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Article:

Accounting for the 21st century

15 June 2020

Ivan Kovář , Partner |

Modern accounting is not the same as our grandparents knew it (writing on paper ledgers) or as our fathers remember it (formal bookkeeping on a computer, as it is still commonly done in its raw form).

In modern 21st century accounting, document entry is only one of the components of a comprehensive and flexible system of document processing in the company. The outputs from accounting then provide easy-to-understand data usable for everyday operational and long-term strategic decisions. Accounting is a huge source of information that can be transformed into a significant competitive advantage. At BDO we help our clients get the most out of accounting.

So how does 21st century accounting work?

The work that machines can do should be done by machines. No accountant wants to spend their time copying data previously created by another accountant in another company. Nor does he want to create mountains of files which are then stored all over the office.

Modern accounting is part of the company's electronic document circulation system. In addition to its primary function of bookkeeping, it also provides data for verification and reporting, i.e. for management and decision-making.

So what does modern accounting look like in the 21st century? Let us illustrate this with the most common type of accounting document – the invoice received:

 

 

1. Document electronically

The invoice will arrive in your company in paper or electronic form. The first step is to unify invoice inputs into a single electronic form. Fortunately, you can elegantly do this with virtually any affordable scanner. Once all inputs are in electronic form, they are transferred to a secure storage – the BDO Portal.

The BDO Portal

The BDO Portal is a specially set up and secure document repository that is shared between you and BDO. Of course, such sharing meets the requirements of the GDPR and is significantly more secure than e-mail. At the same time, thanks to the BDO Portal, you have all current information at your disposal with one click, so you will not miss any significant legislative change. The BDO Portal can also be used to set up term tasks or to monitor the fulfilment of structured requirements.

Document sharing itself is remarkably simple. Selected documents just need to be "dragged" with the mouse and saved to the BDO Portal.

2. Extraction

All invoices uploaded to the BDO Portal can be automatically processed by artificial intelligence, which can recognise key elements of the invoice and convert them into digital data (so-called "extract" data) with great success. Artificial intelligence can recognise, for example, the supplier, its VAT number, bank account, date of taxable supply, date of issue of the invoice, amounts on the invoice, VAT breakdown, etc.

At the same time, artificial intelligence takes into account the very important psychological aspect of gaining trust in this tool. Not only does it obtain data, but it also clearly emphasises the field from which it draws this data directly on the invoice for users (see the following picture). This way, any user of the system can easily verify that the artificial intelligence is working properly. Any extraction error can be easily corrected. Artificial intelligence can learn from its mistakes and gradually improve its outputs.

An alternative to data mining using artificial intelligence is to use data sent directly from the supplier. The use of the ISDOC standard, for example, corresponds to this principle. This standard ensures that the formatting of the data is consistent so that its use can be automated. Unfortunately, this standard may not always be fully supported by accounting software, and the use of automatic processing is conditioned by individual settings of the structure of the exchanged data.

Collectively, the extraction system means the end of pointless rewriting of data by accountants. The accountant should post and not overwrite the data.

 

Source: web Rossum 

 

3. Approval

The above procedures will be combined within an approval system that can ensure that documents are circulated, not people. No more stacks of transported documents, no more stamps, no more waiting for the signatory to return to the office. A document can be approved anytime, anywhere, and only the data it needs for approval will be displayed to the given approver.

Are you only interested in the approval of the invoice, the amount, and the appearance of the invoice itself? It's not a problem to set it up that way. All other unnecessary data at this stage will remain hidden from you, although of course they remain in the system. Approval, disapproval, commenting on the invoice has never been more accessible and no stamp is required.

Each approver may add his or her comment or divide the invoice into the centres during the approval process. By saving, the document is passed to the next approver. In addition, any change in the status of the document can be notified by e-mail.

4. Posting

The approval system accompanies the accounting process from document to document. The accounting phase of the document changes for the accountant mainly by using the documents only in digital form. Printouts of paper documents are no longer needed – all you need is a monitor. In modern accounting, the role of the accountant is changing from a "transcriber and printer" to a "coordinator and advisor". The accountant's mind is freed to think about the effects of individual costs and investments on corporate finances.

The accountant checks the formalities of the document in the approval system and at this stage can return incomplete documents to the previous levels of the approval process together with his or her comments. He or she works with the same data on the document, but the process is simpler. The system is intuitive and easy to use, the extracted data is automatically filled in the system. From a psychological point of view, it is huge advantage for the accountant to have the opportunity to control all stages of document processing, including the accuracy of extracted data.

The accountant's main task is to complete the missing data or to modify the data proposed by the system (e.g. pre-accounting). To do this, he or she can, as before, use the document copy function, which works even better than in any common accounting software. Thus, the accountant no longer uses the existing accounting software for routine accounting. Instead, he or she now has the time to consider the impact of individual costs and investments on corporate finance as a whole and on taxes.

Existing accounting system

Data from the approval system is loaded into the accounting system automatically. The current accounting system is still used to prepare financial accounting outputs according to the legal requirements, such as tax return forms and financial statements.

5. Reporting

The accountant's work process is followed by work with data from the company's management, which uses online data from the company's accounting system. Here we see another great benefit of modern accounting – the achievement of effective management through a reporting system that is simple enough to use, but at the same time offers sophisticated outputs according to specific needs and the requirements of different levels of management. The reporting system includes a set of tools that allows users to independently analyse and visualise data, creating individualised reports.

 

Source: web Microsoft 

 

Summary

A comprehensive document processing system from the BDO portal through approval to online reporting fulfils the vision of a system that is simple, secure, efficient and accessible from anywhere.

Join us to open the gateway to 21st century accounting.

 

Jitka Radová, Lukáš Toman, Ivan Kovář

[email protected], [email protected], [email protected]