Keeping Compliance in Check: Regulatory Aspects of Automated Bookkeeping
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Maintaining the books and finances of an organization is, in itself, a challenging and rigorous task. Traditionally, these processes are conducted manually, which adds to the burden of accounting professionals due to the time-intensive and error-prone nature of manual work. Furthermore, ensuring that the company meets internal and government-imposed regulations for financial data is another significant obstacle. With strict penalties for non-compliance, it becomes imperative for companies to put effort into streamlining financial data gathering and reporting features. On average, companies can lose around $4 million due to a single non-compliance event.
Automated bookkeeping can have a far-reaching positive impact on a company’s accounting procedures if implemented properly. Not only do these solutions free a company’s resources from manually undertaking repetitive tasks, but they also ensure compliance with regulations. This blog overviews common regulatory principles prevalent in the finance field and how to ensure compliance with them using digital bookkeeping.
Accounting Compliance Principles
Finance data holds extreme importance for a company, as it allows them to identify past trends of the organization and predict outcomes for the future. Not to mention that this data should be kept under access controls and stored in secure databases to prevent data breaches. Due to the immense importance and confidentiality of financial data, accounting compliance laws are legislated by government and international regulators. These laws require that companies, either using manual or automated bookkeeping, have transparent and reliable procedures for handling confidential transactions. Moreover, they also entail that organizations should strictly follow agreed rules for data collection and reporting. Here are two internationally recognized accounting standards that firms must adhere to:
1) Generally Accepted Accounting Principles (GAAP):
These principles have been designed explicitly for US-based firms. They include ten accounting rules for companies that are publicly traded and release financial statements. At the same time, four additional principles dictate accuracy and integrity in the accounting procedures of the companies, even if they use bookkeeping automation tools.
2) International Financial Reporting Standards (IFRS):
IFRS standards were jointly developed by two internationally renowned accounting standards boards and hold much weight in the accounting world. In contrast to the GAAP principles. IFRS standards are primarily adopted in the EU.
Benefits of Complying with Regulations
Ensuring your accounting processes and workflow meet the required standards is not a one-off task. Instead, it is an ongoing process that must be adapted to the changing regulations. It can be challenging for companies, especially SMBs, to conduct regular audits and feature changes. However, the benefits of regulatory compliance far outweigh the costs associated with the related processes. For instance, the first and foremost benefit of compliance is that it saves the company from hefty penalties.
Secondly, compliance is for more than just government institutions to determine a company’s cash flow. Instead, these laws require that companies have transparent and clear data procedures. This way, businesses can figure out any financial discrepancies and irregularities sooner rather than later. Moreover, complying with regulations can help companies set up robust procedures for financial reporting. This can enable them to predict how the business will perform and where to focus company efforts.
Simplifying Compliance with Automation
Evidently, it can become challenging and resource-intensive for companies to set up an internal department for compliance checks. Therefore, it falls on the business leaders to implement automated bookkeeping, resulting in decreased costs and exceptional regulatory compliance. A study by Thomson Reuter’s suggests that 34% of organizations outsource their compliance functionalities. However, it would be significantly profitable for a company to outsource its entire bookkeeping process, which comes with compliance functionalities. Firstly, when it comes to data controls, manual data collection and reporting can result in errors. In contrast, automated bookkeeping uses optical character recognition to ensure accurate data gathering. Secondly, a digital bookkeeping solution is constantly updated to reflect the changes in the regulatory environment.
Opting for an automated bookkeeping solution is the best choice for businesses as it simplifies the financial management processes and lets business owners save themselves the hassle of managing these tasks manually. Reporting is a crucial process for businesses as it directly reflects their performance. Bookkeeping automation streamlines the reporting process by generating the necessary reports timely and keeping compliance in check. On-demand reports can also be generated to facilitate sudden audits or to satisfy shareholders demanding specific statistics.
Keeping Compliance in Check with RecordMe
RecordMe is a full-scale solution for businesses looking to automate their financial management and reporting processes. It helps businesses stay compliant with the policies of the country or jurisdiction they are functioning in and thus function without any hurdles in their way. Eliminating physical records and bookkeeping, our software solution creates a streamlined digital workflow that saves business owners time and resources. It simplifies compliance and makes it effortless by generating on-demand reports with key metrics within seconds. These reports are saved on the cloud, which makes them safe from solicitation and fabrication.
Businesses that fail to comply with these laws and regulations are subjected to hefty fines and charges, which can significantly affect their resources. RecordMe helps businesses avoid these charges and provides them with a safe and secure financial experience. It allows businesses to mitigate the mental turmoil of dealing with finances manually and allows them to nurture growth by focusing on other parts of the business that need attention.