Digital accounting: what is it? Advantages and how it works
In the midst of the digital revolution in the business world, digital accounting is enough to provide a more accurate and real-time analysis of business finances, facilitating strategic decision-making and optimizing processes.
In this context, this text will explore the impact of digital accounting, its advantages and challenges, and how the integration of technology and innovation becomes fundamental to modern financial and accounting management.
What is digital accounting?
To understand digital accounting, let's first dwell on the concept of accounting. Accounting is a science that studies and practices, basically, guidance, control, and recording functions regarding acts and facts of the economic administration of a business (and also of the Public Administration).
Simply put, accounting considers the theoretical and practical importance of calculation methods and records of financial movements of a firm, company, or business activity.
This social science acts as an arm (or backbone) of Economics and Management and, in a strategic way, helps to manage the assets of companies through accounting records of facts, acts, and their respective income statements.
A company's decision-making can and will be influenced by accounting, in the figure of the accountant. It is through their strategic indications that the entrepreneur can follow the best path towards success and profitability.
In this sense, digital accounting is an evolution of traditional accounting, driven by technological progress and the need for more agile and efficient processes. It consists of the use of systems, softwares and digital tools specialized in managing, analyzing, and recording a company's financial operations.
Unlike conventional accounting, which is often based on physical documents and manual processes, digital accounting automates a large part of these activities, making them more accurate, fast, and accessible.
What is the purpose of digital accounting?
The primary objective of digital accounting is to modernize and optimize the financial and accounting management of companies, in line with the demands of the digital age.
Thus, based on it, it is possible to use technology to automate routine tasks, accelerating accounting processes, minimizing errors and freeing up time for strategic analysis.
How does digital accounting work?
Digital accounting works through the integration of technology and automation into traditional accounting and financial processes, as we can see below:
Digitization of documents
Physical documents, such as invoices, contracts, proof of expenses, and others, are scanned through scanners or mobile applications, converting them into electronic files.
Accounting software
Use of specialized accounting software that centralizes the company's financial and accounting information, allowing the recording, processing, and secure storage of data.
Integration with data sources
Systems integration accounting with other data sources, such as banks, payment systems, and business management systems, to automate the import of relevant information. This allows the data to be processed in real time, allowing an updated view of the company's financial situation and aiding in timely decision-making.
Automated transaction launch
Financial transactions are automatically entered into the accounting system based on integration with data sources, minimizing manual errors and streamlining registration. These entries are categorized according to the company's chart of accounts, making it easier to organize and analyze the information.
Analysis and reports
Accounting software generates reports and analyses based on the processed data, offering insights about the company's financial performance, costs, revenues, cash flow, and other aspects.
Information Security
Safety measures are implemented to ensure the protection of sensitive and sensitive data, including encryption, user authentication, and regular backups.
What is the difference between digital accounting and online accounting?
After the modernization of traditional accounting, the terms digital accounting and online accounting became a reference when talking about the digitization of processes. However, although they have similar characteristics, the two concepts have some differences.
Online accounting appeared in mid-2012 and is nothing more than carrying out company accounting through systems with technology in favor of the Tax Authorities. This type of accounting seeks to resolve legal obligations in a simple way and at a low cost, while still following a bit of the traditional model.
Meanwhile, digital accounting understands that, to improve the efficiency and results of its clients, it is necessary to optimize processes and tasks, automate releases, and integrate systems.
As an example, we can mention that, in online accounting, the client still has to send the accounting information to the accountant manually, while in digital accounting this is done in an automated way.
What are the advantages of digital accounting?
The idea of accounting in the digital age is not, in any way, to replace the accounting professional, but to provide them with tools that can add flexibility to their profession, and improve their production process while predicting an optimal customer journey, exponentially increasing the value perceived by them.
Thus, we will understand some of the advantages added to this type of accounting.
Increased productivity and time optimization
By automating routine processes, digital accounting accelerates data processing, report generation, and the closing of accounting periods, resulting in a faster delivery of crucial information for management and allowing accountants to focus on strategic analysis and activities with greater added value.
In addition, the integration between different systems facilitates the exchange of information and avoids duplication of efforts, improving operational efficiency.
Cost reduction
By increasing productivity and optimizing accountants' time, the automation of accounting processes also reduces the demand for labor, resulting in savings in personnel costs and allowing for a more efficient operation.
In addition, the digitization of processes also reduces the need for physical documents and prints, reducing the costs associated with paper, printing, transportation, and storage.
Improved document management
Digital documents are easily organized electronically, allowing remote access to accounting information. Anytime, from anywhere, accountants and stakeholders they can access the data, manage documents and share information securely.
Increase in process safety
Digital accounting allows the implementation of automatic backup strategies and cybersecurity measures, ensuring the security and integrity of accounting data against loss and attacks.
More efficient service
Digital platforms facilitate instant communication between accountants and clients, clarifying questions and providing support quickly and effectively. In addition, accountants can access information from their clients remotely, allowing for a more agile and efficient service, without the need for physical travel.
Why use electronic signatures in digital accounting?
The presence of electronic signature digital accounting represents a fundamental milestone in the modernization of processes within this sphere. After all, when referring to digital accounting documents, we are, by extension, addressing equally digital processes that require authentication and legal validation.
In this scenario, electronic signatures stand out as an essential tool to simplify and accelerate document management and authentication. It offers an effective way to guarantee the legal validity, authenticity, and integrity of records, providing security and trust to digital accounting processes.
In addition, electronic signatures also bring greater operational efficiency, eliminating any physical and bureaucratic barriers that may have remained in relation to traditional accounting.
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