What is it?
Over recent years we have seen more and more digitalisation of business finance functions and accounting processes. Two major factors have caused this:
- The introduction of new legislation, such as Making Tax Digital (MTD).
- Increased knowledge and awareness of the benefits, such as improved efficiency and cost-saving.
Data capture involves collecting data from original sources and storing them before continuing with data entry to accounting software.
Who is it for?
It is especially relevant for those businesses that struggle with document organisation and/or processing completeness.
Streamlining current finance operations can save data processing time.
How does it work?
Data capture is the process of automatically collecting and storing source documents in one place before extracting financial data from these documents and making it quicker and more efficient to process into accounting software. Some applications can automatically process data to accounting software with no manual interaction needed at all. Source documents include items such as purchase invoices, expenses, and supplier statements.
Data storage and processing can be tedious, as source documents can be sent to different email addresses, stored in various online accounts, or even received by hard copy post, which will have to be collated together for someone to process.
You can achieve the digitalisation of this process through several applications that link to your accounting software.
Once the application is linked to your accounting software, the source documents can be pulled through to the application's storage inbox in various ways. Just a few of these are listed below:
- Email Address: Most applications will have an email address assigned to your specific data inbox. If you forward digital documents to this email address, they should end up in the application ready for processing and extraction.
- Account Links (AutoFetch): This is where the application is linked to online supplier accounts. As soon as an invoice is added to the online account, the data capture application will pull it through to the inbox, ready for processing/extraction.
- Phone Apps: Most applications have a phone app that can be used to take a picture of documents and upload them, which will then appear in the inbox of the application.
Once the documents are in the application, the software will extract as much financial data as possible and populate fields that manual entry is usually needed for. The user can then go through and publish the data to their accounting software if it is all correct.
What should I do next?
The next step is to evaluate your business's current data capture and data storage function. If it could do with streamlining and organising, it may be worth looking into a data capture application.
The first place to look would be your current accounting software. Check to see what applications integrate well with them. For example, 'Hubdoc' integrates well with Xero, and 'AutoEntry' integrates well with Sage.
There are usually free trials that can be taken out with these applications to test and assess the process. If you have a high volume of invoices, then these applications will more than likely be beneficial.
A cost vs benefit exercise is always worthwhile when making the final judgement on whether to make changes.
The choice of application is entirely personal. It depends on the business needs, but please do not hesitate to contact Ollie Morton on 01865 261100 or via his email if you have any questions.
First Published 29 November 2021
Last Updated 29 November 2021
29 November 2021
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