Accounting technology has continued to evolve and shows no signs of stopping. In fact, 56% of accountants say that technology is increasing their productivity. As more and more businesses look for accelerated reporting, it’s important to understand how your business can utilize real-time accounting. But how should you categorize and organize the data being produced? How can you turn data into actionable insights for your company? Continue reading to learn more about the benefits of real-time reporting and accounting.
What Is Real-Time Accounting?
Real-time accounting describes the process of updating your books at all times. This type of accounting provides the benefits of an easily accessible dashboard where your entire company can view all of your metrics and insights.
Real-time reporting keeps you updated on revenue, account balances, and profit. It reveals cash flow analysis and eliminates human errors resulting from manual data entry. Traditional accounting, the opposite of this method, slows down the process of profit/loss analysis and delays inventory and stock analysis.
How Does Real-Time Accounting Compare with Traditional Accounting?
Traditional accounting — whether you use cash basis or the accrual method — is sluggish and requires laborious data collection when compared to real-time accounting. You have to commit to more manual processes and it takes much longer to generate the same amount of data.
Real-time accounting automates processes and ensures your financial information is always accurate, allowing your team to track key performance indicators (KPIs) and stay on track. It involves descriptive statistical references and utilizes raw data to provide a statistical analysis. Large and small businesses can benefit from these data analytics and save money in labor and long-term strategy creation. This automatic method enables your employees to unpack the data and make more informed decisions.
The primary difference between these two methods is the amount of insight the customer receives about their financial status. With traditional accounting, a customer wouldn’t have access to February’s reports until mid-March. With real-time reporting and accounting, the customer has access to accurate data from February throughout the entire month. it also minimizes the threat of fraudulent financial reporting.
A Glance At The Benefits of Real-Time Accounting:
- Improved cash flow management.
- More efficient pricing, hiring, stocking, and margin analysis.
- Increased savings and profits.
- Faster identification of tax liabilities.
- Increased ability to reduce or eliminate penalties for paying late taxes.
- Reduced human error regarding compliance directives.
- Increased insight into profit/loss statements.
- Increased insight into fraud or identity theft.
- Lowered accounting costs.
- Freedom to focus on core initiatives.
- Increased ability to be proactive in business management and capitalize on opportunities that show themselves in the numbers.
Below, we explain these benefits in more detail.
What Are the Benefits of Real-Time Reporting and Accounting?
Control Who Has Access to Your Reports
Real-time reporting offers significant advantages by providing actionable insights instantly. Leaders can manage access to these reports, enhancing collaboration and efficiency across the organization. Tailored reports can be distributed automatically, ensuring relevant information reaches the right people at the right time. For example, a CFO can set up alerts for departments exceeding their budgets, optimizing decision-making. Real-time reporting also features Business Intelligence and analytics, integration, and data integrity, streamlining the data analysis process.
Investment and Financial Decision-Making
Research by the Association of Chartered Certified Accountants (ACCA) shows that real-time financial information boosts investor returns, corporate governance, and investment opportunities. The ability to customize reports and facilitate real-time collaboration enhances accuracy and transparency. These benefits directly impact cash flow management and help organizations scale more effectively.
Profit and Loss and Financial State
Real-time reporting provides immediate access to income statements and P&L reports, allowing businesses to compare channels and make informed decisions. This continuous access eliminates delays in financial reporting, ensuring accurate stock evaluations and up-to-date financial insights, which are crucial for effective communication and strategic planning.
Fraud Prevention and Audit Efficiency
Real-time reporting plays a critical role in preventing financial fraud by keeping financial data current and accurate. This continuous update process ensures compliance and reduces the risk of false financial reporting, protecting the organization from potential legal issues.
Versatility of Reports
With real-time financial data, businesses can generate a broader range of reports quickly, easing the pressure of month-end reporting. This versatility provides executives with deeper insights into future financial objectives, supporting more informed strategic decisions.
Scalability and Costs
As your business grows, you need more readily available access to real-time reporting and accounting. This can increase costs and hinder your bottom line. Cloud-based solutions ensure your executives have access to reports from their smartphones and laptops, which eliminates the need for excessive hardware or software. These cloud-based solutions simplify reporting for small-to-medium-sized businesses that would otherwise only be available to larger companies.
How Do You Choose Your Real-Time Accounting Software?
Choosing your accounting software requires a few elements. First, consider the size of your business and the number of clients your business has. Depending on these elements, you will want software that has a wide range of tools.
You will also need to consider your budget. With real-time reporting software, you can scale your solution based on the needs of your company.
There is a wide price range when it comes to accounting software. You will need to determine your overall budget before proceeding. Lastly, you will need to determine how you plan to use the software.
Some businesses will use it primarily for the P/L insight it provides. Others will want to access the inventory and stock analysis feature. Clearly deciding what tools you need will help you better tailor your software option.
Analyze Your Current Business Goals
Before you implement real-time reporting, you should choose reporting software that aligns with your goals. Answer where you plan on securing capital in the future. Do you have outside investors or VC funding? Answering these questions will better prepare you for the types of software you need to implement in your accounting infrastructure.
Data Analysis
Real-time accountants have expanded their roles within the organizations they serve. Where their roles used to be primarily bookkeeping-based, they now require more data analysis. Data analysis is an essential skill for accountants. They should be able to clearly depict the insight garnered from data and communicate it to executives.
Bottom Line: The Benefits of Real-Time Reporting and Accounting
Every finance team seeks to close faster and minimize the time it takes to issue monthly or quarterly financial statements. Real-time accounting simplifies this process so you can easily implement the correct accounting procedures into your business. This technology ensures your entire team stays on the same page regarding financial strategies. It also gives your employees open-door access to valuable insights that can change the course of your business.
Entrust Fully Accountable with your real-time accounting. You’ll receive a fractionalized team of accountants who tailor your reporting to your industry’s needs. Whether you need a strategic CFO or a controller, we’ll implement tools into your business infrastructure to maximize your financial potential.
