Enhance your accounting process with the best sales process automation tools for Accounting

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i started a tech startup 20 years ago with zero and no knowledge about accounting i wanted to organize our funding and nervously write checks and deposit money to the bank uh by myself so all was trial and error and i made mistakes in filing our taxes the threshold that took government penalties you know but since we started developing our own accounting software i had no choice but learned from books and our clients for decades i believe this podcast episode can help startups and small business owners organize their back office and accounting to avoid the mistakes i made in the past welcome to the digital transformation academy my name is dennis hilario and i'm here to help you in your digital transformation journey let the show begin hey everyone welcome to our new episode today we are going to be talking about digital transformation in back offices and accounting so without further ado let's get started hey welcome to the digital transformation academy podcast my name is dennis hilario and i give my best thoughts and tips about digital transformation innovation and productivity with me is fiona hi fiona good morning it's another friday so yeah um how's life i think people are gradually you know the pandemic is uh easing out uh gradually we're already in alert what alert two alert two yeah kids are out teenagers can go out face shields are finally out of the picture at last i am so happy yeah i know and then i think uh the face to face is gradually coming back even in the business [Music] side uh of course in school uh yeah what does that look like for your business now um yeah actually that's a little bit challenging at the moment especially i'm in the province you know but yeah clients are really requesting for a face to face but to me if um it's just you know uh a quick talk i i believe practically we still uh need to do it online unless it's like a major meeting or a contact signing and whatnot so there's a time uh i'll uh agree on that face to face because still they're still covered i think yeah and um until all people especially the children are vaccinated then that's the time i can really be or we can be really comfortable in face-to-face meetings it's a whole another it's a whole nother justin adjusting period for everyone i know because um you go going back to school man yeah you have to buy new clothes new shoes and everything but anyway uh at the end of the day it uh it helps our economy hopefully it's a fresh start next year especially there's a new president and it's coming coming up also everything's so new yeah okay so let's dive right to the topic so the topic today is digital transformation for your back office and accounting so we already talked about a lot of stuff in digital transformation from sales marketing operations uh you know digital marketing uh online marketing and whatnot but um i think the last episode was about uh order fulfillment so after order fulfillment there should be a back office support you know so the back office support is the admin side and of course the accounting side now human resource management is a little different which also we talked about a couple of episodes ago because it overlaps operations no but this one somehow there's an interface between order fulfillment and operations and the back office and admin you say back obviously accounting supplies requesting supplies requests of petty cash yeah and those things okay but um the main reason for businesses to transform their back office digitally is basically to save costs and control cost because of course operation sales uh they have expenses they need to deliver their services uh of course with financial the job of budget back office is to like scrutinize those expenses the expenditure is it valid or not and control it as well so that the business can get more profits yeah because if not then your profitability uh will go down so an accounting software or back office software for a small business a typical challenge then for entrepreneurs especially when they are just starting so many business owners because they focus on selling they just focus on selling operations but they tend to you know disregard the back office side but the first thing that they that comes to their minds are just to buy an accounting software case um that will solve the problem but um as we always talk about it will not uh solve the problem until you fix your processes but also in back office and accounting let's back off normally uh if you are say in a retail or uh distribution business normally the the service delivery are in the field so the term back office because it's like if you have a headquarters but there's offices there the back office are the ones supporting the front offices so if you have retail uh a chain of restaurants those are the front offices but the back office team that supports the front offices are the basically back office accounting and administration and also the recording of transactions normally are done in the back office in accounting releasing of checks preparation of invoice preparation of official receipts unless you're a retailer you tell the point of sale as we discussed before yeah you record actual transactions there but other transactions not related to [Music] sales or customers then they are being done in the back office okay so probably um let's focus more on the accounting side you know i also have posted several uh episodes or post posts about uh accounting but this is just you know a quick recap on uh how to do it i think the first thing that we you have to do is start to structure your accounting process before you when you start in your back office no the first is number one is to define your ledgers okay okay it's a record of various accounts the main purchasing cost so there should be a purchase ledger you also have a bank account you also have a bank account ledger accounts payable ledger so those ledgers can say in definition it's just uh shows the increase or decrease of the value of the account for example if you have a bank account it increases in value it decreases in value so you have to record each of it no because if not it's very difficult to trace an audit story of transactions especially where is it usually placed if you have a software then ideally you should do you should have a software you encode the transactions there the ledgers no but in manual uh you have the traditional ledger it's like a book a journal all right so once you have defined those number uh well going back uh there's a term in accounting called chart of accounts so chart of accounts is basically the whole ledger of your company yes and decrease the value of each account so one example is your receivables your fixed assets your equipment your computers those should be well accounted no yeah so number two is