email address to collect all email invoices and receipts in one place where they can be accessed, reviewed and imported into the accounts payable system.
3. Reduce data entry for receipts
Some accounting systems are smart enough to “read” received invoices (via email or scan), allow you to assign the invoice to an outstanding purchase order or create an accounts payable entry, and then prepare a check or ACH item with little or no data entry. Other systems are able to automate three-way matching – connect a purchase order, packing slip, and bill together along with the system entry – so that the business can accurately and efficiently track what is ordered, received and still outstanding (i.e., receipt of partial orders). Newer accounting systems can also scan or capture cell phone photos of physical receipts – whether cash or credit card – and then “read” them and record the transaction.
4. Automate approvals
Automating the invoice approval process allows multiple staff to electronically review and approve digital invoices and receipts for payment. This is especially handy for companies with a multi-person approval process.
It’s not easy to change processes. But taking the time to track, and automate is financially worthwhile. Make use of helpful features in an accounting system to save time and money. If you have questions or think you need to update your accounting system, please talk with us. We can help.