Growing businesses need to manage a sometimes dizzying combination of diverse revenue streams, multiple expenses, assets, liabilities and equity. Perhaps more important, they also need to interpret all of that data wisely to drive smarter business decisions. Integrated accounting systems help companies control this financial complexity by pulling together the many components of the accounting process into one consolidated, real-time system that provides an accurate, up-to-date view of their financial health. This article discusses how integrated accounting systems work, their many benefits and best practices for choosing and implementing them.
What Is Integrated Accounting?
Business accounting comprises many functions, such as payroll, purchasing, inventory accounting, asset management, accounts payable (AP) and accounts receivable (AR). Rather than managing these transactions in separate ledgers, as had historically been the case — for example, using one ledger to record the costs of producing goods and another to keep track of non-cost-related financial transactions — integrated accounting uses multiple ledgers that roll up into a single general ledger. This method gives companies a consolidated, centralized view of their finances and operations, which, among many benefits, improves their strategic decision-making. Integrated accounting is, by far, the de facto approach to accounting today.
What Is an Integrated Accounting System?
Integrated accounting systems provide companies with the technological foundation to streamline separate accounting processes into a single application. As a result, they eliminate the need for manual data entry across multiple systems, giving businesses a comprehensive overview of their financial health. For example, when a retail store sells a product, an integrated accounting system records the financial transaction and automatically accounts for the decline in inventory. Real-time data updates help companies create more accurate forecasts, build more comprehensive reports and make better informed decisions.
- Accounting is a complex process that involves recording, managing and interpreting financial data across many interrelated activities.
- Companies that use separate systems for different accounting activities have difficulty with gauging a real-time view of their financial health.
- An integrated accounting system brings together many financial activities in a single, automated system using a single database.
- The first step before switching to an integrated accounting system is for companies to clean up their existing data and determine what should be migrated.
Integrated Accounting Systems Explained
In the early days of business technology, companies used individual software solutions for various accounting functions. While technology made the overall accounting process faster and more efficient, the separate systems weren’t connected, creating data silos that made it difficult for companies to form a complete picture of their overall financial health. In addition, transactions had to be manually entered into each system separately, which took time and led to data-entry errors and inconsistencies among systems.
Integrated accounting systems emerged as a way to unite disjointed financial processes. Instead of multiple systems and teams working in isolation, companies use a single system in which data flows seamlessly across all financial disciplines. These systems also give companies a holistic view of their finances to extract valuable insights, forecast trends and fuel better decisions.
Traditional vs. Integrated Accounting Systems
In the mid-20th century, when businesses first began adopting technology to streamline their financial processes, individual systems were used to manage specific financial functions, such as payroll and AR. But these standalone platforms operated apart from each other, requiring a costly, cumbersome process of manual data entry for each system and data transfer from one system to another.
By the late 1970s and early 1980s, accounting trends shifted and integrated accounting systems emerged as a way to replace standalone solutions with a single system to handle all accounting functions. These systems allowed data to flow seamlessly between systems, reducing errors and providing comprehensive financial insights. For example, with an integrated accounting system, an employee’s business expense can be recorded as a liability in a general ledger, while also automatically recorded as a departmental cost.
Today, most companies, other than the smallest of businesses with minimal financial and technological needs, use integrated accounting systems, often as part of an enterprise resource planning (ERP) system, for financial management.
Key Components of an Integrated Accounting System
As with any type of software platform, integrated accounting systems vary by vendor. But they do share several common features. Look for the following capabilities when evaluating a new integrated accounting system.
If seamless data flow is the lifeblood of an integrated accounting system, a centralized database is its beating heart. A centralized database stores consolidated financial and operational data for all departments to use for gathering real-time insights that drive swift decision-making. And because everyone pulls data from the same source, the risk of data inaccuracies is dramatically reduced.
