There’s a better way to manage your books without paying an arm and a leg…use AI

Whether you are a general contractor who is self-employed or incorporated, bookkeeping matters to the survival of your business (remember, cash isn’t king, but cash-flow is king). Without having a bookkeeping system in place, you will be unable to satisfy your tax obligations, nor will you be able to measure the performance of your enterprise.

I want to explain what technology is available to today that can improve your bookkeeping process. But let’s first discuss the traditional bookkeeping workflow to see what’s wrong with it.

The Traditional Approach: The Box of Receipts

Throughout the year, you stuff all your receipts, invoices & statements in a box and send it off to your accountant. Alternatively, you may have an accountant in-house to enter in your paper documents. Here’s what’s wrong with this process:

  1. It is time-consuming for your accountant to manually enter each document in their software program. Whether you have hired an accountant internally or externally, their time does not come cheap.
  2. The process is not audit-proof. Over time, paper documents either fade, get misplaced, or get destroyed. However, the Canada Revenue Agency makes it clear that you must keep your business source documents for a minimum of six years. In the event of an audit, the inability to support your expenses with source documents will result in unforeseen tax liabilities.
  3. This process delays your ability to properly manage receivables, payables and project costs. For a contractor, this is CRUCIAL for the survival of your business. What good is an accounting system if you can only see your results months after your fiscal period has already ended? Of course, it would be best to be able to see this information in real-time.

The (Somewhat) Modern Approach: Using Cloud Accounting Applications

If you’ve heard of accountants offering to update your books using applications like QuickBooks Online, Sage Business Cloud, Xero, FreshBooks, & Wave, they are talking about “using the cloud.”

Using “the cloud” is very secure, contrary to old-school beliefs. Cloud accounting also addresses one of the pitfalls faced by the traditional approach, in that it allows you to react faster to financial issues facing your business on a daily basis by being able to pull up reports in real-time. However, if you still collect your source documents in a box and you have your accountant update your books in the cloud, some of the major pitfalls existing in the traditional approach still exist.

The best way around this is to use something really cool called “artificial intelligence.”

The (Real) Modern Approach: Using Cloud Applications + ARTIFICIAL INTELLIGENCE

Artificial intelligence, or “AI”, is basically the ability for a computer to perform operations equivalent to the learning and decision making performed by humans.

As of 2018, there are very few accounting applications available that actually use AI. Hubdoc and ReceiptBank, two popular cloud document management applications in Canada, allow you to upload your source documents via picture-taking and email forwarding; however, both apps use human beings to extract the data that you uploaded. This non-AI, “traditional” approach is the cause of their slow processing time, along with the insecurity of a human looking at your business transactions.

The best cloud accounting application out there using AI that I have seen so far is Veryfi. Here are the top reasons why I think Veryfi integrated with QuickBooks Online, Sage Business Cloud or Xero is the BEST approach to do accounting for small businesses in 2018:

  1. In a matter of seconds after uploading your bill or receipt to Veryfi (using the phone application), the key accounting data from the upload has been extracted. Since the app uses machines rater than humans, the processing time, the accuracy of the information pulled, and the privacy of your business is much better than other apps currently available.
  2. The app retains a digital copy of the source document you uploaded, which is perfect if you want your books to be audit-proof without going through the hassles of scanning in documents later.
  3. Roughly a minute after your source document is in Veryfi, the transaction data, along with a digital copy of the source document, will be automatically uploaded into the cloud accounting application of your choice (like QuickBooks Online or Xero). This means that you do not need to forgo cloud software you are currently using just to automate some of the accounting process.
  4. The fees charged by Veryfi are currently very affordable and considerably cheaper than other competitors in the Canadian app marketplace.
  5. Veryfi has also developed an app called Logbook, which allows you to log your vehicle trips in real time on your phone. This is very useful for any contractor on-the-road, as the Canada Revenue Agency requires you to keep a logbook for tax purposes.

One final reason why I think Veryfi integration is super important, especially for users who are general contractors, is that they will be soon releasing Veryfi TimeSheets. This new app will allow contractors to (1) assign expenses to certain projects, (2) keep track of time spent on projects, and (3) track where your team is working, all of which are useful when it comes to billing your clients for jobs well done.

I can help cut your bookkeeping & accounting costs significantly using technology. What are you waiting for? Don’t be shy! Drop me an email at steven@p2ctax.com to learn more.

Cheers,

Steven Pitucci, CPA, CA, LPA

Founder @ P2C Tax

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