Are you tired of constantly having to go back and 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. Maybe 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 is accounting that happens in real-time. Pretty self-explanatory, right? Actually, it’s a little more complicated than it might seem at first glance.
Real-time accounting is about tracking expenses, profits, and losses in, well, 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 all that data exactly when you need it. 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 later after we have closed the books for the previous month. We can do that immediately at the point of purchase or at the point of the expense.
How is it different from normal 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 one time, in a linear fashion. It takes longer, but also gives you more time to make sure 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 major benefit of real-time accounting is that it’s faster, which is always a good thing. But it’s not just about having more time to go play ping-pong in the break room. Faster accounting also means you have access to crucial business insights—like profits, losses, and expenses, a whole lot 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 you need it.
Here’s an easy-to-understand example:
Let’s say Clyr is planning to attend two accounting conferences in an effort to drive more leads. You go to 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 from the Accounting Web Live Summit) won’t be ready before you attend Scaling New Heights.
Maybe I work fast, and I 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 on how to attend Scaling New Heights.
You might totally bungle your sponsorship of Scaling New Heights because of bad data from May.”
The bottom line is this: If you do real-time accounting right it is faster, more accurate, and provides access to the data your business needs quickly. 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. There are, however, a number of tools you’ll need to build your real-time accounting system.
For starters, you’ll need:
- Accounting Software: To get started, you’ll need Quickbooks or another 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 be able to generate reports fast—and that’s where automation comes in handy. Look for a reporting tool that integrates with your accounting software, or use a tool like Zapier, a third-party integration tool, 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. Make sure to explain the new process to your team and ensure everyone knows how to enter expenses, categorize purchases, and generate the reports they need.
Clyr makes your real-time accounting dreams come true
Real-time accounting software gives businesses access to the critical business data they need to make better business decisions in real-time. Clyr is an expense and spend management tool that makes it easy to manage expenses—including approvals—in, you guessed it, real-time.