Here are just a few of the key problems that are often mentioned:

1. Closing the books takes days, if not weeks. This is because of the complexities involved with consolidating multiple entities at the end of the month.
2. The team doesn’t have access to real-time data throughout the month, therefore making it difficult for executives to make better decisions.
3. Manually executing the complex accounting processes that most banks face is time-consuming. Additionally, it’s dangerous as the likelihood of data entry error is quite high.    

To help solve these challenges, we analyzed various accounting solutions for banks and compiled a list of our top picks. We’ll also introduce you to our own product, SoftLedger, which several banks are currently using as their accounting software solution. 

• Best for companies seeking advanced multi-entity automation, APIs, and an intuitive UI: SoftLedger
• Best for companies that need more flexibility: Flexi
• Best for companies looking to integrate AP automation in their core banking system: AvidXchange
• Best for companies who are looking for a mobile banking option: FPSGold
• Best for larger enterprise companies: Netsuite ERP
• Enables users to perform all of the basic accounting needs: TallyPrime
• Best for freelancers or small business owners who need a simple solution: Freshbooks

Flexi

Flexi is another popular accounting solution for financial institutions. The key features they highlight are:

• Continuous close
• An average daily balance
• Cloud and on-premise deployment options
• Multi-entity options

Along with general ledger software, they offer solutions for accounts payable, accounts receivable, workflow automation, workflow automation, and financial reporting.

Reviewers praise Flexi for its user-friendly interface and responsive customer support.

AvidXchange

AvidXchange offers accounts payable automation for banks and credit unions with its two solutions; AvidAscend and AvidPay.

AvidAscend is their automated accounting solution. It enables users to efficiently manage invoices, prepaid and accruals, fixed assets, and expense reports. Here are a few key aspects of AvidXchange:

• Create custom approval processes and workflows
• Reporting that is research and audit-friendly
• Optical Character Recognition (OCR) invoice processing and automated coding

AvidPay is payment automation software designed to make online payments and billing easy. 

While the main platform only automates the accounts payable functions of the system, it can be a powerful integration for your core banking system. A few of the systems they integrate with include DCI, Symitar, CSI, Finastra, Jack Henry, and FIS. 

The benefits AvidXchange highlights include faster payment processes, reduced risk thanks to its advanced e-payment options, and remote usage capabilities.

FPSGold

FPSGold is a popular accounting software solution for banks. It offers core banking, online and mobile banking, CMS, and wire transfer software – all designed specifically for banks.

Drilling down to their core accounting solution, they enable:

• Financial reporting
• Fast general ledger entries
• Flexible year-end closings
• Pay vendors easily with ACH
• Fixed assets system that enables you to repost depreciation
• Streamline check reconciliation

While their core accounting system might not be as robust as some of the other solutions on this list, it’s an excellent all-around system that offers plenty of different features for various needs. 

Reviewers say it is user-friendly, and customer support is responsive and helpful.

Netsuite ERP

Netsuite is a popular accounting solution that offers robust features for larger enterprise companies. It offers everything from inventory and asset management to cash flow and audit trails. 

While it offers both cloud and on-premise software, Netsuite is an older solution. Therefore, isn’t as flexible as some of the more modern online accounting solutions. 

For example, it’s tricky to build integrations with its API as it requires proprietary knowledge of its programming language. 

However, it can be a good solution for businesses with 2,000 plus employees and extensive complexities.

TallyPrime

TallyPrime is gaining popularity in the accounting industry and enables users to perform all of the basic accounting needs. For example, managing multiple entities, inventory management, financial and banking transactions, and fast reporting.

Here are a few specific things that reviewers like about TallyPrime:

• Easily maintain the Books of Account for each business entity
• Back-ups to keep data safe
• Remote access to financial data with Tally.net
• Audit and compliance features 
• Simple reports like balance sheet, profit and loss account, etc. 

However, a key complaint among reviewers is that the UI is not very user-friendly, especially for non-accountants.

Freshbooks

Freshbooks is designed for freelancers, small business owners, startups, and bookkeeping professionals that need a simple solution to manage basic accounting processes. So while it isn’t ideal for large corporations, it can be a good option for those that just want a simple, user-friendly solution.

With their basic accounting plan, you’ll have access to:

• General ledger software
• Accounts payable
• Balance sheet
• Chart of accounts
• Journal entries

They also make it easy for anyone to get started with step-by-step guides to most general accounting processes and templates for processes like invoicing.

Expense tracking is also super easy as you can set up bank feeds and automatically import expenses into your Freshbooks account.

