Automated accounting uses software to simplify the process of manually entering data, cross-posting accounts, and generating reports. It can also link to credit card and bank accounts, making payments and receiving electronic invoices more efficient. It is a basic component of most ERP strategies and can increase efficiency and cash flow.
Automated accounting is an approach to keep accounting records up to date with the help of accounting software. Business software of this type is often configured to allow easy cross-posting of accounts receivable and payable, eliminating the need to enter multiple postings to maintain accounting records in accordance with generally accepted accounting principles. Many of the most popular automated accounting systems can be tailored to meet the needs of the company purchasing the software, allowing custom reports to be created and using standard report formats included in the software package.
The automated accounting process can save a great deal of time when posting credits and debits. Rather than having to make entries in different ledgers, as is common with more traditional methods, most accounting software packages are structured to allow manual entry of the transaction in one field on one page. From there, the software automatically relates the transaction to all other relevant records within the software package. Once the transaction is entered, the data will be included in any generated report that is structured to cover the date of that entry.
In addition to simplifying the process of manually entering data into an automated accounting system, many accounting software packages can be linked to credit card and bank accounts. Using the software’s built-in interface, payments can be forwarded to vendors and automatically applied to the appropriate vendor account and invoice number within the accounting records. At the same time, customers can remit a payment online through links that the system includes with any electronic invoice distributed to those customers. Using the link to submit the payment, the software automatically receives the payment, posts it to the correct customer account and invoice number, then routes the payment to the bank account specified by the end user.
Today, automated accounting is considered a basic component of most ERP or enterprise resource planning strategies. Secure features and time savings can greatly increase the efficiency of the accounting team. In addition, the accounting software includes features that make the generation and distribution of electronic invoices to clients an extremely efficient tool. Using those features makes it possible to receive payments in a short period of time, either because the customer can approve the payment and mail a check in less time, or by using the option to send an electronic payment. In either scenario, the company benefits from an increase in its accounts receivable receipts in a short period of time, giving the company access to more cash on hand to run the day-to-day operation.
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