How Payments Integration Software Helps Avoid Accounting Mistakes

With the advent of easy to use accounting software, bookkeeping has never been easier for small to midsized businesses, but that doesn’t mean it has eliminated costly accounting mistakes. While some errors have only a marginal effect on a company’s financials, others are more serious and may have a significant impact by misrepresenting a company’s real financial health. While a trained accountant can help keep the books in order, there are things business owners can do to ensure their financial record keeping is done correctly. With payments integration software, many common errors can be avoided.

Manual entry 

Accounting software helps businesses manage their finances but still requires the entry of data. While account software simplifies this process, it’s still mostly manual for many small to midsize companies. Data is collected and input into the accounting system by hand and because these are manual processes, bookkeepers can run into errors when inputting payment data into the accounting applications. If information is entered incorrectly, vendors can be paid the wrong amount, or the wrong vendor can be charged for a transaction.

Double entry is one of the more common errors and means doing the entry twice. For companies processing a high volume of transactions, it can be easy for entries to be duplicated. Researching these errors can be costly, causing monetary losses for the time needed to research and correct the mistakes.

Human error when entering data is a common cause of both monetary and productivity loss in most businesses. Preventing all data entry errors is impossible but you can put procedures in place to ensure incorrect entries are identified and fixed quickly.

One way to solve many of these errors is with payments integration software. Automating data into the accounting system helps eliminate errors from manual entries and makes it easier for businesses to manage their bookkeeping efforts. By having payment processing integrated into the accounting software application, payments can be automatically applied to the general ledger or credited to an invoice. This simple process reduces human errors, eliminates double data entry, and helps businesses more easily reconcile their books.

Reconciliation

Reconciling your accounts regularly is important to make sure that your account balances are in sync with your bank account balances. The regular practice of reconciliation can help identify any discrepancies before they become a problem that can distort your true financial picture. Performing this process on balance sheet accounts, at least monthly, is vital to a small business’ success. Most accounting software has a reconciliation feature available in the system, which makes it easier to review transactions against your bank statements.

Without a doubt, manual reconciliation is a very inefficient and demanding process. According to a survey by the accounting firm Ernst & Young, up to 59% of a bookkeeper’s time is spent dealing with these transaction intensive processes. When looking at the data closely, it turns out that 95% of this effort is wasted on transactions that already match. This takes effort away from problem entries that actually require attention. And, if you wait until the end of the year to reconcile your accounts, it can be even more difficult to find errors.

The benefit of automatic payment reconciliation is that it helps increase the accuracy of the reconciliation process to simplify and speed up your reconciliations while freeing the bookkeeper’s time. The software can deal with repetitive tasks like transaction matching, giving you the ability to drill down on open entries or exceptions that require additional attention.