Are we ready for electronic cashbooks?
A recent exchange in AccountingWEB.co.uk’s Cloud computing discussion group triggered an exploration of something that has been lurking just beyond accountancy’s horizon in recent years – the potential for companies to base their books on automated bank statement feeds.
For years, AccountingWEB.co.uk consultant editor David Carter has argued that the electronic cashbook is logical, labour-saving approach that make life easier for small companies and their advisers.
The latest episode in the bank statement bookkeeping debate started when KashFlow said it was working on a module to speed up bulk data entry for its online bookkeeping application.
This approach brought a retort from rival Xero’s UK managing director Gary Turner: “Our instinctive expectations are informed by a software design workflow that involves paper, documents and manual entry.”
Instead of manually keying hundreds of transactions into an application, Turner argued that bulk imports of electronic bank statement could eradicate a raft of pointless, paper-bound accounting processes.
“Many small businesses rack up large numbers of direct debit, cash and credit card expenses in a month where the paperwork appears long after the funds have left the bank account. This throws accurate visibility of cashflow a real curveball, so actually driving the business off the bank statement is probably more sensible for smaller businesses too,” Turner said.
For Twinfield, UK country manager Mark Davies joined in the discussion by adding that even without relying purely on bank transaction data, it is now possible to eliminate paper documentation from the accounting process. His Dutch counterparts already work with accounting practices that automate more than 80% of their invoice processing by using scanning and OCR. The system then prepares invoices for approval and payment automatically using the same business rules that would previously have applied to paper invoices raised manually. Twinfield is working on bringing the same facilities to its UK customers.
Paul Scholes posted a sceptic’s view of the electronic cashbook approach. “My first practical problem is that it makes people lazy,” he wrote. “They are not forced to match payment with paperwork.” Losing this control causes problems such as bills being paid twice and confusion with a series of identical payments whether “the April payment was for the March bill (which was missing) or the April one”.
However, Scholes acknowledged it was “daft” for a human to key in data one end to generate an invoice for dispatch only to have the same data re-keyed at the other end by another human. His suggestion was closer to the Twinfield model, but would depend on developing a national or international bar coding standard so that all the standard data fields a purchaser would need - name, date, invoice number, product description, amounts – could be captured. Then only the internal stock and nominal codes would need to be allocated by the receiver.
Having put the counter-argument, he then admitted to a private suspicion that he was not seeing the wood for the trees. Perhaps “I too have suffered indoctrination,” he said.
Where do you stand and what evidence do you have to support the suggestions put forward by Xero and Twinfield? Join the electronic cashbook debate by posting your comments below.