The new accountancy: the evolution and automation of your financial record keeping system
Philippe was the head of the IT department in a prominent accountancy company when he thought up the concept of his automated record keeping platform TOCO. In this article, he shares his views on the evolution of accountancy and what the future holds.
What is the biggest challenge in keeping records that entrepreneurs face today?
The mailman used to visit
Ask any entrepreneur what he expects of digitisation and you’ll most likely get the answer that things should be quicker, more efficient, cheaper and possibly in real-time. Recent history teaches us, however, that efficiency is not always the result when it comes to finances.
It’s an observation that many suppliers to entrepreneurs choose to deliver invoices digitally from now on. But that doesn’t guarantee saving time. It’s a flawed perception. Yes, the entrepreneur has direct and digital access to this particular supplier’s invoices. No, that’s not better.
The entrepreneur has dozens of portals and channels delivering invoices. I now start seeing agents acting on this phenomenon by scraping these portals, a technique to collect all invoices. It’s not a solution, it’s a workaround. And it’s definitely unfit for the long term.
Back in the day, the mailman came. The start of an invoice’s journey was always the same. Now more than ever I hear entrepreneurs complain that maintaining different channels, letters, emails, portals, banks delivering invoices… is no longer sustainable. The number of invoices paid on time is at an all time low. Moreover, collecting these invoices has turned into quite the task for the entrepreneur.
Putting together your records to then hand them to an accountant has become an incredibly labour intensive process. That can’t have been the purpose of digitisation, can it?
UBL and E-FFF
We’ve spoken about solutions, now for the theory. UBL is short for Universal Business Language. Don’t let a complex abbreviation startle you, it’s merely an open protocol allowing to send an invoice in the form of a structured file. E-FFF is the Belgian variant.
You can compare it to a running list in excel with 2 columns: 1 with a field description, the 2nd with a field value. Done. Such a UBL can be made by your invoicing software and read by the receiver’s accounting software.
Only the receiver’s accounting software? Unfortunately, yes. And the story of the current digital invoice often ends there. An entrepreneur without access to their accounting will not be able to read nor pay these invoices! They will – subconsciously – ignore the invoice or request a physical duplicate from the sender.
That’s where TOCO comes in. TOCO will first make the invoice legible and processable to the entrepreneur and no longer only for the accountant and their software. This allows us to automatically pay, archive and send invoices to our accountant. It’s an all-in-one solution.
Another challenge for the entrepreneur when it comes to keeping their records, is the 7 year retention obligation. Certain records are required to be kept for 7 years, but what if they’re spread over different portals?
Will you print everything to be able to bundle it in a single place? No, TOCO is the entrepreneur’s archive. A single place, safe and in accordance with the SPF Finances’ stipulations.
Executing and following up on payments
No one likes it, executing payments. It seems so useless to copy all of those digits from a document to a banking application. Following up on payments received is also a big job for many an entrepreneur. Paying an invoice might be possible from the different portals offered by suppliers, there is still a large chance of paying an invoice twice or not at all.
Moreover, an entrepreneur likes paying close to the expiration date. When the invoice in question is consequently sent to the accountant, another list is to be created. One to follow up on outgoing payments. What entrepreneur does not have a second set of records, solely for their own peace of mind? Not efficient at all.
TOCO allows you to collect all of your invoices and send them to your accountant while leaving them available for payment. Following up payment of inbound invoices is possibly even more intensive and necessary to keep your company healthy. Another place where automating your records is helpful.
Why is automating your financial records advisable?
Customers pay late, not at all, in parts or they pay a new bill before an older one. As an entrepreneur, do you use several bank accounts? Then the search for a payment is possibly even more challenging since your customers have their pick of different accounts to pay to.
TOCO unites all of your business accounts into a single solution. You can make payments from all accounts without having to log on to every separate banking portal. And all payments from customers throughout all of your accounts can be accessed through that same solution: TOCO.
In the long run, everything will be unified. You will automatically receive actual digital invoices, the payment will draft itself, you approve it or even automatically confirm it. The document is automatically sent to your accountant, directly into their accounting system. That’s true digitisation.
How do you think the role of the accountant will evolve towards the future?
I recently wrote a blog (in Dutch, Ed.) about the conception of accounting. Accounting, in its current form, has been around for over 5,000 years. It came into existence for one important purpose: traders of old wanted to know how their business was doing. They wanted insight into their financial situation.
Today, it seems like many accountants drifted off to only legally taking care of accounting. Don’t get me wrong, modern and regional obligations make even that a daunting task. But the entrepreneur expects more than the legal minimum.
When you read about the role of the accountant, advice is the number one with a bullet. And that is not entirely unnecessary. I too, as an entrepreneur, am in need of advice and want the best for myself. But advice is supported by data. By the story. And the accountant does not always have – direct – access to all data. (Just like the entrepreneur unable to access their own books, Ed.)
Once the accountant has access to all the data, I mean accounting, fiscal and banking data, only then advice can follow. And that’s what TOCO represents,Together Connected. Because the entrepreneur uses it to access handy tools for their financial record keeping, it creates valuable data providing insights for both them and their accountant.
We need to bring it up again. Digitisation. The accounting industry has already been taking a number of steps toward digitisation. And that already made it so that the accountant presumably has more time for other services than only accountancy, like giving advice. But the digitisation as we know it today is in effect only provided for the accountant.
It seems like the most important asset of the accountant, the customer, was forgotten in the process. Just about all tools available today are meant to simplify the process on the side of the accountant and not the side of the entrepreneur. It poses quite the challenge for the accountant to help digitise the entrepreneur when it results in no real value for them.
What technological evolutions or trends will impact the SME’s financial record keeping in the future?
Accountancy apps are becoming more prominent. It starts with pre-accounting: we need to give input faster to get decent output and advice. It’s clear that accountancy apps with more value to the entrepreneur are underway.
Another abbreviation. Payment Service Directive, version 2. European law obligates banks to open up all accounts to their holders. The entrepreneur can then choose to link their accounts to any applications they are using. This provides more insights into their payment traffic, of course, over their different banks. But it also enables the entrepreneur to make even better analyses.
Monetary transactions go hand in hand with accountancy related transactions and trends. TOCO will tell the entrepreneur for which transactions accountancy related documents like invoices are needed. An important step in the automation of any record keeping system.
I’m coming across a lot of trends about accountancy automation. No hands accounting, for one. A good-looking and efficient solution, but it, again, starts at delivering data. No input, no output.
Read: as long as the entrepreneur does not experience added value from delivering their invoices or the way they can deliver them, they will keep procrastinating. The automation will not be put to full use and we’ll be back at square one. A real chicken-or-egg-story.
The millennials are coming
Possibly the most underrated – technological – factor of all! Clients will bring about change themselves. Toward the future, the younger generation will lead by example in many aspects… almost everywhere. Many of the current young and future company owners will start out differently. Paperless and automated accountancy is the exact reflection of what young CEOs and accountants will want to see over the coming decades.
The age of the millennials literally means that accounts will have to work with clients totally different from those we know today.
Proactivity, improved operational transparency and a personalised approach are only some of the minimum requirements of the new generation of entrepreneurs.
Looking for more expert insights? Philippe explained how to optimise your financial record keeping process, the role of AI in accountancy and 5 tips to streamline your financial records.