- How much should you have in cash reserves? In standard
If your accounting function isn’t embracing new technology, you are spending more money than you should in that function. And it’s probably impacting your cash flow due to higher expenses, slower processes, and dependency on snail mail and paper.
Gone are the days of manual data entries, paper checks and snail-mailing invoices. Going are the days of Betty the Bookkeeper with piles of papers on her desk and rubber stamper in hand recording transactions and filing papers in cabinets full of folders.
Betty is a dying breed because accounting technology is quickly replacing her.
For those of you who think that accounting technology is only for your CPA, you are very wrong. If you work with a progressive CPA firm, they are probably sharing documents electronically, sending you documents for you to sign online, and remoting into your accounting systems. Heck, you may even pay through a client payment portal.
What you may not know is that many of those technologies have applications in your everyday accounting function, reducing the need for lots of staff that are slow to close the books and even slower to change. I’m knocking my own industry here, so don’t get offended. Accounting folks have never been on the top of the list of “innovators” or “change agents.”
Why would you need or want to change when everything is running smoothly?
I’ll tell you why—because your competitors are changing. And they are doing more accounting with less headcount and making their interactions (on the accounting side) for their clients and vendors easier.
Here are a few benefits experienced by your competitors who are embracing technology:
They are spending less on office space because they don’t have lots of filing cabinets. Their employees access everything they need from wherever they are working (not just when they are at HQ and can access files)
Payroll is less of a production and has fewer errors. Paper timesheets are gone. Timecards are electronic, don’t require manual calculations and, even better, can allocate labor costs by job for better jobs costing. Not to mention most electronic timecard systems are Department of Labor compliant whereas paper timecards are not.
Their clients love them because their invoices are submitted electronically, they can pay their bills electronically and they can access their statements at any time without having a bookkeeper have to find, scan and email copies of past-due invoices or go through their own AP department to dig up a bill.
Vendors love them because they can be paid electronically, and not have to wait for paper checks or have the hassle of payments getting “lost in the mail.” Your competitors are using new technologies to file and track all vendor invoices, route them for approval and find and fix errors before they go into the queue for payment.
They are spending less in Admin and Accounting. They have fewer employees supporting the business because use tools to automatically enter bills or if they haven’t converted all their bills electronically, have software to read paper bills for data entry.
Their cash flow is under control because electronic invoice submission reduces the cycle time from invoice being received to being paid. They can control when payments are made to their vendors.
New technologies do come with a price tag and once you understand how you and your vendors and customers will use it you may find that they not only save you time but improve the speed and accuracy of your books. It won’t be comfortable for you or for Betty, but it will be good for your bottom line and cash flow.