Modules and Functionalities
A hallmark of an integrated accounting system is its combination of distinct but interconnected modules that handle specific accounting functions. For example, most integrated accounting systems have modules for payroll, AP and AR. Additional functions may include inventory accounting, purchasing, general ledger, asset management, financial statements, taxes, and reporting and analytics. Each module shares its data in a centralized database, which maintains accurate, consistent and real-time data across all accounting functions.
Real-Time Data Processing
With a standalone accounting system, data is processed in batches, such as at the end of each day, leading to temporary discrepancies until data is reconciled. On the other hand, an integrated accounting system immediately captures, processes and updates data in real time, without the need to wait for information to be verified and reconciled. For example, a sale in Sydney, Australia, and supplier purchases in New York are instantly recorded across the entire system. Real-time data processing minimizes errors and ensures that all stakeholders have access to the most current data.
User Access and Permissions
Integrated accounting systems store a company’s most sensitive financial and operational data, so it’s critical that they feature state-of-the-art security. An important way to safeguard financial data is to carefully manage who has access to it and how much they can see. For example, a procurement officer needs access to vendor payment information — but not payroll details. An integrated accounting system limits data access according to roles, which is known as user access. Companies can also assign different levels of access based on individual needs, known as permissions, which further protect against internal data breaches. User access and permissions tools make it possible to trace data inconsistencies back to individuals.
Advantages of an Integrated Accounting System
Integrated accounting systems can be transformative, especially for growing companies with expanding product portfolios, new markets and higher transaction volumes. Driven by a consolidated financial database with integrated and automated processes, companies can use an integrated accounting system to become more efficient, responsive and competitive.
Automation of Repetitive Tasks, Reducing Human Errors
With a traditional, non-integrated accounting system, data isn’t the only thing that often gets siloed. When accounting functions are handled by separate systems, processes and workflows are also unconnected. An integrated accounting system automates accounting processes to increase efficiency, reduce errors and free up resources for more strategic tasks. For example, an integrated system can automatically cross-reference invoices and payments, allowing accounting teams to spend more time analyzing cash flow trends or optimizing budgets.
Real-Time Data Validation and Consistency
Inaccurate or inconsistent data can have serious financial and legal consequences for companies, throwing off budgets, forecasts and reports, and resulting in regulatory noncompliance. An integrated accounting system minimizes risk by instantly verifying data accuracy and consistency against customized rules that companies can build into their systems. For example, if a salesperson records a sale of a product that sold out the day before, the accounting system can flag it for immediate review. An integrated accounting system also automatically updates data entered into one module across all relevant modules to ensure consistency and accuracy — which also helps to prevent the previous scenario. A change to a vendor’s payment details in the AP module is also automatically updated in a vendor contact database.
Single Point of Truth for Accounting Information
For companies to succeed, every part of the organization needs to work with the same data, particularly when it comes to financial information. An integrated accounting system builds a “single point of truth” by consolidating financial information into one database, so everyone sings from the same song sheet. The result is comprehensive, real-time financial reports based on reliable data to drive fast, accurate decision-making. A single source of financial data also makes regulatory compliance more straightforward, reducing the risk of inaccurate financial reports.
Holistic View of the Business’s Financial Health
Financial data resides in almost every corner of a company’s operations, from the financial department to sales, human resources and manufacturing. As a result, getting a clear picture of overall financial health requires carefully gathering and validating often siloed information, which can be both time-consuming and error-prone. Integrated accounting systems solve this challenge by gathering, storing and normalizing companywide financial data in a single database. With a unified view, companies can identify patterns or anomalies in data, allowing them to take immediate action to either avoid a problem or capitalize on a trend.
Easier to Scale With Business Growth
With business growth comes complexity, especially with regard to accounting. What once may have been manageable with simple tools quickly becomes complicated — and highly subject to error — as companies scale-up, with higher transaction volumes, diversified products and market expansions. Integrated accounting systems are built for scaling, with the ability to customize processes and rules to suit changing products and markets, for example. And because changes are made to a single application rather than multiple standalone tools, fewer resources are needed to adapt the system to accommodate growth.
