Record to reporting is a fairly new practice in the world of accounting and finances. While accounts can be handled without using this process, accountants and other money-managers are likely to find out that their jobs are made easier by using it. Below is a simple explanation of how record to reporting accounting works and what it is used for in businesses.
How Does Record to Reporting Work?
Record to reporting, also known as r2r, is a process that is used to collect and assess data as a way to understand how well the business is operating on a financial level. This process is often used as a way to automate account processes that might usually be stored in a nominal ledger and managed by an employee.
There are eight general steps that go into the record to reporting process. These are listed below.
Extract the data
Collect the data
Validate the data
Transform the data to create a voucher
Store vouchers in a compressed format
General or consolidated account analysis
Generate financial reports
This is a fast and easy way to collect and show existing data in an easy-to-read and process way. This data can be kept in a computer system or printed out.
It is likely that a business will want to create one of these reports often. This is because the data used to create these reports will change as quickly as the business itself changes. To have an up-to-date view of how the business is doing, it is important to update the report as often as a business would create any other type of similar accounting report.
What is Included in the Report?
What kind of data the business uses to create the report will determine what they get out of it. Even with this in mind, there are a few things that are visible in most all reports include the business's financial performance at the given moment), any key performance indicators, key performance metrics, financial comparison to previous years/quarters, financial predictions for the year ahead/quarter ahead, and optional commentary (added by a human employee) on the business's performance based on the collected and evaluated data.
What is Record and Reporting is Used For?
When the data from the reports are collected to be analyzed, the business can then use the results of the reports to learn how to improve their business's financial state. There are a few ways a business can go about this. So, without any further ado, here's how record to reporting is used in business today.
One of the best ways to use record to reporting reports is simply for use in general accounting. This helps to give accountants accurate numbers and calculations, thus lowering the likelihood of mathematical errors. Of course, with any other accounting system, accountants will need to learn how to read these reports well. This will work best if the accounting department of the business creates roles for themselves, as to who will work with certain parts of the report.
These reports can also be of great help when it comes to filing taxes at the beginning of each year. Most commonly, these reports are great for finding deductions that businesses can claim on their taxes. One helpful deduction comes in the form of depreciation. So long as the tax systems and rules are input into the reporting system, the record to reporting report should be able to give an accurate reading of how much any certain item has depreciated in value over the course of the year.
These reports can also be used to keep the reporting processes in chain businesses the same as each other. So long as the same system is used in each branch of the business, the system will be able to create similar reports for each branch. This can make it easy for accountants from any branch to read each other's reports.
Record to Reporting is a great accounting option for any business owner who wants to automate their financial records further. This can help to make accounting easier and faster. The reports are sure to help any business see their data, which the business owner can then used to make improvements.