Technology has definitely helped businesses develop further over the last couple of years, and recently new technologies have definitely changed their approach to several aspects of their management.
Good examples of this include things like marketing, which now has evolved to digital marketing, and customer service. Now more than ever both aspects of management rely on technology since it is far more efficient, organized, and easy to deal with.
There are certain procedures, however, that still rely on outdated methods of management. When it comes to bookkeeping and accounting, it is true that there are many companies out still rely on more traditional forms of organization which might be perceived as ineffective in comparison to new techniques.
In this article, we will cover these two aspects of businesses management in detail and talk about the way they both influence companies, as well as cover some of the reasons why companies should update their procedures when it comes to bookkeeping and accounting.
Understanding the Basics of Bookkeeping and Accounting
Bookkeeping and accounting can be described as the processes in which companies register most of their transactions, and it is a necessary aspect of any company regardless of their size or the products and services they provide.
They are both related to the act of registering various transactions for the sake of using them whenever they are needed in any legal process involving taxes. They are also done to properly understand the performance of a company and take decisions based on it.
A good example of this is how, by saving documents related to services provided, sales made, operations completed and events related to investments or purchases of products or services, it becomes easier to properly estimate the performance of different procedures and changes to determine whether they were successful or not.
It is also absolutely necessary to determine whether a partnership or business relationship with another company has been beneficial for all the parties involved, which is very common in the world of businesses.
Overall, these two aspects of management greatly determine whether a company is being successful or not, and it becomes easier to predict the performance of future endeavors. This also facilitates the decision-making processes of any company, which are very important for the growth (and management of said growth) of any brand.
Different Types of Accounting
Something important to note is that there are different types of accounting processes, which are determined by the type of recordings done by the accountants in charge. Although accounting, in general, is the process of registering a piece of information about something, the type of information registered is what determines its category. For example:
- Financial records: which are the records involving an accounting period (which tend to be a yearly-based period) and it is used to determine the profit of a company through its annual financial statement. It is also a requirement for procedures involving taxes.
- Managerial records: this one registers pretty similar information to the one registered by financial accounting processes, however, it manages the information in a different way, mostly on a monthly or weekly basis so staff members can use that information in decision-making procedures that might influence things like predictions or budgeting.
- Cost records: financial and managerial records can greatly influence the way a company makes decisions, and cost records are the ones that influence the way a company invests its money in many of its procedures.
A good example of this is how the money invested in the creation of a product is recorded for the sake of determining whether the techniques used are the most suitable for the company’s financial situation.
Each form of accounting is capable of influencing the future and expectations of any business to a certain extent, but how are they performed?
How It Is Done in Today’s Society
Accounting and bookkeeping often require the help of a professional who is trained and experimented with within these aspects, just because of how delicate they can be. Any mistakes or problems related to these aspects can affect the results of the data, which can influence the decisions and the internal procedures of any company for the worse since these decisions will be made through faulty information.
However, thanks to technology, bookkeeping processes have become much simpler, and as long as the person is trained to manage these new technologies (commonly referred to as software or programs) the chances of mistakes being made can be greatly reduced. Still, it is true that there are companies out there that still manage their information using traditional methods, like paper-based documents.
Although it is common that most companies out there still work using paper documents, some companies out there are updating their procedures to save up those documents in a cloud (or server) so they have access to said information anywhere and whenever, and that information can also be accessed by multiple people at the same time.
This, of course, directly translates into a more organized management process which is far more efficient than most traditional methods of document organization. It is also safer in comparison since that information stored in the cloud is tightly secured.
Thankfully, if a company doesn’t have enough time and staff, they can rely on specific service providers that store their information through the use of scanners to convert paper files into digital files which can be stored in servers, then be accessed by their customers whenever they are needed.
The fact that the information stored in the cloud can be accessed much faster thanks to its level of organization is the actual appealing of new technologies, and the main reason companies are updating their procedures, for the sake of protecting the information of their processes as well as their customer’s data.
This also opens new doors for new technologies to be applied in some of their processes, which directly analyze the data stored in the cloud as long as it is correctly inputted into the software. However, this might require the help of a professional (or special training for a staff member) to come up with accurate results.