Significant Reductions in Labor and Administrative Expenses
For many companies, consolidating multiple standalone accounting tools into one integrated system leads to cost reductions, thanks to the reduced licensing and maintenance costs alone. But those aren’t the only cost savings. An integrated accounting system can reduce resource and administration costs for data entry because separate teams no longer need to enter data into separate systems. Data is entered once and then automatically updated across all modules in the system, enabling companies to also avoid mistakes that can lead to inaccurate reports and forecasts.
Built-In Tools to Ensure Financial Compliance
As companies grow, they’ll likely need to comply with an ever-increasing number of regulations from various state, federal and global regulatory bodies. Accounting regulations and standards, such as the Generally Accepted Accounting Principles and the International Financial Reporting Standards, require meticulous accounting practices to bring consistency and discipline to financial operations. With a standalone accounting system, companies need to manually update international tax changes in multiple systems. Mistakes can lead to costly compliance violations. Integrated accounting systems, on the other hand, offer tools, such as tax calculators, that automatically monitor and adjust for regulatory changes to ensure compliance. They also offer audit trails that timestamp every transaction, change or entry so companies and auditors can trace the history of financial data.
Challenges of Integrated Accounting Systems
Integrated accounting systems can be a powerful change agent for businesses, providing they select the one that best matches their requirements. Careful consideration of the following issues can help them make the right choice for their specific needs.
Depending on a company’s chosen method for technology deployment — namely, on-premises solutions or cloud-based options — costs for integrated accounting systems can vary significantly. For example, an on-premises accounting system requires considerable up-front costs for software, hardware, resources and training. With standalone systems, it also becomes costly to maintain so many applications that each require individual maintenance and updates. A cloud-based integrated accounting system, however, can mitigate those costs because a third-party provider hosts, maintains and upgrades the system themselves, which greatly reduces up-front cost. Software, hardware, maintenance and upgrade costs are included in a monthly subscription price.
It seems humans are hardwired to resist change, especially when it comes to technology. Change management is the process of helping employees embrace change by involving them in the implementation process well before the technology is launched. This is especially helpful with an integrated accounting system, which inevitably leads to changes in processes and workflows that employees may have been long accustomed to. Lack of preparation also can lead to confusion, resistance, productivity declines and costly errors. When launching a new integrated accounting system, companies should communicate early and often with employees about the reasons for the change, as well as to offer timelines for implementation and status updates.
For many companies, an integrated accounting system is just one part of a broader ecosystem of applications. For example, a retail business might want its accounting system to communicate with a proprietary inventory management system or a customer relationship management (CRM) tool. If it’s difficult to integrate these systems, companies might have to manually transfer data between systems, which complicates processes and makes real-time data availability challenging. Thus, companies should consider how a potential new solution will integrate with their other critical applications.
All software requires regular updates, whether it’s to add new features, improve performance or resolve bugs. Because integrated accounting systems house important company data, they may also require regular maintenance to ensure data integrity and compatibility with other systems; in the case of on-premises solutions, maintenance also includes hardware upgrades. Maintenance can be time- and resource-intensive (especially with on-premises solutions), sometimes requiring days of dedicated attention during which companies can be exposed to system slowdowns and data vulnerabilities and incompatibilities. Cloud-based integrated accounting systems, on the other hand, have automated update features, patches and bug fixes, all of which are handled by the cloud provider as part of a monthly subscription fee.
Integrated Accounting System Features
Every integrated accounting systems vendor offers its own specific set of features, so it’s important for companies to first understand their needs before comparing features. In most cases, however, integrated accounting systems will have the following capabilities in common.
Automated General Ledger
A general ledger (GL) is the foundation of a company’s financial record-keeping, combining information from many subledgers, such as a sales ledger or an inventory ledger. With a traditional system, those ledgers are often managed separately and need to be manually reconciled against each other. An integrated accounting system, however, automates this process so transactions recorded in one ledger are automatically updated in the GL in real time. This not only reduces errors, but it significantly lessens the time spent on tasks like reconciling bank statements and posting debits and credits. An integrated accounting system can also automatically recognize and categorize recurring transactions, such as monthly utility bills or subscriptions.
