Traditional back-office accounting involves endless stacks of important papers and packed file cabinets. The digital age has changed everything, including back-office accounting, and the benefits go far beyond a cleaner office. In this article we will explain what back-house accounting is and what digital back-house accounting looks like, discuss useful accounting technology and tools, and go through the benefits of digital back-office accounting.
What is Back-Office Accounting?
The front office of a company interacts directly with clients while the back office provides behind the scenes support including financial, administrative, and IT services. So, what is back-office accounting? Back-office accounting refers to the financial management of a company. That’s a broad definition. Let’s take a closer look at the back-office accounting department’s role.
Back Office Accounting Tasks
Accurate and informative back-office accounting is crucial to a business’s success. Back-office accounting tasks include recording financial transactions, compiling financial reports, and analyzing financial data. Bookkeepers handle day-to-day transactions (accounts payable, accounts receivable, payroll etc.) and maintain accurate financial records. Accountants use this data to create financial reports, evaluate the company’s financial health, form projections, identify business opportunities, and offer investment advice.
Digital Back Office Accounting
Technology has changed nearly every aspect of our lives, from how we communicate to how we conduct business. This technological revolution has sent a digital wave through the accounting industry, changing the way that businesses record, manage, and utilize financial data. Traditional back-office accounting relies on hard copies of important financial documents. Digital back-office accounting eliminates the paper frenzy and uses software and technology to manage finances.
Digital Accounting Technology
Technology has improved every aspect of back-office accounting. With digital back office accounting every transaction is conducted electronically and data is stored digitally. The following technological advancements, tools, and software are the backbone of digital accounting.
Cloud Computing
Cloud computing provides access to servers, storage, software, data, and applications via the internet. With cloud computing every authorized party can access stored information, databases, and software used for back-office accounting as long as they have a Wi-Fi connection. The cloud is highly secure, and data is available in real-time.
Cloud-Based Accounting Software
Cloud-based accounting software programs serve as a central hub where data is stored, managed, and analyzed. Cloud-based accounting software can integrate with other relevant programs and entities to connect banking, payroll, tax info, e-commerce, and more under one umbrella.
Electronic Invoicing and Payment Systems
Sending and receiving payments through an electronic invoicing and payment system is a fast and simple process. Payments and invoices can be set to occur on a schedule so that recurring transactions are never forgotten. When a transaction is complete, there is no need for a bookkeeper to manually enter the information, it is automatically recorded within the system.
Digital Document Management
The days of flipping through file cabinets or scrambling to find a misplaced document are over. In a fraction of the time that it takes to locate, file, fax, or email a physical copy, back-office accountants have the ability to find, share, and organize documents at their fingertips.
The Benefits of Digital Back Office Accounting
At this point you might still be thinking, “if it ain’t broke, don’t fix it”. Why should companies bother going digital if the traditional way is working just fine? The benefits of digital back-office accounting go far beyond saving trees.
Minimizing “Busy Work”
Say goodbye to manual data entry, filing, faxing, and mailing. Digital accounting eliminates these tasks so back-office accounting teams can focus on more important tasks such as growth opportunities and problem solving. Electronic payment and invoicing systems automatically record data. Documents can be easily stored and accessed in a document management system, accessed by all members of the team via the cloud, and shared electronically with outside parties when necessary.
Digital Accounting is Cost Effective
You might assume that transitioning to digital accounting would be expensive, but in reality, making the digital transformation saves money. Cloud computing is more affordable than having an in-house IT team and server. As we explained in the previous section, digital accounting minimizes busy work which means that your back house accounting team can be lean, and there’s no need to hire extra employees to complete tasks that technology can handle.
Eliminates Human Error/Improves Accuracy
With digital accounting software, transactions are recorded automatically which eliminates the possibility of numbers being entered incorrectly or data slipping through the cracks.
Analyzing Real-Time Data & Forming Predictions
With real-time data being automatically recorded, the back-office accounting team is always up to date on the company’s current financial situation so they can focus on the future. They can use software to easily analyze data, identify trends, and make predictions which helps the business succeed and grow.
Integration & Collaboration
Digital back-office accounting keeps everyone on the same page and makes working together a breeze. As mentioned previously, using cloud based accounting software seamlessly integrates tools and data sources such as a company’s website, inventory records, and electronic invoicing and payment system.
Digital back-office accounting also connects people and makes collaboration much easier. With cloud computing, data is always up to date so everyone is on the same page. Individuals are able to work on projects and analyze data in real time.
The cloud also offers flexibility, so accountants can work anytime from anywhere. Digital accounting also makes it easy for companies to work with remote employees or use a third-party accounting service.
Trust the Experts in Digital Back Office Accounting
Considering making the switch to digital back-office accounting? Looking for a dependable third-party provider of back-office accounting? Lawhorn CPA can guide you through the process of making the change or the financial and accounting reporting department can fully manage your company’s finances. Our team of exceptional accountants will manage your business’s financial health and use the latest technology to prepare for the future and identify opportunities for growth. Contact us today to learn more about Lawhorn CPA and our services.