Reminder of accounting rules
Accounting must be done on a day-to-day basis....
Article 14 of the Acte Uniforme relatif au Droit Comptable et à l'Information Financière (AUDCIF) stipulates that «the accounting organization must ensure that basic information is recorded exhaustively, ‘from day to day», and without delay; that recorded data is processed in a timely manner; and that the required documents are made available to users within the legal deadlines set for issuance".
The mass is said...
Findings
As part of our bookkeeping, auditing and accounting support services, we very often notice delays in bookkeeping and the production of financial statements; the so-called ‘tax period’ is a stressful time for both the client and the firm's staff. Financial statements are often filed on the last day, sometimes causing bugs on the tax authorities' financial statement filing platform.
There are several reasons for this ‘dysfunction’:
- State of mind and internal control environment
In our opinion, the manager's mindset is one of the main factors behind the absence of real-time accounting, and the company's inability to obtain real-time accounting information. Indeed, if the manager sees accounting as a mere regulatory constraint, it will be difficult to obtain accounting and financial information in real time. Managers do not really care about the accounting impact of their decisions, and do not pass on the information required for proper bookkeeping. Managers need to set an example and know that, at the end of the day, everything goes through the accounts (nothing can be hidden). It's also important to realize that accounting is a steering and decision-making tool.
- Competent accounting staff
The competence and mindset of the accounting staff are also causes of the lack of real-time accounting.
Staff must have the necessary accounting, organizational and soft skills (communication, persuasion, pedagogy) and experience, depending on the size and complexity of the organization.
The mindset of staff is also important; we often come across accountants who always leave things to the last minute, or who wait until the end of the month to process all operations, resulting in unnecessary overload and unavailability of the information needed to make decisions.
- Work procedures
The absence of procedures is the third cause, in our opinion. As required by the AUDCIF, the company must put in place an accounting organization and procedures manual. This manual describes how accounting journals are organized, how information is processed (receipt, allocation, entry, filing, archiving, etc.) and so on. It helps to define roles and responsibilities in the processing of accounting information. If your accounting is outsourced, the operating procedure between the company and the accounting firm can be described in this manual. Your chartered accountant can help you set up this manual and organize the filing system to make life easier for everyone involved (see our recommendations for the minimum organization required to keep track of your accounting).
- Work tools
Companies often lack collaborative working tools and accounting document processing software that enable real-time sharing of information between operational staff and the accounting department. The accounting software used is not shared by the accountant; accounting becomes a ‘black box’ until the financial statements are produced.
How to set up real time accounting
What's it all about?
As an entrepreneur or CFO, you need real-time information to make the right decisions at the right time.
Real-time accounting means collecting and processing information in real time, without delay, to provide relevant indicators and information for management purposes.
Information will also be available wherever you are, and there will be no constraints on access to information.
What's in it for me?
- For the company manager :
- Information for decision-making at the right time; ;
- Keep your commitments to your partners and stakeholders;
- Strengthen credibility with shareholders and bankers in relation to financial information
- For CFOs: better budget management, improved visibility for negotiations with financial partners
- For the accountant: time savings, efficiency and less pressure when closing the accounts.
- For the statutory auditor or chartered accountant: real-time accounting will enable better planning of interventions, real-time advice and certification of accounts on time. A well-organized company that has set up real-time accounting can better negotiate the fees charged by its statutory auditors, by reducing the time needed to carry out their work.
How do you get there?
- Mindset and culture
For real-time financial information to be available, it is important for the control environment to be well established within the company, and for the CEO to set the tone and example. Accounting must be seen as a steering and decision-making tool, and the means to achieve this must be made available to the accounting team.
- Organization
Good organization is essential for real-time accounting. You need to define the internal organization (who does what) and set up clear procedures for processing information: customer and supplier invoices, payments, etc., and manage any interfaces with other software.
- The right tools: take advantage of existing digital tools on the market
- Google Drive for document sharing. Accounting documents can be scanned and saved in folders created for this purpose by year, month, transaction type, etc.
- Expense claim management to enable employees to enter their expense claims in real time and facilitate reimbursement
- Cash desk management: there are solutions for managing a workflow of cash desk expenses to facilitate accounting.
- Banking interface: there are solutions for retrieving banking information and reconciling the accounts.
- Review your information processing process
To implement real-time accounting, it's essential to review your information processing and set up the right procedures. Formalized procedures help to ensure continuity in information processing. The company can enlist the help of its chartered accountant for this task. If accounting is outsourced, this is an opportunity to define working relationships
- Training employees in soft skills
Employees need cross-functional skills and ‘soft skills’ that go beyond accounting: a sense of initiative and organization, a focus on analysis, good time management, etc.
- Inform and involve stakeholders:
- Suppliers: ask suppliers to submit invoices by e-mail or on a platform where electronic documents are available. Document recognition solutions available in certain accounting software packages will facilitate the capture of basic information.
- Banks: most banks offer real-time access to bank accounts, making it easy to retrieve information and reconcile bank transactions with accounting in real time. We recommend giving preference to payments by bank transfer, in order to ensure reliable cash flow forecasts unbiased by suspense items.
- Customers: the company needs to set up an invoicing and collection system that allows direct retrieval of accounting information once the invoice or payment has been validated. ERP systems on the market can easily manage this functionality.
- The accountant: if your accounting is outsourced, set up tools for sharing information and documents, and avoid physical transmission as much as possible, which carries a risk of confidentiality and loss of information.
Conclusion
As we have just seen, the implementation of real-time accounting depends on the manager's willingness and interest in accounting as a management tool. Secondly, the accounting team needs to have a real time culture and the right tools to process the information. High-performance processes and solutions need to be put in place, and they need to involve the company's partners: suppliers, banks, others...