Bookkeeping is the meticulous process of recording financial transactions to account for every penny that flows in and out of a business. It is central to many other accounting activities, such as financial reporting and tax preparation. With a standalone system, bookkeeping is a painstaking, time-intensive process of logging transactions into separate systems, then reconciling them to prevent costly errors. An integrated accounting system, on the other hand, eliminates all of that repeat work. For example, it will automatically log a sale from an ecommerce platform, adjust inventory levels and update AR in real time without manual intervention.
Simplified Billing and Invoicing
All companies want to make sure they’re paid for their work, but it’s also critical that they promptly pay for the goods and services they purchase. As they grow, a company’s inability to track and reconcile an ever-increasing number of bills and invoices can wreak havoc with its financial records, disrupt cash flow and jeopardize supplier relationships when bills aren’t paid on time. An integrated accounting system simplifies billing and invoicing by automating key processes. For example, when a sale is made, an integrated accounting system can automatically generate an accurate invoice based on real-time data, ensuring no duplication of charges. This saves time and reduces the margin of error significantly. An integrated system can also automatically adjust invoices according to changing sales terms, such as seasonal discounts.
Accounts Payable and Receivable Automation
An integrated accounting system can automate AP and AR processes. For example, rather than requiring companies to manually scan each invoice and check for inconsistencies before processing payments, an integrated system can scan invoices, match them against purchase orders and suggest approvals or rejections based on preset criteria. When it comes to AR, integrated systems can create automated reminders to notify customers about upcoming or overdue payments, reducing the manual effort required for follow-ups.
Inventory management isn’t just about the movement of physical products; it also plays a substantial role in both revenue recognition and cost control, which can significantly impact a company’s bottom line. Imagine a swimsuit manufacturer that enters the summer season without a clear understanding of what inventory remains on hand from last year or which swimsuits are currently popular. Without this critical information, it runs the risk of overstocking out-of-date styles that don’t sell and also ties up capital, hurting liquidity and profit margins. An integrated accounting system connects these financial activities in one system. As a result, when a sale is made, revenue is automatically recognized and inventory is automatically adjusted. When inventory drops below a preset level, the accounting system can also automatically trigger purchase orders to replenish stock.
Almost every business depends on a supply chain to help support its operations, whether it’s for raw materials to build products or software to drive efficiency. Strong supplier relationship management optimizes costs, maintains quality standards and leads to a steady flow of goods and services to drive growth. An integrated accounting system ties together the various threads of vendor management into a seamless, automated process that manages cash flows, liabilities and expense recognition. For a manufacturing company purchasing raw materials, for example, an integrated accounting system can track purchases and match them with AP to ensure accurate and timely payments. The system can also flag discrepancies in real time, such as mismatches between what was invoiced and what was delivered.
The sale of a single product has a far-reaching ripple effect across many financial activities. For example, the sale decreases inventory, which requires an update in the general ledger. It might also necessitate the purchase of raw materials to produce new inventory. In a standalone accounting system, each step in the process is handled separately and, often, by different teams. An integrated accounting system can automate the entire finance and sales process by recording the sale, updating inventory, recognizing revenue and adjusting future sales forecasts in real time.
Compared with traditional accounting, which looks at an organization as a whole, project-based accounting evaluates individual projects by tracking and analyzing their respective revenues and costs. It’s a critical function for project-based businesses, such as construction companies or event organizers. A standalone accounting system makes this process challenging. For example, one system may handle revenues and costs for a specific project, but syncing data with inventory management or human resources can be time-consuming and error-prone. An integrated system, meanwhile, automatically automates and synchronizes the process. If construction workers work extended hours, for example, an integrated system registers their overtime pay in an HR system and adjusts the forecast for the project’s profitability.
