Why Manual Accounting Process is Causing Your Business More Money
Filipino businesses are going through digital transformation.
Small businesses are now using various social media platforms for their customer service, sales, and marketing. While cash is still prevalent, use of e-wallets and online banking for payments is fast growing.
Ironically, however, it seems that accounting processes lag behind and are still heavily reliant on manual processes.
“Subscription fees from purchasing apps or software will undoubtedly cost me a lot of money. Hiring more employees is still cheaper,”
This is a common mindset among entrepreneurs when they come across some type of automation.
As a result, many businesses are still using manual accounting methods that, while computerized per se, require accountants to search through a stockroom of papers whenever clients have a question or when audits take place!
Indeed, change can be risky, which is why most Philippine businesses stick with what has become the norm.
However, continuing to use manual accounting processes is a costly propostion. Here’s why:
1. The manual accounting process takes time.
As any business owner knows, time is money. And when it comes to accounting, manual processes take up a lot of valuable time that could be spent on other more important tasks. From compiling and validating data to processing spreadsheets, manual processes can occupy a significant amount of time each month.
2. Manual processes are prone to error.
Due to the time-consuming and repetitive nature of the activities required, manual accounting operations are prone to error. Human mistake is always a possibility, whether it is forgetting to enter a digit or transposing numbers. This can lead to inconsistencies in financial reports, which can generate problems for the organization. In addition, paper records can be easily lost or damaged, making it difficult to reconstruct financial history.
3. Manual accounting systems make it harder to predict cash flow.
Cash flow is critical for any firm, large or small. It is the operation’s lifeblood, and having a dependable means to estimate cash flow is critical for making wise financial decisions. This work may be made more difficult by a manual accounting system. It’s more difficult to gain an accurate and up-to-date picture of your cash flow when data is manually entered. This can make it difficult to predict when you’ll have surpluses or deficits and can lead to financial problems down the road.
4. It exhausts employees and turns off potential hires.
Manual accounting systems are not only obsolete but also extremely taxing for personnel. Having to manually encode transactions constantly is a time-consuming and error-prone operation that may rapidly lead to burnout.
Furthermore, potential new hires may be put off by the prospect of working with a complicated and out-of-date system.
Finally, accountants who want to rethink, reinvent, and use cutting-edge technology may be drawn away if they are bogged down by manual transactions.
5. Manual accounting processes force you to hire more people.
Businesses using manual accounting methods are probably hiring more people than they need. This is because human accounting is both error-prone and time-consuming. Manual accounting makes it easy to make mistakes that can lead to costly mistakes.
For example, you could mistakenly record a transaction twice or leave out critical information. These errors can lead to significant difficulties in the future, so it’s critical to have a team of individuals who can see them. Furthermore, manual accounting takes longer than computerized accounting. This means you’ll need more workers to complete the same amount of work.
Why Now is the Time to Automate
Businesses can save time and reduce the chance of errors by shifting to automated systems.that can also provide real-time insights, allowing firms to make more informed financial decisions.
Make Olivia your starting point for automation, and contact us.
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