you also have to define the accountabilities in transaction preparation process so who will handle the recording of sales so will require handle the recording of purchase purchases we'll handle the recording of bank accounts transactions no if you're a micro business normally the owner is the one doing that but if you have um you have a bigger scale now operations like small and medium sized business normally there's a control measure to like there's a certain person along with the do the accounts payable yeah the person who will do the the sales etc and then after of course there's also what you call accountability forms [Music] on every transaction there should be a form yeah produced it can be printed it can be paperless uh i'm sure they give them the sales receipts that you get from the stores the vouchers that people use to document the recording of checks the purchase order form that you give to your suppliers if you are confirming an order of course a contract if it's a service so those documentations are really important and well defined when you process your accounting and then um number four is reports so as a business owner a manager what summaries would you like to get yeah like last month how much is my purchases how much is my sales how much is my cash collections last week how much is my disbursement of checks last month something like those so what you have to define what do you need you know for us to come up with the uh a review and decision making in in running your business because it's really difficult to run a business if you don't have those information right so with all these documents like it's already something you coordinate with the client as you work with them or is it like the term itself is back office it doesn't relate to the client no um it's actually just organizing your your transactions okay in the back you know so that you can come up with uh you know metrics yeah business metrics financial reports and see if you're you're really you know uh profitable in your business number one and what is your financial position and then the last step is you also have to define an audit process you know when you say other processes yes you are recording transactions you are recording your ledgers um if you don't have an audit you don't have a way that to to know or to validate if those records are true yeah you have to assign people or separate people so the ones encoding or processing the transaction should be different from the one auditing because it doesn't make sense if they are the same person yeah again it's a small business owner uh normally the owner is the one doing the audit but even if you're just starting um this is something you have to do everything like as you have transactions so usually it's the owner who's first like handles everything yes micro business but as you uh hire employees you know delegate some of it but it's important that the audit person audit or audit team is separate from a different person from the the bookkeepers or the transaction encoders again the main job of them is to check and check and balance if the records are true so those five things are important in uh as a foundation of your back office or account yeah so now that you have formed your accounting structure or process the next step is to digitize so why would you digitize okay so the main benefit of digitization is the number one instead of manually writing forms you can print it out digitally yeah just encode it and print it so it saves time already because yeah but you'll be surprised now a lot of businesses still writes they still write the form manually as in hungry and so number two uh automatic posting to ledgers because once you encode it in the accounting system automatic it uh updates the report you don't have to wait you know because in traditional way you prepare the invoice and then you go to another record or an excel sheet to update the report right but if you have a system it automatically uh opposed to your ledgers number two strict record you have sticker controls if you have an accounting system [Music] before if you prepare a transaction you can debug if you prepare a recorder transaction uh an account a good accounting software case approval online with the manager supervisor the owner is out of the office then you can easily approve purchases purchase orders from the accounting system using a mobile phone or a laptop the people can disorganize the process number four tax reporting import that's also important because you can already automatically capture transactions so hence you can already generate tax reports automatically because if not the process of in the process of this but is there quality assurance like while it's happening oh yeah again depending on the process uh okay process there's an encoder a clerk who encodes transaction and then there's a reviewer for check and balance if the clerk encoded the transactions correctly and then post it or approve it yeah so but uh not necessarily no no um uh the the clerk has uh a motive in doing it because sometimes uh honest mistake you know the communication amount the compilation on date etc so ideally there should be a checker but again if you're lean if you're saving cost people then uh you know you have to just uh do uh a workaround instead of uh hiring a checker again another benefit is tax reporting because if your tax reports are not updated on a regular basis yeah our tax government agency bir they have a strict deadline to say in uh filing for taxes and paying it if you are late in in uh generating those tax reports then uh you'll be penalized yeah so a good software because they have automatic tax reporting number five increasing productivity so since [Music] they can focus on other things that can help you distance more lower overhead because the expenses so yeah those basically uh the benefits of accounting software now then the last uh guide or tip here is how can you successfully implement an accounting software you know buying one is will not solve it you really have to strategize in uh doing it you know okay so uh here naman are a few tips in implementing an accounting software okay so number one is you have to the important step actually is the setup the setup setup steps so the check i have a checklist here of what you need to have or establish before you implement the county software number one chart of accounts like i said a listing of your suppliers you have to have a listing of your customers your bank accounts okay uh then the tax uh parameters if you have 80 if you have expanded with golden tax then the accountability forms as well that i mentioned earlier it has to be defined properly and then the accounting entries what you call accounting entries on every transaction what is an accounting entry yeah you might need to uh you know research or learn about uh accounting to understand it better if you're not if you're not an accountant but you can