Accounting is a constant process of reconciling multiple sets of internal financial records against each other, as well as external statements, such as bank and credit card statements, to uncover inconsistencies or errors. For example, if a company has items returned, but they’re not recorded in inventory because systems are disconnected, it could inadvertently submit inaccurate financial reports to regulators, with serious financial and legal consequences. An integrated accounting system automatically connects the dots. For example, an integrated system could quickly identify the source of the returned inventory inconsistency by cross-referencing sales, returns and inventory data.
Complying with ever-evolving corporate tax laws, taking advantage of new deductions and filing timely, accurate tax documents is a meticulous process with serious financial and reputational repercussions. Accounting and financial teams must understand granular tax requirements across states and countries, for example, while also maintaining a big-picture perspective on how tax obligations impact a business’s overall financial health. Ensuring standalone accounting systems are all updated with the latest tax rates is an arduous task. Reporting errors and data inconsistencies are common. An integrated accounting system eliminates these complexities by providing a single, real-time view of revenues and applicable taxes using the latest tax rates and regulations. Cloud-based systems also have the benefit of automatic updates to tax and regulatory information, handled by software providers.
Reporting and Dashboards
Financial management goes well beyond the ability to gather, store and manage transactions. The real power of accounting lies in the intelligence that can be gleaned from financial data to drive actionable, winning strategies. Many accounting systems feature reports and dashboards to develop insights, but unless information can be consolidated across financial activities, companies will fail to get the big-picture analysis required to make better decisions. This is where integrated accounting systems excel. Interconnected modules across invoicing, payroll and tax management, for example, allow companies to leverage a powerful, consolidated database to create comprehensive reports and dashboards that build a holistic view of a business’s financial landscape.
Accounting systems manage extremely sensitive information about finances, transactions and employees that, if breached, can result in substantial financial losses and reputational damage. The broad nature of an integrated accounting system, which combines multiple critical financial functions into a single application, underscores the importance of financial data security. Compared with standalone systems, which require managing different security protocols for separate accounting systems, integrated systems use consistent security protocols across all modules. Not only does this make security management simpler, but it also means various accounting modules are able to automatically share security information. For example, when an invoicing module flags a suspicious transaction, it can automatically trigger alerts in CRM and inventory modules.
While accounting rules are the same across businesses, accounting processes can vary significantly from one company to another. That’s why every company needs software it can mold to fit its methods. Most software offers a degree of customizability, but when companies use standalone accounting systems, each separate system has its own level and method of customization, which can be costly to set up and maintain. Because integrated accounting systems are, by definition, connected, companies can customize all modules at once, using a consistent process that allows them to activate, modify and deactivate features as needed.
Cloud capabilities aren’t a necessity for integrated accounting systems, but cloud-based solutions make it easier to realize their full benefits. A cloud-based integrated accounting system enables anytime, anywhere access, managed by a cloud provider that hosts, maintains and updates the system. So, if tax regulations change in Canada, for example, the cloud vendor will provide an immediate update that applies to every module of an integrated accounting system at once. A cloud-based system also offers substantial cost and scalability benefits. For example, adding computing capacity to handle higher transaction volumes can be done in minutes, compared to the days and weeks needed for on-premises systems.
Multicurrency and Multilanguage Options
With technology allowing companies of any size to sell globally, the need for multiple-currency and multiple-language capabilities in accounting systems has never been greater. For example, a U.S.-based company that purchases materials from India, sells products in Europe and has a subsidiary in Japan will need to manage transactions in U.S. dollars, euros, Japanese yen and Indian rupees. Ideally, it’ll also need an accounting system that lets its Japanese subsidiary use native-language systems to avoid mistakes. An integrated accounting system with multicurrency and multilanguage capabilities enables seamless transactions across currencies, automates conversion rates and keeps ledgers consistent.
Integrated Accounting System Examples
Most integrated accounting systems can be tailored to industry-specific challenges. The following examples illustrate some of the benefits integrated systems can offer across multiple industries.
