Digitalization is causing profound change in all areas of social life and the economy. While some are actively discussing Industry 4.0, time seems to have stood still in many accounting offices. As always, documents are filed in folders and endless rows of data are typed out to make them accessible for electronic processing. In the rush of daily operations, errors can quickly creep in. It is therefore understandable that in only 5% of companies do the December business evaluations align with the annual financial statements.
While there have been strong efforts for some time to leverage modern technology and gradually transition to digital accounting, there are currently no reliable figures on how far this process has actually progressed. Small and medium-sized enterprises, in particular, feel overwhelmed by this step. However, it is often ingrained thought patterns that hinder progress. In the startup sector, the proportion of companies that already save significant labor through digital accounting is considerably higher than in established companies.
Accounting is Indispensable
No company can operate without proper accounting. On the one hand, the figures are needed to effectively plan economic processes within the company and to objectively assess the economic success of business activities. On the other hand, every entrepreneur is legally obliged to record, store, and make available all business activities and transactions for potential audits. To meet these diverse requirements, companies must invest significant time and costs in accounting. However, many routine accounting tasks can already be largely automated today.
The Advantages of Digital Accounting
In traditional accounting, all records are processed in paper form. Since much data is already transmitted electronically today, an absurd situation arises where emails and files are printed, coded, and then re-entered into an IT system. To avoid such a media break, it is more sensible to digitize documents immediately. This approach helps avoid sources of error and can significantly reduce personnel expenditure in accounting.
Furthermore, material costs decrease, and the environment benefits, as fewer printers, toner, and paper are required. When documents and records are digitally captured, the time-consuming search for individual documents is eliminated. Data can be forwarded to the tax advisor promptly and without postage costs. The physical transfer folder becomes obsolete, and data for important business decisions can be generated at the push of a button. If accounting is organized completely paperless, all authorized persons can access the necessary data from any location.
Key Considerations
Since January 1, 2017, the GoBD, or “Principles for the proper management and storage of books, records, and documents in electronic form, as well as for data access,” have been binding. They define how the “Principles of Proper Accounting (GoB)” must be implemented by software systems.
Documents must be stored in the form in which they were received by the company. If invoices are originally received electronically, they must also be filed and stored in electronic form. Furthermore, all business documents subject to retention, especially commercially and tax-relevant data and records, must be processed, stored, and immutably archived in compliance with GoBD for the ten-year retention period. Throughout the entire retention period, they must be readable, unalterable, and machine-evaluable at all times.
An audit-proof, digital document storage system is absolutely necessary.
All commercial processes must be reviewed against these requirements. Supporting software systems must also be checked for their GoBD compliance. Access rights to data must be regulated, and the affected processes must be documented within the company using procedural instructions.
With standard operating systems, GoBD-compliant archiving is only possible with a very high organizational effort. Changes are not traceable in Excel or Word. Businesses working with these and processing a lot of digital data either need an internal IT solution that archives everything, or an external partner to handle the archiving.
Adapting accounting processes and acquiring new technology are essentially the biggest challenges on the path to digital accounting.
Collaboration with External Service Providers
More and more companies are focusing on their core competencies and outsourcing routine tasks to external service providers. What could be more natural than combining the transition to digital accounting with Business Process Outsourcing (BPO)? With a specialized accounting service partner, internal processes can be professionally prepared for digitalization. It is not enough to simply adapt digitalization and new IT solutions to established processes. In addition to merely taking over administrative tasks, the service provider also covers the associated IT environment.
Expenses for hardware, software, and data backup are eliminated. Documents are stored on secure servers in high-performance data centers and can be easily found via search queries. Neither water damage, fire damage, nor human error are to be feared. The digital originals are secure – even from data theft.
If you opt for BPO, you receive a professional solution and avoid all complications that are almost inevitable during the lengthy transition to a paperless office.
How are you approaching the transition to digital accounting? What challenges do you foresee? We look forward to your comment.
Image source: Fotolia.com, Photographer: WrightStudio
