Since modern accounting principles were first introduced in the early 20th century, the R2R model (record to report, that is, reporting based on accounts) was the dominant accounting process. This approach manages the reporting and information cycle as a iterative process based on the absolute principle of accounting for documented financial events.
For most of the 20th century, R2R worked well for the majority of companies. However, in the end, the activities and processes inherent in this model are inadequate for 21st century businesses based on the prerequisites of the modern economy. The R2R process was designed to host rigid accounting systems that suffer from integration level to be integrated into other data sources, with the desired result of an integrated financial picture of an organization.
Today, modern companies are adopting the principles of Continuous Accounting Model (hereinafter: CAM) – which is the next evolutionary step in accounting and transcends mere reporting, aiming to provide real-time financial information, essentially helping triangle management – control mechanism – strategic planning.
CAM applies modern financial principles in accounting to increase flexibility and efficiency. This approach to accounting cycle management has three main axes:
Automation of recurring accounting procedures to ensure the validity of fixed dataDistribution of accounting tasks on an ongoing basis during the accounting period (eg month, quarter or year). This eliminates the bottlenecks of the period and helps ensure that accounting is done at the most appropriate times.
The establishment of a culture of continuous improvement in operating accounting management. The benefits of this process are obvious, continuous and valid – timely updating of data – decisions and strategies.
Continuous accounting goes beyond simply automating existing processes. It creates a new foundation for financial flexibility, holistically exploiting the capabilities of modern software.
A common and persistent problem in the operation of a Financial Department is the accumulation of work at the end of the accounting period. In today’s complex, 24/7 global business environment, this is a strategic disadvantage. In addition, it can lead to chaos and confusion, which results in errors and high levels of stress for the accounting team. Bank account matching is a good example of the differences between R2R and CAM. Many companies account for this type of work at the end of each month. With CAM, accounting – reconciliation is a continuous process that is performed daily. The benefits of this process are measured as time savings, less stress, higher accuracy, greater efficiency of more accurate financial statements at the end of the accounting period.
The main advantages of CAM include the following:
- It modernizes finance and accounting.
- It speeds up financial analysis and enables real-time precision.
- Integrates operational efficiency into the accounting process.
Capa Epsilon spPCC is the first consulting company in Greece to apply Continuous Accounting models in the domestic market. With a passionate and genuine belief in the vision of entrepreneurship, the result is produced, adds value, removes unnecessary resources, multiplies the benefits and divides the entrepreneur’s purpose harmoniously.
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