Retailers often deal with a long list of products, suppliers, pricing structures and diverse markets, making accounting processes complex. An integrated accounting system can simplify that process substantially. For example, consider a retail chain that must maintain correct inventory levels across multiple outlets. An integrated accounting system connects sales and inventory data, so each sale instantly updates inventory levels. If an outlet’s inventory for a product runs low, the system can send an automatic alert to purchase additional inventory or reallocate products to restock shelves. This helps mitigate the risks of costly overstock or stockout scenarios.
Manufacturing businesses also deal with multiple activities that impact accounting processes, such as purchasing raw materials from suppliers, tracking costs for production and monitoring product distribution. An integrated accounting system can keep tabs on expenses and revenue across the entire supply chain. For example, as raw materials are purchased, the system can log changing costs in real time to create more accurate forecasts for production costs. In turn, this allows manufacturers to update product pricing to protect profit margins and remain competitive.
Real Estate and Property Management
The real estate industry is characterized by many types of transactions, such as property acquisitions, the collection of monthly rental fees and maintenance costs across multiple properties. An integrated accounting system can use project-based accounting to help companies track expenses and revenue for each property in their portfolios by treating each property as a project. For example, if a property manager repairs a tenant’s broken refrigerator, the cost is logged into the accounting system, which automatically adjusts the profitability forecast for the property. As a result, real estate companies can make quick decisions about adjusting rental rates or potentially selling properties.
Healthcare companies require precise accounting to balance patient-care costs with their own financial health. One critical aspect of healthcare operations is insurance-claims processing. Hospitals, for example, need timely, accurate reimbursement for many expenses related to patient care. An integrated accounting system can streamline the process by consolidating patient, treatment, policy, rate and claim information into a seamless workflow. As a result, the accounting system connects patient data with information about their treatment to ensure proper billing. It also integrates with data about each insurer’s specific policies and claims processes to automatically generate accurate claims, so the hospital receives payment. Some integrated accounting systems also have electronic data interchange capabilities to automatically submit claims to insurers.
How to Choose an Integrated Accounting System
When evaluating integrated accounting systems, it’s important to remember that apples-to-apples comparisons are difficult to make because of the many individual nuances each vendor provides. However, the following steps can help narrow down the choice to identify the solution that best suits each company’s needs.
It’s tempting for companies to focus only on current needs when choosing an integrated accounting system, but the system should be able to handle future needs, too. That means, for example, considering not only where transaction volumes are today but also where they’re expected to be in several years. Are acquisitions on the horizon? To ensure scalability, look for a solution with a modular design that can adapt to increasing requirements. Cloud-based solutions make scaling server capacity for increasing transaction volumes just a few clicks away.
Understand Integration Needs
An integrated accounting system consolidates many accounting activities into one. However, it’s important that it be able to seamlessly integrate with other critical applications, such as CRM, inventory management or ecommerce platforms, to further streamline processes, reduce manual data entry, minimize errors and provide a more detailed, real-time view of finances. When choosing an integrated accounting system, look for a vendor that offers robust application programming interfaces, which simplify the process of connecting distinct applications.
Prioritize Data Security
Protecting sensitive financial information from security breaches should be a top business priority. Strong financial data security can protect against potentially devastating financial losses, legal consequences and reputational damage. When selecting an integrated accounting system, be sure to delve into each vendor’s security protocols. Features such as encryption, multifactor authentication and regular backups are necessities in today’s environment.
Even the most feature-rich accounting software is useless if it’s too difficult or cumbersome to use. A complex user experience can lead to errors, lower productivity and increased employee resistance. To avoid these problems, ask vendors for demos or trial versions to allow staff to evaluate their systems. In addition, look for user-friendly features, including intuitive dashboards, customizable interfaces, interactive reporting tools, automated workflows and drag-and-drop functionality.
