Are you tired of constantly having to redo your expense reports because someone forgot to submit them on time? We feel your pain. That’s where real-time accounting comes in. It’s like a guardian angel for your finances, keeping everything up-to-date and organized in real-time.
What is real-time accounting? Maybe you’ve heard of it but are a little fuzzy on the details. Perhaps you’re questioning if it’s the right choice for your clients or business.
That’s what we’re here for. Here is what you need to know before making the switch.
What is real-time accounting?
As the name suggests, real-time accounting happens in real-time. Pretty self-explanatory, right? It’s a little more complicated than it might seem at first glance.
Real-time accounting tracks expenses, profits, and losses in real time. Rather than waiting to handle the balance sheet, reconcile expense reports, and enter all that data into your accounting software, real-time accounting gives you access to it exactly when needed. Awesome.
That means no more long hours waiting for data—and your clients are happy because they have the data they need to make crucial business decisions faster.
The power of real-time accounting for expense management:
You get access to data fast. Not 60 days later, not 30 days after we closed the previous month’s books. We can do that immediately at the point of purchase or the point of the expense.
How is it different from standard accounting methods?
Real-time accounting is different from after-the-fact accounting in one key area—when the accounting occurs. Real-time happens in real-time, while the fact happens later.
After the fact, accounting, sometimes called batch accounting, means the bookkeeper or accountant sits down and processes expense reports, profits, loss, etc., all at once, in a linear fashion. It takes longer but gives you more time to ensure everything is accurate.
Real-time accounting requires inputting data in real-time. Then, you generate reports, check authorizations, and fix categories on a regular basis. This method is also easier to automate, which can save you time and your client’s money. (Don’t worry; this won’t put you out of a job; there’s still plenty of accounting to do!).
What are the benefits of real-time accounting vs. after-the-fact accounting?
The primary benefit of real-time accounting is that it’s faster, which is always good. But it’s not just about having more time to play ping-pong in the break room. Faster accounting also means you have access to crucial business insights—like profits, losses, and expenses- much faster.
That can give your clients a leg up on their competitors who are putting around waiting for the end of the month or quarter to see where they stand. You’re also more likely to spot fraud or trends that impact revenue faster because you’re tracking everything in real-time.
Here are a few other benefits of real-time accounting:
As you can see, there are pros and cons to both approaches. For example, if you rush through real-time accounting, it can be inaccurate. With after-the-fact accounting, you risk not having access to data when needed.
Here’s an easy-to-understand example:
Let’ sClyr plans to attend two accounting conferences to drive more leads. You participated at the Accounting Web Live Summit in early May and want to learn what you used in another conference called Scaling New Heights in early June.
With after-the-fact accounting, I can get you an accurate financial statement for Clyr for May by July 15th. The problem is all of the insights from May (including the impact of the Accounting Web Live Summit) won’t be ready before you attend Scaling New Heights.
Maybe I work fast and get you a financial statement for May by June 5th (in time for Scaling New Heights), but it is so full of errors due to uncategorized transactions that you end up making the wrong decisions about attending Scaling New Heights.
You might bungle your sponsorship of Scaling New Heights because of insufficient data from May.”
The bottom line is this: If you do real-time accounting right, it is faster, more accurate, and provides quick access to the data your business needs. If you aren’t careful, it can result in inaccurate data. Using integrative tools that share data can solve this issue.
What can help you achieve the holy grail of real-time accounting?
Ready to switch to real-time accounting? Don’t worry; you won’t need to be on call 24/7 to make it happen. However, you’ll need several tools to implement your real-time accounting system.
For starters, you’ll need:
- Accounting Software: To get started, you’ll need your books or a similar platform that integrates with other software and can process accounting in real-time. The integration is crucial because it eliminates manual tasks by sharing data directly.
- Expense reporting automation: To keep your accounting in real time, you’ll want to generate reports fast—and that’s where that station comes in handy. Look for a reporting tool that integrates with your accounting software, or use a third-party integration tool like Zapier to bring all that sweet, sweet data into one place.
- Receipt collection: Finally, you need a tool to gather, store, and reconcile all those expenses. We recommend Clyr, but maybe we’re a little biased.
Once you choose your real-time accounting software and set up the integrations, you’re good to go. Explain the new process to your team and ensure everyone can enter expenses, categorize purchases, and generate the needed reports.
Clyr makes your real-time accounting dreams come true
Real-time accounting software gives businesses access to critical data to make better real-time business decisions. Clyr is an expense and spend management tool that makes it easy to manage the costs—including approvals—in, you guessed it, real-time.
