We all remember when making financial documents required piles of paper, a pen, and prayer that they wouldn't get lost. These days are soon over. Digital tools have changed the way financial documentation is managed for businesses and individuals, making it quick and accurate. These tools are revolutionizing processes across the enterprise, from managing invoices by a freelancer to proving compliance on audit by a CFO.
What Is Missed With Traditional Financial Document Prep?
In the past, it was tedious and confusing to prepare financial documents. It could take hours to correct just a wrong decimal digit. Auditing the paper trails was tough, and it was much tougher to share securely.
The following are some of the issues with the old system:
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- Written information – from payroll to tax filing – resulted in errors.
- The process of obtaining documents, with physical storage, was stressful.
- Lack of real-time collaboration – teams end up working in silos, passing files from one to another.
- All compliance checks were manual, creating a great deal of risk for the organization.
- There wasn't significant fraud detection.
62% feel they waste too much time seeking out information throughout the day at work. This figure rises yet further when document management isn't effective for financial teams.
Control of Modern Finance With Accounting Software
Accounting software has gone from being a tool to be used to creating accounting documents to being the working animal of the day. All of the following platforms are good examples of the platforms that handle transaction tracking, automated tax preparation, etc.: QuickBooks, FreshBooks, and Xero.
The key element of their magic is process automation. These tools can connect with your bank account, automatically sort those transactions into groups and give you financial reports on the spot – instead of manually logging every transaction into your bank. That's minimizing human error and quicker reporting.
Factors that are promoting the taking up of this include:
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- An integration with payroll, CRM and ecommerce systems.
- Log audit – version control summary for the document, including who made changes and when (vital for regulations).
- Real-time performance analytics with interactive dashboards.
Businesses that adopt automated accounting systems report that they need 50% of the time (or more) required for month-end close. It is a big change in allotment of time for finance people.
Get Your Data in the Cloud – Paperless Office Revolution
A cloud storage has replaced a filing cabinet. Financial document access is as fast and easy as it gets in Google Drive and Microsoft OneDrive – you can upload and collaborate with people around the world.
But, it's not only remote access. These are some of the features of a cloud-based document management system:
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- Version control (can undo any changes, revert to previous versions of the file).
- Permission control by role to avoid access to sensitive information.
- Data loss recovery.
- Ability to edit and collaboratively work on the same document with multiple people.
Data security is truly a concern – especially for sensitive financial data. Good cloud services provide SOC 2 and ISO 27001 level encryption of data in transit and at rest. It's a security that most small businesses wouldn't be able to secure in-house.
Digital Bank Records and Financial Statements
One level of disruption that is happening a lot is how bank statements and financial records are organized. Previously this was a time-consuming and lengthy process to coordinate with banks and get them in order for loan applications or audits.
Today's world lives in digitization which helps users generate bank statements right at their fingertips – perfect for freelancers and small business owners who want a well-formatted financial statement, in no time at all.
Bank statement generator software creates accurate, organized statements which capture the real bank statements, whether for mortgage applications or financial record keeping. It is a modern practice in financial documentation which has seen individuals become more involved in financial management processes.
e-Signatures in Remote Financial Management
Financial documents with wet signatures are quickly becoming outdated. Digital signatures (DocuSign, Adobe Sign, HelloSign) have enabled deals to be done, audits to be conducted, financial documents to be approved — without printing any page of paper.
This is big news when it comes to complying with the regulations. Digital signatures:
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- Adhere to the regulatory compliance, including eIDAS (EU), ESIGN Act (US);
- Speed up approvals (days to minutes);
- Organically integrate into the workflow of document management.
This works well for companies that have customers in several countries. The rules vary by jurisdiction, and, in general, the rules of digital signature platforms are automatically updated.
Planning and Analytics
One more feature of new financial management is the shift towards a data-based strategy. Modern tools don't perform operations just to save and format documents; they analyze them.
For firms in the asset management industry and investment advisors, financial modeling programs like Anaplan or Adaptive Insights take it one step further. They enable users to create scenarios and financial reports that were not possible 10 years ago.
What to Know for Financial Professionals
Digital tools help enhance – not replace – financial knowledge. In this day and age, accountants and financial analysts can save hours of manually inputting data and spend more time planning for strategic decisions.
The teams that are adopting these types of technologies usually find that they experience:
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- Saved time by creating templates and automating documents.
- Enhanced posture for compliance with built-in compliance checks.
- Avoiding paper-based processes and reducing paper expenses.
- More connections with colleagues and partners.
Of course, this environment is not for anti-changers. It's for those who look at digital tools as assistants and use them right.
Conclusion
Financial document preparation has become streamlined, more automated, and less difficult with digital tools. Cloud storage, accounting software, digital signatures, on-demand record generation – it's all improved. Businesses equipped with these tools have the advantages of speed, accuracy, compliance, and security. The paperless future is here. It's here for the majority of progressive companies.