Evaluate Cost Implications
Cost shouldn’t be the only consideration when selecting an integrated accounting system, but it’s an important factor for many companies nonetheless. Budgets need to factor for the cost of software, as well as expenses related to implementation, maintenance, training and upgrades. An on-premises solution will also require considerable up-front investments in hardware and support resources. Cloud-based applications require far less initial investment because providers handle hosting, maintenance and upgrade costs as part of a monthly subscription cost.
Integrated Accounting System Implementation Tips and Best Practices
The transition to an integrated accounting system is not merely about using new software but also about optimizing processes for maximum efficiency. The following six best practices can make for a successful implementation.
Clean Up Files Before Import
Data migration from an older system is a critical step in the implementation of a new integrated accounting system. But if existing data issues, such as inconsistencies, redundancies and inaccuracies, aren’t fixed before import, the new accounting system will inevitably experience the same problems. Companies should conduct a comprehensive audit of current data to identify discrepancies, outdated records and redundancies. Data validation tools can help identify issues quickly. Helpful tip: To gain insights about financial data challenges, engage frequent users of existing accounting systems.
Figure Out Transaction-Level vs. Summary-Level Data for Import
Not all financial data needs to be migrated to a new integrated accounting system. For example, some companies have on record a decade’s worth of transaction-level data for every sale, purchase or payment. Importing every transaction could potentially slow down the system without offering any meaningful advantage. It may be more important to import summary-level data, which aggregates individual records into comprehensive totals, such as monthly sales or yearly expenses. Decisions about the amount of data to import come down to long-term goals: If a company requires detailed financial tracking, then transaction-level data may be necessary. If a company is looking for a top-down view, then summary-level data may be a better fit.
Involve Your Team Early and Often
Implementing an integrated accounting system shouldn’t occur in a proverbial vacuum, managed only by IT teams and a few stakeholders. Involving employees who will use the system regularly increases the likelihood of a smoother, more efficient rollout. It also accelerates the learning curve by giving teams access to the system early, offering them the chance to identify and address any potential issues before they escalate. When implementing a new integrated accounting system, schedule regular feedback sessions and hands-on workshops to build familiarity and a sense of ownership among staff; this also helps boost morale and foster a proactive approach to troubleshooting. In addition, consider designating committed employees as “implementation champions” who can act as intermediaries in gathering feedback and helping colleagues.
Run Both Systems for the First Few Months
Making a sudden switch from an older system to a new integrated accounting system can feel like walking a high wire without a net. That’s why companies should consider running both systems in parallel for a few months. If any unexpected issues with the new system crop up, they can still rely on their previous systems to prevent costly disruptions or errors. It also allows them to make real-time comparisons between the systems to identify inconsistencies and find solutions quickly. Running systems in tandem adds additional cost, however, and can’t go on indefinitely. Establish a period long enough to capture inconsistencies but with a clear end date. In addition, schedule regular review sessions for employees to actively report issues.
Commit to a Cutover Date
A cutover date is the day when existing accounting systems are retired and the new integrated accounting system takes the reins. While cutover dates are subject to change, it’s important that companies commit to a date early in the implementation process to guide their efforts. The date also serves as a motivator, energizing teams to focus as the date approaches. Choosing a cutover date requires careful consideration about both the scope of the transition and potential hiccups. Before setting the date, consult staff who will be using the system to gauge their readiness. Then, once the date is selected, communicate it widely within the organization, ensuring that everyone is aligned.
Don’t Forgo Ongoing Support
There’s no such thing as “set it and forget it” when it comes to software. As business needs evolve and new features are added, companies would be wise to consider ongoing assistance, training and troubleshooting offered by system vendors or third-party consultants to be sure their integrated accounting systems will continue to operate efficiently. Vendors and consultants typically have deep industry expertise and can help companies adapt their systems to changes in regulations and standards, for example. Carefully analyze after-sales support offerings when evaluating accounting systems vendors. In addition, ongoing support is an investment, not an expense, so be sure to budget accordingly.
