Accounting is a central business function in companies of all sizes. Given business model complexities, capturing and translating financial data into accounting journal entries can be challenging. Firms rely on multiple data sources and platforms to make sense of their financial data, and gaps between systems can create delays in their accounting processes.
Integrated accounting software systems help companies streamline their financial accounting and overcome these challenges. In this article, we'll cover the most important topics related to integrated accounting systems, such as:
An integrated accounting system is software that brings every aspect of accounting onto a single platform.
An integrated accounting solution simplifies accounting processes within a company by eliminating the need to transfer data manually between multiple financial platforms. These solutions can either be a single platform that contains different modules or a smaller solution that seamlessly integrates with the different finance-as-a-service (FaaS) tools modern teams use.
Note: the phrase "integrated accounting system" also refers to an accounting procedure where accountants separate cost and financial entries. In this article, we will be discussing integrated accounting systems from a software perspective.
Integrated accounting software modules handle the core tasks facing modern accounting teams. Here are the most important features of every integrated software accounting solution.
AR and AP departments play a major role in helping firms project their cash flow needs. AR handles payments a company receives from its customers, while AP handles payments to its suppliers.
Software helps these teams project the cash inflows and outflows the company can expect over a period, minimizing expenses and smoothing working capital needs. For instance, AP software can alert teams to early payment, or annual bulk payment discounts vendors offer, lowering procurement costs.
Procurement plays a central role in a company's supply chain, and reducing vendor-related costs will boost gross margins. Expense management is closely tied to vendor-related costs in modern companies, thanks to the rise of SaaS apps.
For instance, employee spending on SaaS apps can spiral out of control if the company does not maintain a spending policy. Tools such as Ramp help companies centralize SaaS vendor spending and nip problems such as shadow IT and duplicate expenses in the bud.
Integrated accounting software records these spends in appropriate journal entries, simplifying spending classification and general ledger (GL) transfers.
Accountants rely on their general ledgers (GL) to prepare statements and reconcile cash flows. As a company grows, preparing a GL becomes challenging. Multiple systems can create data silos that will lead to incorrect financial reporting.
An integrated accounting system brings all expense accounting and reporting onto a single platform, thus automating GL creation. The result is less manual work for accountants and more time for value-added financial planning and analysis.
All growing companies rely on accrual accounting, where cash and expenses are recorded before they occur physically. As a result, reconciling journal entries to cash positions is essential.
Integrated accounting software streamlines this task by presenting all financial data on a single platform. Accounting teams do not waste time searching disparate systems for data. Some integrated systems even automate reconciliation tasks.
For instance, some expense management modules match receipts to bank statements, resulting in speedy expense reimbursement and monthly close processes.
Bookkeeping and accounting are closely related. As volumes rise, entering transactions into the right accounts under the double-entry bookkeeping system is challenging.
Integrated software systems simplify this task by automatically pulling financial information like expense and revenue data into the correct accounts and creating offsetting journal entries. Thus, bookkeeping becomes simple, and accounting statement preparation times reduce.
Integrated accounting systems handle the financial aspects of inventory, such as recording purchasing costs and simplifying inventory accounting. For instance, estimating the impact of changing from FIFO to LIFO is difficult when using standalone software or manual accounting.
In such scenarios, integrated accounting systems automate most processes, helping accountants arrive at correct inventory numbers. The result is a flexible and resilient accounting system that can quickly respond to business needs.
Integrated accounting systems present companies with many advantages. However, before adopting a solution, check whether you face one of the following challenges and business situations.
Companies collect revenues from different sources in different formats. For instance, POS terminals deliver highly granular revenue datasets, but app stores deliver bulk sales data without additional context. Integrating these formats is challenging.
Integrated accounting systems will help you standardize datasets and deploy analytics on them. Thus, analyzing trends in your revenue and customer relationships is simple.
Expense reporting and approvals become a bottleneck as a company grows. Lengthy expense reimbursement and approval times not only antagonize employees but also delay monthly closes.
Integrating an expense management SaaS provider with your accounting platform will help you create end-to-end workflows that result in quick monthly closes, better budget projections, and automated expense audits.
