Preparation and structuring of receipts and data
Let me start by defining what “pre-accounting” is. The term refers to all the work that has the be done before the actual accounting/bookkeeping process can start. In other words, we’re talking about the boring work with collecting, registering, enriching, and approving receipts, expenses, travel expenses, time registrations, mileage etc. So, it can be described as preparation and structuring of receipts and data before the bookkeeping can be done.
The responsibility of the kind of work usually lies with the employees in the business and not with the finance department.
However, the finance department is highly dependable of the “pre-accounting” work, because this is where the appropriate and needed documentation for the accounting process is secured. Finance employees usually needs to possess a certain amount of patience, because the colleagues in the business isn’t always structured around their “pre-accounting” work. The ability of the finance function to run a fast, precise and efficient bookkeeping process depends on others to deliver documentation, both in a timely matter and in the right quality. If you’re responsible for a finance function or work in one, then you must question yourself, whether you can live with not being in control of this?
Far from every organization has a break with an inefficient “pre-accounting” process on their agenda. And that’s despite the fact, that it’s obvious how valuable it is for those who’d already pulled the trigger and implemented an automated and digital process. Some might argue that the responsibility for the “pre-accounting” process doesn’t rest on the shoulders of the finance function. In the end, however, the finance function is accountable for missing receipts or a lagging bookkeeping process. As I’ve touched upon previously in another context, the finance function is a likely candidate to spearhead the digital transformation of an organization. And digitizing the “pre-accounting” process is an ideal place to start.
I believe that the “pre-accounting” process should be orchestrated in a way, so that the transition to the accounting/bookkeeping process becomes completely seamless. If you do it the right way, it’s possible to enable the employees in the business to manage a large part of the entries before the receipts land with you in the finance department. The only requirement is that you think in digital options. I’ve formulated 4 recommendations, that’ll send on the right track to achieve an efficient approach to “pre-accounting”:
1. A flexible and intuitive tool
A flexible and intuitive tool is key when you want to collect data from the hands of busy sales reps, consultants or other employees in your organization. An automated workflow and a mobile app are examples of tools, that’ll make it possible for the employees to register expenses, mileage and time consumption on their smartphones. They must be able to handle this, when they’re on the road. It’s flexible and saves time, as the user can register the expenses the moment they occur. For the finance department, ongoing expense registration is an advantage, as it’ll cater for faster passage to the bookkeeping process. It’ll help get closer to a real-time overview. However, these types of tools are nothing without an intuitive interface. Put differently, it must be easy and simple for the employees to manage the work with collecting and registering receipts. It might sound somewhat unbelievable, but with the right tool for the job, it’s possible to pull out the boring and cumbersome element of the task.
2. Go digital!
As mentioned earlier, the “pre-accounting” process is born to be digital. There’s nothing but advantages to harvest by digitizing this process. You’ll see error rates drop, you’ll get more precise data and you’ll secure full digital documentation. Manual tasks, such as working through piles of old receipts, matching expenses with the right credit card transactions or allocating costs to a specific project, is over. With a well-defined process and the right system in place, everything will be automated. Most digital systems also come with comprehensive integration options. It could for example be integrations to company credit cards, that’ll enable the card transactions to be easily enriched with “pre-accounting” data and a digital copy of the receipt. It can also be the integration to an ERP or bookkeeping system, which will secure an even more seamless transition from “pre-accounting” to accounting.
3. The option to control financial dimensions
The option to control financial dimensions in a “pre-accounting” process is preferable. Dimension control is the element that’ll provide you with the ability to increase the precision and detail of the “pre-accounting” work. For example, when we talk registration of expenses and mileage, the dimension control can refer to the ability for the employee to link a department and a project to the given expense. Combined with a registration of the cost type, the bookkeeping will be neatly precise. For organizations, that works according to the Activity Based Costing (ABC) methodology, it’s an advantage with options to configure financial dimensions. Dimension control also makes it easier to create transparence. It’ll be easy to control costs for specific employees, departments or projects. It’ll help reduce error margins.
4. Travel to the cloud!
A cloud-based solution to support your “pre-accounting” process will provide easy access to data. The organizations that run a manual “pre-accounting” process knows that it’s very time consuming. I’ll go to the point, where manual collection of receipts and following keying in information (perhaps even in multiple systems) is a straight up waste of resources! Nobody should live with this. With a cloud-based solution, data will be centralized. Most cloud-based solutions for “pre-accounting” will, as mentioned, integrate with other tools. A digital, automated and mobile “pre-accounting” process will, guaranteed, provide increased efficiency – both on the employee side and in the finance function. It makes sense. The digital transformation is rolling, and the “pre-accounting” process must be included. The finance functions need to seize control with the “pre-accounting” process. The upsides are substantial. Apart from time savings and more precise bookkeeping, you’ll build a data foundation, that’ll be a source for valuable insights to the spend patterns of your organization.