Collaborative accounting: what is it and how can it benefit your company?

Ever had disjointed information or couldn’t locate the information you so desperately require regarding your company’s accounts? These issues not only mean spending valuable time in searching, but they also lead to mistakes. And as a result, this can turn out to be extremely detrimental to your business. It is exactly in these situations that collaborative accounting can prove to be very useful.

What is collaborative accounting?

Collaborative accounting is a new accounting management system. It is based on the utilization of electronic tools, including software and cloud files, with the purpose of centralizing information, automating functions, and improving communication between your business, accountants, and other stakeholders.

Even with the use of multiple technologies, collaborative accounting is not merely about adjusting tools or digitalization. It’s a shift in accounting paradigm, as it changes the way accounting is imagined and practiced.

Collaborative Accounting vs. Traditional Accounting

Traditional accounting first depends on manual, decentralized processes. Consequently, they are more time-consuming, error-prone, and have more security concerns.

In contrast, collaborative accounting, or online accounting or cloud accounting, is characterized by a set of attributes that transform a firm’s accounting and financial management:

• Remote access: The company’s accounting information is stored in digital clouds, making it accessible from anywhere, as long as there is a computer, tablet, or smartphone with internet access;
• Task automation: you can automate routine and time-consuming tasks, such as bank reconciliation, or even create reports;
• Real-time collaboration: Business owners, accountants, and even customers and suppliers can communicate in a virtual environment, not only to share documents and manage their accounting in real time, but also to work together and monitor projects;
• Data security mechanisms: On collaborative accounting platforms, a company’s financial data is protected by rigorous security protocols, including access control and data encryption.

What are the advantages of collaborative accounting?

With these characteristics listed, it’s easy to see the added value of collaborative accounting for businesses. In addition to time and cost savings, we highlight the following advantages:

• Process optimization and increased productivity: the ability to automate tasks, centralize information, and collaborate in real time optimizes accounting processes. This frees up time for the team to focus on more strategic business tasks, increasing productivity.
• Improved communication and collaboration: Having access to the same resources facilitates communication between companies, accountants, and stakeholders. These collaboration tools therefore promote information sharing and transparency;
• Greater visibility and control over the company’s financial health: Collaborative accounting platforms allow you to not only aggregate all financial information, but also analyze that information and generate reports, offering a complete and up-to-date view of the business’s financial health. This, in turn, enables more assertive business management, allowing for better decision-making and identification of optimization opportunities.
• Greater security and confidentiality of information: data encryption, access control, and auditing processes associated with collaborative accounting platforms ensure information confidentiality;
• Compliance with legal requirements: Collaborative accounting platforms are regularly updated with changing tax laws and regulations, ensuring compliance with legal obligations.

What practices are recommended in this area?

The benefits of teamwork in accounting are obvious. However, in order to take full use of these advantages, a number of conditions and procedures must be met.

Establishing specific goals, determining the issues to be resolved, the areas to be optimized, and the anticipated outcomes of using the new tool should come first.

Selecting the platform that best fits your company’s unique requirements, business profile, and available budget is the next stage. A marketing firm or a clothes store is not the same as a rental vehicle company, which must oversee a fleet in addition to paying clients. At this stage, you should assess not just the functionality but also the technical support and ability to integrate with other systems.

After choosing the platform, training is provided to the employees who will be involved in the process. Therefore, it’s necessary to establish clear and efficient workflows and define and optimize reports. At the same time, policies and procedures must be clearly defined, for example, regarding platform access and use, document storage, and activity logging.

While all these points are important, the most crucial is fostering a collaborative culture . Otherwise, the entire effort of opting for collaborative accounting could be jeopardized. Thus, establish a corporate culture that encourages collaboration and communication between all parties, using this platform as the basis for exchanging documents, ideas, and information. You’re also promoting the use of new technology at the same time.