Real time accounting is said to happen when data is available as they occur, without having to wait for the end of the day, let alone end of the year for getting to know about the figures of business. This is made possible by a number of factors, the chief of which is accounting applications. Cloud storage if used by the application will result in making known the real-time information anywhere, and not just in the premise of the office.
Real time accounting has a number of benefits. With this, time is saved, thus helping the management take decisions in time. Opportunities can be grasped when they arrive and books are kept in real time. Organising and reorganising of the business can happen as and when needed, without having to eagerly wait for the results at the end of the fiscal year (or when quarterly reports come out).
Comparison with corresponding time period can be done easily. This helps in making a decision regarding any change that can be made to optimise the profitability. Faster calculation of figures means fewer people involved in this and more time getting advice from the accountants for the conduct of business. Reacting to any anomalies can be done faster than it would have been possible.
Internal controls are also aided by real-time accounting as it helps in controlling fraud – otherwise, some fraud may happen in the business that may later be covered by the perpetrator. An accountant, for example, may be pilfering some amount and deposit the difference when closing the books at the year-end. This and some of these sorts will not be possible under real-time surveillance.
Another aspect how this helps in internal controls is the way it checks errors, which may accumulate over time and become difficult to either check or even correct. This also helps lower the cost that is associated with the errors. Margins can be added or reduced to sales when the necessity arises thus yielding better figures. Also, it is easier to find offers by vendors quickly thereby reducing the cost associated with purchases.
Conducting business is also easier thanks to information that can be obtained with a click. This means you can communicate with concerned parties – be it vendors, debtors, auditors or other members of management themselves. Communicating, in turn, helps in finding out any pertinent issues and finding that on time helps the business a lot.
While a business can benefit from quarterly or monthly time limit than when closing books annually, it is better if they can go all the way to accounting applications make real-time accounting possible. What’s more, the data is available for viewing in its dashboard in graph or figures, as the management wants it.