Freshbooks also offers a mobile app (for both iOS and Android) so that you always have easy access to your financial data. 

SoftLedger

SoftLedger is designed specifically for multi-entity companies, and there are a few key things that set it apart from other solutions:

• It automatically consolidates data for multiple entities. So when a transaction is entered for one entity, the impact is reflected in the general ledger the same day.
• You always have access to real-time data, which makes it easier for executives to make better decisions.
• It’s built with a REST API, which makes it uniquely versatile and flexible so that it can automate processes that are traditionally manual and slow.  

The digital banking platform, Power, is an excellent example of a company that adopted SoftLedger early on as its core accounting solution, and they’ve reported that it efficiently handles many complexities like:

• Offering real-time reporting on various financial services to thousands of customers across different countries using different currencies. 
• Reporting and accounting across multiple different dimensions, cost centers, and partners.
• Exceptional speed to satisfy their growing customer base.

You can read more about how Power uses SoftLedger or stick with us as we explain why SoftLedger’s accounting software is uniquely designed to help banks improve their accounting processes.

Automatic Multi-Entity Consolidation

There are usually two different camps when it comes to multi-entity consolidation:

1. Small business accounting solutions (like QuickBooks) require users to purchase different accounts for each entity and manually consolidate the books at the end of the month in spreadsheets.
2. Legacy accounting software requires users to purchase a multi-entity consolidation add-on that speeds up the consolidation process, though you might still have to manually prepare the data to be consolidated (e.g., perform intercompany eliminations, etc.).

Either way, there’s some friction at the end of the month, therefore you never really have an accurate picture of your current financial status.

We wanted to eliminate these cumbersome processes, so SoftLedger automatically performs all calculations involved with the multi-entity consolidation process (such as multi-currency consolidation and intercompany eliminations) and then consolidates the entities for you automatically. 

This entire process happens as soon as a new transaction is entered for a single entity, so you always have an up-to-date general ledger and can drill down to any specific entity.

By automating these processes, you’ll be able to eliminate most of the manual processes associated with multi-entity consolidation and close the books faster.

Access Real-Time Data

A key differentiator between SoftLedger and other accounting software is that SoftLedger users always know exactly how the company is performing at any given moment throughout the month.

This is possible because SoftLedger automatically consolidates multiple entities, multiple currencies, and performs any other calculations necessary to provide an up-to-date general ledger. 

So if an executive wants to make a new investment, they can make a better decision based on real data. Similarly, if the bank overspends at the beginning of the month, you can course correct it before the end of the month and avoid going over the budget.

Enjoy Ultimate Versatility With a REST API

When Power was looking for a solution, the team knew their banking platform would need a highly flexible solution that could quickly accommodate a high volume of complex transactions. 

As SoftLedger uses a REST API, 95% of the platform is entirely programmable via API. This was a key factor that made SoftLedger a perfect solution to accommodate the unique needs of Power. 

With small business accounting software, users are limited to integrating with only the apps available in their marketplaces. While larger legacy accounting systems enable users to build customer integrations, the process is often laborious and resource intensive, requiring developers to deal with proprietary protocols.

With SoftLedger, developers can easily access the documentation necessary to execute the integration, and the overall process is quick and easy.

Despite its powerful capabilities, SoftLedger is also user-friendly and designed so that anyone can quickly learn how to use the platform. Our onboarding process is also quite fast, averaging between a few days to a week or two. For example, despite Power’s extensive complexities, it only took 2-3 days to integrate, and the team was comfortable using it in just a couple of weeks. 

Our customer support team will also be with you every step of the way to ensure your team feels comfortable in their new workflow, and we’re also open to feature requests and other ideas.

Choosing the Best Accounting Software for Banks

There are plenty of different accounting software solutions for different needs, but finding one that suits your needs can be tricky.

We built SoftLedger because we couldn’t find an accounting solution that:

• Automatically consolidates multi-entities 
• Provides access to real-time data at any point throughout the month
• Is 95% programmable via API

Today, SoftLedger is that solution. If you want an accounting solution that can easily handle the complexities of banking accounting processes, schedule a demo of SoftLedger today and see if it can solve those problems for you.

The post Accounting Software for Banks (With Analysis) appeared first on SoftLedger.

Here Are the Accounting Statistics We Found and Our Commentary on These Findings.

Most companies (at least those with multiple entities) have realized that cloud accounting software is significantly more efficient than traditional accounting solutions. In addition, cloud accounting software is much easier to set up and doesn’t require any maintenance.   

