Digital accounting is expected to save businesses time and money, contributing to greater efficiency for businesses and government agencies. In light of this, Vietnam is increasingly focusing on digital accounting as it strives to digitize its middle-income economy and attract income-generating FDI.
The COVID-19 pandemic has accelerated the shift to digitalization for many businesses, not just in Vietnam, but around the world. It highlights the importance of technology and digital transformation for the survival and evolution of businesses in all sectors. From this, the further development of digital accounting will play a role in modernizing the business environment in Vietnam, which will help generate revenue and attract foreign investors.
Digital accounting refers to the creation, representation, and transfer of financial information in an electronic format. Instead of using physical paper and pen, all accounting transactions are done electronically.
Digital bookkeeping is performed on digital bookkeeping systems. Essentially, digital accounting systems allow users to synchronize their business bank accounts, transactions, and credit cards with the appropriate software.
The system then syncs all of these flows and transactions into the accounting software where they are separated into different categories and accounts. Once a business synchronizes its bank accounts and credit cards with the appropriate accounting software, financial transactions begin to appear in a queue and are categorized into different categories.
By using such digital accounting systems, a business can save time and generate a financial report to compare costs and revenues, review profitability, check bank and loan balances, as well as forecast tax obligations.
The fundamental functions that a digital accounting system can provide include:
Despite common concerns, digital accounting complements accountants rather than replacing them. By improving technology, digital accounting frees accountants from repetitive tasks such as compiling, managing, and categorizing data while allowing accountants to focus on more strategic tasks that enable better decision-making.
A digital accounting system can be achieved through integrated software solutions implemented by the company itself or through the software as a service (SAAS) approach, or through other cloud-based system approaches. However, regardless of the approach used, there will always be flexible platforms available, which provide digital accounting solutions for free or for an upfront fee.
Digital accounting has gradually become a norm in Vietnam, where many companies, financial institutions and family businesses have tried to implement digital accounting in their accounting process. However, there is still room for development and standardization.
This article was first published by VietnamBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from its offices worldwideincluding in in China, hong kong, Vietnam, Singapore, Indiaand Russia. Readers can write to [email protected]