Dematerialization, or DEMAT, is the process of using electronic record-keeping tools to manage financial transactions, eliminating the need for physical documentation. This approach allows for easy access, storage, and sharing of records and enables multiple users to work on the same documents simultaneously.
Also known as DEMAT, dematerialization is a process that moves away from using physical documentation to maintain financial records. Instead, dematerialization uses electronic record keeping tools to track all types of financial transactions. The range of documents that can be managed effectively with software applications includes just about everything from basic accounting records to inventory certificates.
One of the main advantages of this approach to electronic accounting is that the need to physically store copies of balance sheets and other accounting documents no longer exists. Thanks to scanning technology, it is possible to make electronic copies of supporting documents that provide references to line items in electronic accounting records. Everything can easily be hosted on a hard drive or server. To protect against loss or corruption, backup files can be easily created and stored offsite.
Along with basic accounting records, dematerialization also allows you to eliminate the need for physical inventory certificates. Electronic copies of shares may be archived for easy retrieval. Should the shareholder need copies of the shares quickly, they can be accessed and transmitted via electronic methods such as email or secure FTP transmission.
Dematerialization also makes it possible for authorized individuals to work with the same documents at the same time. With physical accounting methods, it is often difficult for two people to work on the books at the same time. When the accounting process is completely electronic, several people can perform different functions at the same time. It’s possible for a team to create new invoices, post incoming payments for past invoices, and prepare a wide variety of reports all at the same time.
There is no doubt that the dematerialization process can benefit users in many ways. Record keeping requires much less space, can be easily accessed from remote locations and allows multiple users to access the ledgers simultaneously. Today, there are free, fee-based, accounting and financial records software packages that can help any business or organization achieve full dematerialization status with ease. In the case of accounting software, there are also online products that allow an individual or a business to establish a set of virtual ledgers. Securely uploaded to the product’s servers, authorized individuals can access and work with records from any location with an active Internet connection.
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