Accounting Methods – The journey to the modern day!

Where did bookkeeping first start?

It was all the way back in the fifteenth century when bookkeeping first began. The Italian mathematician Luca Pacioli first formalised the bookkeeping method. It started as a simplistic method to help them understand business productivity and has evolved ever since.

Now, I’m not as old as Luca Pacioli but, in my accounting studies in High School we learnt the basics that each debit must marry a credit  and debits were on the left and credits on the right, it was drilled into us. This was considered pivotal to bookkeeping knowledge then.

Little did we know that many years later we would have accounting software that almost does all  the hard work for us. Who would have known!

How did we do it then?

I started with General Ledger books and ledger sheets, I was always excited at the start of the new school year, what I was about to learn. I recall my first professional job in a country bank, being a Ledger machine operator, where I used a  Ledger machine.

The ledger machine role meant manually typing (like on a typewriter!) into the ledger machine all the cheques and deposit amounts. These were printed onto a semi-cardboard ledger for each customer. We would work out the bank interest on a simple calculator and add that onto the ledger, that was a task and a half! Now this was long before ATM’s, Credit Cards, PayPal, and Internet Banking!

The machines did not have a memory as the modern-day computer does, nor could you go back to older financial transactions. So double-entry bookkeeping was not enough to get an idea of the company’s day to day operations, and therefore the new and modern method of accounting became necessary.

Why did it change?

I specialise in QuickBooks Online and I recall on one of my visits to Silicon Valley at the Intuit Headquarters in Mountain View California, the story of Scott Cook.

From Scott Cook’s own kitchen table, he came up with what we now know as Intuit accounting software, all from the need of helping his wife balance her chequebook.

With his work experience and from the awareness of the emergence of personal computers, he began looking for a computer programmer. He found Tom Prolux and in 1983, Intuit was formed.

What we see today in most accounting software is due to someone thinking of a way to make our lives easier. Maybe you will help our lives become easier with the next genius idea!

What’s this thing called GST?

The emergence of GST in Australia in 2000 became the Accounting industry’s biggest growth recorded. This was due to new requirements for the business owner to comply with the new Australian Goods and Services tax reporting, that we now know as BAS reporting (Business Activity Statements). There was a study that identified significant ongoing record keeping and accounting costs that were required by small businesses in order to meet their GST obligations: using Victorian University Research Repository titled “The impact of the introduction of the GST on small business in Australia” https://vuir.vu.edu.au/1286/1/ARA_02_GST_and_SB.pdf

Let’s go green!

So, we went from big and clunky accounting ledger books to accounting software that we were able to download from  CD’s or floppy discs to stick into our hard drives. We also were travelling to clients’ offices to get their bookkeeping and  BAS’s done.

Printing all our work  and keeping copies for compliance and record keeping, monthly bank  reconciliations, monthly and yearly profit & loss and balance sheets – all this was printed for every client.

We were storing folders and folders for each client, with paper records for compliance and record keeping for years. Just in case of a potential Audit and keeping end of year financials, this meant having a room full of filing cabinets. Sending paper records to accountant at the end of each year was via snail mail too.

Today we have it easy, accessing clients’ accounting files from anywhere, at anytime all from a PC, laptop, iPad or Iphone. Holding all records in the cloud for storage, no need for messy filing cabinets and accessible anywhere and all we need to do is click the share button and you can share it with anyone you need to see it instantly.

Today’s methods!

Looking at today’s accounting methods, we have the latest advancement in accounting software. It is no longer just to book keep, to run compliance and audit the company finances but also to give the business owner a better perspective of the financials anytime.

We have AI (artificial intelligence) that helps with bank feeds and automates the accounts for us making life quicker and simpler. You can  produce a quote and invoice and email it directly to the client, set up bills and through an ABA file upload to the bank and pay hundreds of suppliers in one click!

We can split the income and expenses into different jobs for the clients easily, so they know where they are making their money. We also set up and tailor the Chart of Accounts to suit the industry and the client’s needs.

We can run and automate Payroll and lodge STP (Single Touch Payroll) events keeping compliant at all times. We can pay the employees’ Superannuation straight from the software payroll. It can also auto calculate a BAS (Business Activity Statements)  for us and lodge directly from the software to the ATO,  just to name a few features. This saves us a whole lot of time compared to the past.

My personal favourite features through accounting software today, we help business owners make sense of their financials in real time through smart bookkeeping so that they can grow their business, and we can work from anywhere!

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