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 what real-time accounting is and how your business can utilize it.
As a business owner, you recognize the importance of having reliable metrics when making company-wide financial decisions. But how should you categorize and organize the data being produced? How can you turn data into actionable insights for your company?
At Fully Accountable, we understand the future of accounting is not only about speed, but also accuracy. It’s simple: our full-time team of financial professionals implement digital accounting tools that improve your bottom line.
Whether you’re looking for a strategic CFO or controller, we offer scalable outsourced accounting options that seamlessly integrate into your existing accounting structure. It’s time to streamline your business’s financial success. Real-time reporting and accounting is the simplest way to do so.
Continue reading to learn more about the benefits of real-time reporting and accounting.
Why Is Real-Time Reporting the Wave of the Future?
Digital accounting solutions are essential in today’s business environment. The challenge many companies face is how to approach these digital accounting solutions. Every business desires faster insights into their financial health. Real-time reporting acts as an access point for this increased agility and flexibility.
Real-time accounting delivers data immediately, compared to traditional accounting, which has delays. The frequency of this data relieves the pressure from executives who, in a traditional accounting setting, would have had to wait until month’s end to scramble and enact directives.
Additionally, cloud-based accounting solutions enable organizations to scale and reduce costs so they can utilize real-time reports without paying for unnecessary features. These features do more than reduce hand-off times, manual data entry, external spreadsheets, and the errors that accompany these outdated procedures.
They give your organization complete control over the reports you implement into your infrastructure on an a-la-carte basis. This is essential for businesses who need to scale their real-time reporting needs based on the size of their business.
What Is Real-Time Accounting?
Real-time accounting describes the process of updating your books at all times. Utilizing this type of accounting gives you 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 any human errors resulting from manual data entry. The opposite of this accounting method is traditional accounting. 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 is sluggish and laborious 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. 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 February data throughout the entire month.
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 from 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
There are many benefits to real-time reporting. These metrics create actionable insights immediately. Team members across your organization can view these metrics and understand the reasoning behind the strategy you adopt.
Leaders can control who has access to these reports within the organization, streamlining efficiency and improving collaboration. The employees who have access can specifically tailor the reports to their position’s needs. You can also schedule automatic distribution to employee endpoints.
For example, your strategic CFO wants to notify a specific department whenever they exceed their budget. The ability to tailor this information to user-specific needs maximizes efficiency across your organization.
Real-time reporting also features Business Intelligence and analytics, integration, and data integrity. These features facilitate automation and can organize notices, taxes owed, and relationships with taxpayers in files. With options such as a single-view portal, your accountants can drastically reduce the time they take to research this information. All of your employee information is organized in one location, so there is virtually no manual entry.
Investment and Financial Decision-Making
Research published by the Association of Chartered Certified Accountants (ACCA) found that real-time financial information increased investor returns, improved corporate governance, and enhanced investment opportunities. The increased investment opportunities come from a few different areas.
First, they offer decision-makers flexibility to design reports and customize all of your data to specific needs. These platforms facilitate real-time collaboration, accuracy, and visible records of each.
Accessibility, flexibility, and collaboration are the primary benefits of a real-time reporting solution. This greatly affects cash flow and helps organizations respond to the challenges of scaling. It also frees your employees to focus on operations and increase the profitability of your business.
Having readily-available data and metrics at your fingertips ensures you can preemptively respond to issues. Instead of waiting until things are too late to avoid, you can see the signs of a coming storm and shift course.
Profit and Loss and Financial State
Your income and P and L statements are available whenever you need them with real-time reporting. You can access these reports at the click of a button. They also let you check different channels to see how they compare.
From that, you can make the choices that will drive your business in the right direction. These reports are always available, which means you can present them whenever you need to. No more lengthy waits for your accountant to put together reports. You will always have accurate stock and inventory evaluations, which means you will always know how much revenue you have outstanding on goods received and not invoiced.
Having these types of metrics up-to-date creates more accurate P and L statements, which gives you insight into the direction of your business. The accuracy of these statements also facilitates company-wide communication.
Fraud Prevention and Audit Efficiency
Financial fraud is an insidious process that relies on the accuracy of financial information. It’s conceivable that a company commits financial fraud unknowingly (though this is not an adequate excuse to the IRS). Real-time reporting solutions provide an immediate solution to compliance because you know your financial metrics are current at all times.
Without real-time reporting, you run the risk of not being able to accurately identify your compliance status. This opens the window of opportunity for false financial reporting. Real-time reporting technology continuously updates reports for stakeholders and enhances the accuracy of financial information so you never have to worry about compliance or fraud.
Versatility of Reports
When you have readily available financial information, you can create a wider set of reports at an accelerated pace. Frequent reporting relieves pressure from the month-end financial report because managers and executives already understand the challenges they faced throughout the month. Because real-time reporting creates a wider set of documents, your financial executives have more insight into the future financial objectives of your business.
What Are the Challenges of Real-Time Reporting?
Data Analysis and Integration
When implemented incorrectly or managed improperly, real-time reporting will have adverse effects on your company’s financial health. These solutions can quickly add up in costs and integration can further drive these unexpected costs.
Real-time reporting technology uses several sources to pool data and infer insights. Mobile devices, cloud computing, Business Intelligence, and enterprise application integration can all bolster your real-time reporting technology.
While the completeness of your data has obvious benefits, such as real-time accounting and continuous auditing, it comes with challenges. Digital accountants simplify the process and help you avoid wasted time, energy, and money.
The integration of this accounting software and the operation of that software varies depending on your industry. Economic trends and compliance policies affect how your organization utilizes these tools. An outsourced accountant can provide data analysis as well as effectively communicate with you about how you can utilize your real-time reporting.
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 your 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 amount of clients your business has. Depending on these elements, you will want a software that has a wide range of tools.
You will also need to consider your budget. Part of the benefit to choosing real-time reporting software is that you can scale your solution based on the needs of your company.
There is a wide price range when it comes to accounting software and 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
Your real-time reporting software should align with your financial goals for the future. 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.
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 as they should be able to clearly depict the insight garnered from the data and communicate it to executives and throughout the entire organization.
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 into valuable insights that can change the course of your business.
When you entrust Fully Accountable with your real-time accounting, you 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 can implement the right tools into your business infrastructure so you maximize your financial potential.
Contact us today to implement real-time reporting into your accounting infrastructure.