Streamline Accounting With NetSuite Integrated Systems
NetSuite Cloud Accounting Software seamlessly integrates a wide range of financial activities, such as cash management, accounts payable and receivable, reconciliation, tax management, close management and fixed asset management, in a single system. As such, the solution dramatically reduces manual data entry and errors, ensuring that data flows smoothly across various departments and functions. By combining accounting with built-in, real-time financial dashboards, analytics and reporting, NetSuite streamlines end-to-end financial processes and creates a consolidated view of financial status anytime, anywhere. Customer orders automatically trigger invoices, shipments and revenue entries, with no need for manual data re-entry at each stage.
NetSuite’s accounting software is part of the company’s comprehensive ERP suite, which seamlessly links its accounting module with other mission-critical applications for CRM, ecommerce, manufacturing and supply chain management. The result is the ability to generate insights not only about financial operations but also about every aspect of the business. NetSuite’s cloud-based offerings also offer significant adaptability and scalability, allowing customers to add more computing and storage power in minutes as they grow. NetSuite also boasts advanced revenue-recognition capabilities, multicurrency support and compliance management tools for businesses operating globally.
Implementing an integrated accounting system can have a significant impact on a company’s ability to manage growth by dramatically simplifying workflows, centralizing financial operations and offering a cohesive view of finances. Features vary from system to system, so companies should be sure to assess their needs before choosing one. With careful consideration, the myriad advantages and features of integrated accounting systems make them an invaluable, transformative tool.
Integrated Accounting System FAQs
What are the hallmarks of integrated accounting systems?
At the core of every integrated accounting system is a consolidated, real-time database with integrated modules for multiple accounting activities, such as payroll, accounts payable and receivable, general ledger and inventory accounting. This modular architecture enables a system to scale. In addition, because data from one module is automatically populated into other modules, an integrated accounting system requires far less manual data entry, which ensures data consistency and accuracy and leads to better financial and compliance reporting. Integrated accounting systems also often feature automation tools for greater efficiency and control over user access for stronger security.
What’s wrong with manual accounting?
There’s nothing inherently wrong with manual accounting systems, but as companies grow, they require significant time and resources to manage. That’s because accounting consists of so many separate but interrelated activities, such as accounts payable and receivable, payroll, invoicing, inventory accounting and the general ledger. With manual accounting, not only is each activity often handled by separate employees, but manual data entry into separate systems also carries a greater potential for inadvertent errors and inconsistencies. An integrated accounting system connects these various activities and automates processes and workflows, which makes the accounting process significantly faster and more accurate.
What are the benefits of integrated reporting?
Integrated accounting systems simplify reporting processes and ensure greater accuracy. These benefits stem primarily from the consolidated, real-time database at the heart of an integrated accounting system. Various accounting modules, such as payroll, the general ledger, and accounts payable and receivable, are seamlessly connected in real time, so the system requires far less manual data entry, which results in more accurate and consistent data for reporting. That also means companies can build reports based on the most up-to-date financial information, drawn from across the business, which leads to better decision-making. Accurate data also pays dividends when it comes to compliance, minimizing the risk of costly violations.
Is QuickBooks an integrated accounting system?
Yes, QuickBooks is an integrated accounting system primarily for small businesses. Depending on which version is used, it features a limited set of modules for accounts payable and receivable, inventory and the general ledger. However, several modules rely on third-party integrations. QuickBooks also limits the number of users and transactions a company can manage. As companies grow and require more sophisticated accounting, they may find that more robust solutions, such as a more fully featured integrated accounting system or an enterprise resource planning (ERP) system, will better suit their needs.
What are the 4 types of accounting system?
There are four types of accounting systems. Manual systems are the most rudimentary, where businesses record transactions, such as a sale, and list them individually in a ledger. With single-entry accounting, companies record transactions once in a single account — either an amount coming in or an amount going out — with no insight into how these transactions affect each other. With a double-entry system, companies connect the dots, recording every transaction twice, as a debit in one account and a credit in another. The fourth type of accounting system is computerized accounting, where an accounting system automates many of these processes.