On the other hand, SMB accounting solutions require multi-entity companies to create separate accounts for each entity. Unfortunately, this means the parent company never has an up-to-date, consolidated general ledger as the entities are only consolidated at the end of the month. 

This makes it nearly impossible to accurately gauge the company’s overall performance until the month is closed. 

In addition, multi-entities that are using SMB accounting software have to either:

• Perform the consolidation process manually in Excel  
• Purchase a consolidation add-on, export the data, and execute the consolidation process in the add-on, reimport the data

As you can see, both processes are time-consuming (which slows down the close financial process) and expose the data to manual error. 

So a major opportunity for these companies is to move to a solution (like SoftLedger) that offers real-time data and automatically updates the consolidated general ledger the instant an accountant makes an entry for an individual entity. 

This way, they will be able to close the month faster and always offer executives accurate data in minutes.

The Majority of Multi-Entity Companies (85%) Spend at Least $2,000 per Month on Accounting Software.

Approximately 30.77% of companies spend over $2,000 and up to $5,000 per month on accounting software, and an additional 38.46% of companies spend over $5,000 per month.

Companies Using SMB Accounting Software Tend to Spend More on Software per Month Than Those Using ERP Systems.

About 47.17% of companies using SMB accounting software spend over $5,000 per month on accounting software based on our statistics. However, only 29.62% of companies using ERP systems spend over $5,000 per month on accounting software.

This suggests that because multi-entity companies using SMB accounting software have to pay for a new account for each entity, it quickly becomes very expensive and inefficient.

How Long Does It Take Companies to Set Up Their Accounting Software?

Companies using SMB accounting software take longer to set up their accounting systems than companies using ERP systems. About 49% of companies using SMB accounting software completed the setup process in two weeks or less, whereas about 56% of companies using ERP systems completed the setup process in two weeks or less.

What Is the Most Important Thing CFOs Look For in Accounting Software?

45% of CFOs said that the most important thing they look for in accounting software is automatic multi-entity consolidation.

An additional 32% of CFOs say that real-time data is the most important thing they look for in accounting software. 

What Percent of Companies Can Consolidate Their Entities in 1-2 Days?

As multi-entities must finish the consolidation process before they close out the month, their financial close process is also delayed. This means that most companies don’t have access to a real-time, consolidated general ledger throughout the month.

About 44% Of Companies Require a Week or More to Consolidate Their Entities.

The 44% of companies that require at least a week to consolidate entities are at a disadvantage as executives won’t be able to make decisions based on accurate data.

Here’s the full breakdown of the average time required to consolidate multiple entities:

• 16.48% say it takes 1-2 days to consolidate their entities
• 39.56% say it takes 3-6 days to consolidate their entities
• 24.18% say it takes 7-10 days to consolidate their entities
• 10.00% say it takes 11-15 days to consolidate their entities
• 3.30% say it takes 16-25 days to consolidate their entities
• 5.49% say it takes 26 plus days to consolidate their entities

Here’s a Full Breakdown of How Each Company Overspends.

As you can see, it’s most likely that a company will overspend in one or two months during the year.

In addition, about 23% of companies overspend at least five months out of the year.

Of Companies That Overspend at Least One Month Throughout the Year, 38% Said It Was Because They Didn’t Have Access to Real-Time Data.

Without real-time data, it’s difficult to make informed decisions throughout the month. Fortunately, companies can solve this by using a solution (like SoftLedger) that provides real-time data.

What Is the Most Common Issue CFOs Face With Their Current Accounting Software?

When asked, open-endedly, what their biggest pain point with their current accounting software is, about 33% said it is either difficult to use or they frequently experience technical difficulties.

Final Thought

Accountants have fully embraced automated accounting solutions, though many of these solutions are still cumbersome and inefficient.

In the coming years, we’ll likely see more and more software evolve to meet the needs of modern accounting teams.

At SoftLedger, we’re proud to be at the forefront of this revolution by offering a flexible accounting platform with real-time data and automatic consolidation in an easy-to-use package. If you’d like to learn more about SoftLedger, schedule a demo today.

Consolidated Financial Statements: Process and Tools

Why You Need Financial Reporting Automation

Financial Trends in Healthcare You Must Be Aware of for 2023

The post Accounting Statistics: New Data For 2023 appeared first on SoftLedger.

While some fear the short-term unemployment of machines replacing people, technological unemployment is one of the best things to happen in a society. Anytime technology replaces a group of workers they are available to contribute something else to the economy. For example, solving new problems. The point of this essay is not to deter anyone from investing in automation and technology, but to remind executives that you need to evaluate technology investments the same way you would assess any other monetary decision: does the investment cover your hurdle rate? What inefficiencies or risks does automation bring, and how costly are they?