If your team is experiencing significant reconciliation challenges, adopting an integrated accounting system is a great idea. For instance, if your AR team faces challenges reconciling invoices to cash, integrating an AR automation solution will help your teams get on the same page and apply cash to invoices quickly.
Similarly, thanks to readily available data and automation capabilities, hedge accounting workflows can also become simpler with an integrated accounting system.
AP and AR provide insight into your company's ability to create efficiency and lower unnecessary expenses, using metrics to track progress. Some of these metrics include:
All these metrics rely on financial data, and integrated accounting systems pose advantages in this context. Thanks to data from every source being present on a single system, you can automate metric calculation and focus on improving your processes.
Can you predict the balance sheet after-effects of switching WIP thresholds on your balance sheet? If you're struggling to understand the financial implications of your inventory processes, an integrated accounting system that incorporates inventory management is essential.
As transaction volumes grow, keeping pace with different data formats and duplication issues becomes impossible, rendering manual processes ineffective.
An electronic platform that automates most financial tasks will help you focus on value-added tasks in the workflow, helping you squeeze more profit from your resources.
Here are some of the benefits of adopting integrated accounting software platforms for your business.
In today's fast-paced business environment, you must possess end-to-end visibility of your financial data, eliminating data silos and manual data entry tasks.
Integrated accounting systems will help you view the financial implications of your decision on every part of your organization. You can build accurate business projections, knowing that you're always considering the entirety of your data.
Crafting journal entries is tough when relying on manual processes in a growing business. Worse, if your accounting system is part of several disconnected electronic platforms, translating and uploading data will create duplication and other errors.
An integrated accounting system renders such errors almost entirely nonexistent. You can rest assured that all data standardization and uploads are taking place in the background while you gain a real-time view of your business.
Thanks to integrated accounting software offering you insight into your financial data, you can spend time analyzing patterns and removing inefficiencies. For instance, you can integrate expense management and employee spending on SaaS apps with your accounting system and close your books faster.
You can also integrate standalone accounting solutions that help you create rules, automate approvals, and reconcile transactions. The result is faster monthly closes and accurate financial projections.
Modern businesses collect an immense amount of data but often struggle to leverage it. Integrated accounting systems remove the roadblocks to data-driven decision-making, such as data silos and manual processes. By automating most clerical work, you'll leave room for analysis that makes a difference to your company's bottom line.
Here are four of the best integrated accounting software solutions for your business.
QuickBooks by Intuit is one of the most popular accounting applications for businesses. Its ease of use makes it a no-brainer for most companies, and its pricing ensures popularity with small businesses. The software's basic version includes most accounting modules such as:
Advanced versions help your business integrate ACH payments, mobile payments, and subscription billing.
Ramp integrates seamlessly with QuickBooks to help you digitize expense policies and quickly categorize spending.
Oracle's NetSuite is a popular accounting platform for midsized businesses and enterprises. It comes replete with highly customizable options and a range of features such as:
If your company is rapidly growing and is approaching the midsized capitalization mark, choosing NetSuite is a good idea.
Ramp integrates with NetSuite, helping you manage multiple entities and digitize expenses across all of them.
Like NetSuite, Sage Intacct is ideal for large corporations and features an intuitive drag-and-drop user interface. It integrates with several third-party apps, including Ramp, to simplify all accounting tasks. Here are some of the standard features of this platform:
Sage also allows you to add subscription billing, inventory management, project accounting, expense management, and sales taxes for an additional cost.
Thanks to seamless API integration, Ramp helps you view all your transactions and SaaS vendor-related spending on Sage Intacct.
Xero is quickly surpassing QuickBooks as the accounting platform of choice for small businesses. Crucially, it doesn't limit the number of users, helping small businesses scale successfully.
The platform offers the following features with its basic plan:
Ramp's API integration with Xero helps you automate reimbursements and split transactions across jobs, locations, and project codes.
Integrated accounting systems simplify accounting workflows. They help you adopt a data-driven approach in your business. If you’re experiencing rapid growth, an integrated accounting software platform will boost your bottom line and help you scale sustainably.
Learn how Ramp can automate your finances, simplify expense reporting, and strengthen your accounting.