Traditional practices and processes can bring a deep sense of nostalgia. This is how we always do our work — and it works — so why should we change it? But in a world where digitalization and automation are becoming a part of our everyday lives, you may want to reassess if your conventional means of doing business is still worth keeping.
While change is necessary, it still matters to take calculated, strategic moves before going through any form of transformation. As a start, let’s discover how the digitalisation of accounting can affect your business.
What does the digitalisation of accounting mean?
Gartner, a technological research and consulting firm, defines digitalisation as “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”
Simply put, digitalisation is the process of adopting modern digital tools, technologies and processes to transform how an organisation operates. In accounting, digitalisation means using cloud accounting tools, business intelligence software, data analytics and other accounting technologies to improve how accountants manage, process and report a company’s data.
How can the digitalisation of accounting affect your business?
The digitalisation of accounting can bring several benefits to your business, such as:
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Increased operational efficiency
Modern accounting tools can automate manual processes, thus reducing the time you need to do your tasks. Through the accelerated completion of tasks, your business leaders can access real-time data to support their decisions.
Collectively, digitalisation can improve your team’s productivity. It can even boost their morale. Instead of spending time on repetitive tasks, they can focus on higher-level duties, which puts their knowledge and skills to better use.
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Fewer human errors
Your financial data should be free of error, lest it should be costly. Adopting digital tools and processes lets you minimise errors caused by manual data entry. As a result, you can be more confident with the accuracy of your financial data.
For example, consider the difference between $380 and $830 (this is called an error of transposition). If you mistakenly entered $830 into your payables instead of $380, you could lose $450. As long as you program and set up your accounting tools correctly, you can prevent such mishaps from happening.
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Lower operational costs
In the long run, digitizing your accounting processes can lower your operational costs. Cloud accounting software, for instance, is cheaper to maintain than traditional accounting software. It’s also more scalable. Rather than buying expensive hardware for each computer, cloud-based software lets you subscribe to a monthly or yearly plan. It also allows shareable access where your team members can sign in simultaneously to one account instead of using separate accounts on their desktops.
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Better data transparency across your business
With its shareable feature, the financial data of your business can be more accessible and transparent to your key stakeholders. This transparency can prevent potential misunderstandings among team members while reinforcing the accountability of the person responsible for maintaining your financial database.
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Deeper insights into data
The top accounting software providers — such as Spotlight, Xero and QuickBooks — are equipped with reporting and data visualisation capabilities. These features are useful for processing and presenting insights in a digestible format.
Here’s a bonus resource to guide you through your digitalization initiatives.
Despite its merits, digitalisation can still give rise to some challenges, including:
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Budget constraints
The capital costs required to digitalise accounting can be too heavy for some businesses, especially for those with a limited budget.
In case you’re experiencing this predicament, you can begin with the digital tools offered by the Australian government. View the list of digital tools here.
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Lack of expertise
Expertise is crucial in embracing digitalisation. Without the right knowledge and skills in using modern technology, your team will only go back to what they’ve been accustomed to.
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Internal resistance to digital adoption
But what if your internal team opposes the idea despite the expertise to start the digital transformation of your accounting department? Resistance to change is a normal part of any transformation project. Some may fear losing their jobs while others may simply be unaware of its benefits.
To address this, it’s important to let your team know why this change is necessary and how it can help them in terms of career growth and development.
Read Next: 6 Benefits of Cloud Accounting Software for Small Businesses
Start off your digital transformation journey on the right foot
Like every business transformation, the digitalization of your accounting department requires careful planning, robust strategies, and effective implementation methods. If you need help with these areas, contact us today to discover how we use digital tools to drive your business with intelligence.