But When Is Automation Not the Right Decision?

There’s a lot of judgment in calculating savings of technology initiatives since companies rarely have exact measurements of the total cost. The time your employees spend on tasks is a necessary input to calculate internal rates of return, which are difficult to measure accurately. Take a simple example: suppose there are 3 people in your accounts payable department who cost $10,000 per month and spend a third of their time reconciling monthly invoices to bank statements. You learn of new software that can perform the exact same function which costs $1,000 a month. Great! You can reduce your staff by one, lowering the payroll burden to $6,667, adding this software for $1,000, and saving $2,333 a month. After you integrate the software, you learn it still requires some manual inputs and full detail reviews, which prompts complaints from your AP department that it now takes up 40% of their time.

You now spend $11,000 a month on AP and have unhappy, overworked employees. What went wrong? The first common mistake in automation decisions is identifying the specific task you are automating. The AP department said they spend a third of their time on bank reconciliations; ok, but doing what? Is it literally tying out the invoices to the bank statements? Or is most of their time spent researching discrepancies and following up with outside vendors? The latter is probably right, and in that case, automated software cannot replace anyone.

No Matter What, Humans Will Always Play a Part in Automation

The second common mistake is not appreciating the limitations of technology. The software does not know anything you did not explicitly tell it. New vendors need to be input, payments need to be accurate to the penny, and your new AP software does not know that ABC Incorporated LLC is the same vendor as ABC Inc. LLC. The software gets you 99% of the way there, but that 1% takes 99% of the time. Close only counts in horseshoes and hand grenades.

Aside from cash out the door, costly inefficiencies transpire when the human thought process is not part of the workflow. We are living in the age of unhealthy reliance on technology: people trust their weather app more than sticking their hand out the window (“It can’t be raining! My app doesn’t say that”); Uber drivers trust their navigation only, never their customers (“No ma’am, you ARE home”). People have come to trust operations software in the same way. Monthly reporting and daily operations management has been outsourced to machines with unquestioning trust. Machines don’t make mistakes, people make mistakes. Well, everything machines know is from what people are telling them. “Artificial Intelligence” is still just a bunch of rules, created and refined by humans.

Technology has glitches, crashes, the equivalent of a human ‘fat finger.’ If you set up a system correctly and have the right checks in place, it will usually give you accurate outputs, but employees still need to take the time to ask, ‘does this make sense?’ When employees blindly rely on system reporting, it doesn’t just hinder operational analytics but also detaches your workforce from accountability. Your employee didn’t make a mistake, the report did. This lack of ownership and responsibility results in costly delays and financial blackholes.

So Is Automation Worth It?

Despite all the points raised in this article, technological automation is worth it and is usually a cost savings. However, let’s not go overboard. Just because it says ‘automated’ and ‘one touch’ does not mean it is more efficient for your organization and better for your bottom line.    

The post The Inefficiencies of Automation: Is It Worth It? appeared first on SoftLedger.

The update requires companies to recognize all expected losses over the life of an asset from its purchase or origination. Prior to this, the codification dictated companies recognize probable current losses on those assets. The update is a response to the lack of sufficient loss reserves financial institutions had on their balance sheets prior to the financial crisis of 2007.  

The codification adds another layer of judgmental inputs to the complex fair value calculations. These are calculations companies must perform in order to be compliant with GAAP. Although the justification is that CECL more accurately represents the true value of a company’s assets. The future value is based on what we know today, which will be different from what we know tomorrow. Sure, you could make that argument about any line item on the financials, but fair value allows you to recognize material non-cash earnings before they are realized, which is unique.

What Is the Importance of Cash Flow Statements?

Here is where the cash flow statement comes in. Looking at cash inflows and outflows year over year provides meaningful analysis without the timing intricacies and judgment of GAAP.

The three main sections in a cash flow statement tell you the following:

• how much cash the company generated from its main operations
• net of the cash required to operate
• how much cash the company used to invest in growth (or to scale back)
• how much cash the company needed in order to finance its operations.

The cash flow statement also tells you everything about what I just condoned. Since it reconciles to the income statement, you can see how much assets have appreciated or depreciated over time. Year over year comparisons in the worth of a company’s assets is more meaningful than one period of judgmental calculations.

Of course, it’s always best to look at all four financial statements together. Hence, why regulators require all four. But if I’m stranded on a desert island and can only have one financial statement – Cash is King.

Read how SoftLedger helps you to easily and simply manage your cash flow and generate statements.

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