ask your accountant or a consultant if you don't know this accounting entries yeah and like you said uh in the beginning of this episode we have an online accounting course check it out at accountingcourseph.com if you wish to learn more about accounting in tristan and of course you also have to define the reporting requirements so after that yeah you also have to define who are the users who will use the software and what are their access rights then how you and then you have to define how you how will you process your invoice how will you uh process your collection how will you process your purchases and disbursements requests before the issue of yes before you know uh so those things are made abroad you know depending on the size of the company depending on the industry yeah just going back how many how many people usually like has access to that software in a business does it depend on the size of the business as well depending on the size but typically on a business with 100 employees yes buck office one of five in the long run five users five okay for accounting if you we add up like procurement admin uh it can grow up to 10 to 15 users yeah are there features of it that keep it secure also oh yeah so because you can define access right say this person at the longing yeah so this person uh only the receivables this person only d oh okay but not all software has that you know some software because like the ones that we have here so they have that yeah that kind of feature you know uh where you can define responsibilities and even approval workflow you know okay the one i mentioned earlier that's good and then once you define your transaction processing for the software you have to also have to define the reconciliation and the reports so reports how will you generate the reports how will you ensure that there are no unaccounted transactions or no errors in transaction processing and the number five last but not the least the ultimate purpose because of digitizing your software is to have real-time financial reports so why would you need the real-time financial reports so that you can decide early on what to do with certain expense for example mygitamo your expense last month is high higher than the current the expense this month if you don't have that information [Music] um then you won't change anything they buying the business yeah okay so if you find out three months already uh before you knew that the expenses has blown up then you already lost a lot of money in the past three months but if you have that information now and you saw it not that your expenses are too high then you can already decide what to do right away yeah yeah and in effect you'll have sure get more profit profits or profitability blows up so there's a lot more aspects in admin like credit cash management handling requests from your employees something like those another alabaster hr side hr is a different topic but other than that those are some tips in digitizing your back office and accounting yeah you have questions um one question i have is what's the process of being able to train employees to um to use this kind of software especially if someone's also used to manual yeah that's a good question um what we normally recommend when we implement accounting software or erp is that first is during the setup stage there has to be one person at least one person assigned yeah he's like the champion of the software okay so that person will be trained on how to set up and how to encode transactions and also the norm i know ideally it's the best you know business process owner the ones who's accountable uh with for example in the accounting department right so the reason why is that if you involve all employees right away during the implementation they're all like talking to the vendor or talking yeah yeah there's a lot of inputs and debates that will happen you know because some employees they have their ulterior motive sometimes yeah it's good to get the inputs first but during the process of testing it uh encoding until the final result of reports uh should be done by a as that an individual or a team dedicated to software implementation then after that once that assigned person or team has accepted the configuration and then the reports then that's the time you train the employee yeah the end user uh because some end users can say they are not involved in other aspects so why would you just train them ing to what they do yeah yeah and then because um if ever the employee resigns you know and then replaced by a new one i mean the the business will not need to call the vendor for another training because they themselves know how to do it yeah that's true you mentioned earlier that you know there's a reviewer or a checker when it comes to transactions is the role also to kind of oversee um full disclosure of everything you know just in case there's there's people who are dishonest about what they encode or this has not ever happened um to be honest uh it it always happened you know it always happens in the business because some especially in our country sadly because we i mean if a person finds an opportunity to you know you know lack of better terms still yeah especially in the front offices no if they have the opportunity and then they have the need because uh they have financial issues then yeah normally they grab it so that's why there's a checker also that's one of the factors or the audit team checks if there are missing transactions even if there are just like in the government debate the government the government has uh commissioned an audit there are those checking the uh records of the government agencies if they are correct right there are corruption or graph same thing okay that's good but yeah i think those are all my questions so far do you have anything else to add i think that's it for now you know so the next episode let's talk about i think this is the level four of digital transformation oh okay so after business process automation then the next step is uh digital performance management digital performance management is like the the main objective in your digitization the digital business performance management is the the ultimate objective now imagine if you're the business owner you have the you have your mobile phone yeah and then you know you can you can see everything from charts paragraphs even suggestions from the software what to do with your business then that's it it's just a quick episode and yeah i'm looking forward to that yeah me too okay guys thank you so much for um tuning in today's episode if it's your first time um welcome and don't forget to subscribe whatever platform you're consuming this from comment down below any um questions you have about this topic or any other suggestions you have that you want us to talk about and yeah thank you and we'll see you on the next episode yeah thank you so much again uh the extra life of business have a great day