"The Most Innovative Approach to Accounting Software since the PC was Invented" is the slogan on the box in which the software is packaged.
Keith Levenstein of Econoserv SA and the author/developer of EconoAccounting, explains: "Most accounting packages allow a user to create invoices, capture cheques, handle debtors by capturing deposits, capturing journals and reconciling the bank account."
Most users of accounting packages are successful at creating invoices, handling (to an extent) payments and sending out statements. Where many businesses fail is they do not get around to capturing all their financial transactions - all the cheques, deposits, bank charges, debit orders, stop orders, Internet transfers and payments which appear on the bank statement.
Even if they do succeed, the task of reconciling a bank statement can be daunting, and to find that last R2.20 is so frustrating that many people give up on it and let their accountants balance their bank account at the end of each financial year. With regard to the bank account, all accounting packages allow the users to capture cheques, deposits and journals like service fees, bank duty, debit orders, magtape transactions, etc. Once the data is captured, if there are no typing errors, in theory, the accounting system will balance with the actual bank account. In practice, reconciling a bank account is a difficult task, one that requires an experienced person to find the one transaction not captured, or captured incorrectly.
"Until now," says Levenstein. "EconoAccounting takes a completely different approach. EconoAccounting recognises how important the bank statement is. It recognises that the bank statement contains the vast majority of financial transactions in a business. Every invoice payment, every expenditure - cheque, debit order, Internet transfer appears in the bank statement, (or in a petty cash account). Effectively if we could duplicate the bank statement, we would have almost all the transactions necessary to do complete financial accounts:
* Reconcile the bank account
* Produce VAT returns
* Produce an accurate income statement
* Produce an accurate balance sheet
"The EconoAccounting approach is to allow fast easy capture of transactions to exactly emulate the bank account. For example, the system will calculate running balances to easily check and reconcile the bank account. However, EconoAccounting has three built-in features that make it unique and probably 100 times faster to use than any other system on the market."
1) Importation of bank account from the Internet
a. With the advent of Internet banking, it is now possible to download (in electronic format), your bank statement. EconoAccounting allows the importation of this downloaded statement. Each statement contains multiple transactions, and EconoAccounting imports each transaction, capturing the date, the description or narrative supplied by the bank and the amount. This is done at the rate of 10 transactions per second. Each transaction is entered/captured correctly, with no errors.
b. The system has built-in "intelligence" to ensure that once a transaction has been imported, it will not be duplicated the next time the statement is downloaded, and imported. Effectively the system ensures that only transactions not yet captured will be imported, even if they appear on the downloaded bank statement.
2) Automatic reconciliation of the bank account
a. As the data is being imported, the system calculates the running balance on the bank account. Since all transactions are imported directly from the downloaded bank statement, the bank account will always HAVE to balance, ie, it is automatically reconciled. Every single transaction has been captured, and therefore the account will always balance.
3) Automatic, and instant allocation of expenses
a. EconoAccounting uses the narrative or description supplied on the actual bank statement. Often users of other systems will use abbreviations to try to speed up the data capture process. In the case of EconoAccounting, because the entire, correct narrative is used, we realised that the same description appears over and over again on different bank statements. For example, a description "Internet Payment to TELKOM" is likely to repeat itself every month. Similarly descriptions like "Service Fees", "Bank Duty", "Insurance", "Lease" are likely to re-appear at least every month. EconoAccounting therefore can be trained to recognise key words or phrases and allocate those transactions to their relevant expense accounts. When each account in the chart of accounts is created, there is space to indicate if input VAT is "usually paid" on this account. If VAT is usually paid, eg on a lease, then the system will automatically deduct the VAT amount at the same time that it does the auto allocation.
"We have discovered that up to 90% of all credit transactions can be `auto-allocated`, leaving us only to manually allocate 10% of credit transactions, and also handle invoice payments in the same way. Effectively this means that a bank statement containing 200 transactions (four to five printed pages) can be imported, reconciled, and up to 180 of those transactions can be automatically allocated in less than five minutes, leaving only 20 to be manually, but quickly processed.
"We have helped clients download four years of bank statements in less than 60 minutes, and imported up to 5 000 transactions in less than 10 minutes. By setting up auto-allocations on the repeating transactions we were able to allocate over 4 000 transactions within one hour.
"The client was able to produce accurate accounts ready for audit within a couple of days.
"Using any other system requiring manual entry it would simply not be possible or feasible. The benefits are far reaching: because the software does most of the work, most accounting work can be done internally, without waiting for the accountant to do his work. This not only saves money, but more importantly gives complete up to date information. For the first time ever a small business owner can produce his own accounts, simply by downloading his own bank statement - which he needs to do every day anyway. Once he has complete accounts, he can analyse them to ensure he makes the right decisions in his business. He assumes total control of his own business.
Levenstein continues: "The innovativeness of the software is not the exciting features we built into the software, but the fact that a business owner can for the first time, without effort, produce proper, accurate debtors information, reconcile his bank account, allocate the transactions accurately, produce his VAT report and even print out a `bank manager ready` income statement and balance sheet.
"What is also innovative is that we dislike using too many accounting terms - for example an entire set of accounts can be written up without us even using the terms `debit or credit`.
No wonder the EconoAccounting packaging box says "The Most Innovative Approach to Accounting Software since the PC was Invented", concludes Levenstein.
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