Accountants act as an organization’s financial record keepers, meticulously documenting and reporting past financial transactions. But, challenges arise when documents like invoices or contracts arrive after a financial period closes, forcing accountants to make adjustments to ensure accurate reporting. In these situations, accountants need an “Easy” button that instantly generates and prepares all necessary journal entries to record the missed accounting activity for those late documents. Now, they have one for prepaid and accrual accounting.
FinQuery has added catch-up capabilities similar to those it originally introduced for lease accounting to its prepaid and accrual accounting solution. This customer-favorite feature simplifies the recording of late or missed invoices and contracts, along with the corresponding adjustments to prepaids and accruals. By making the tedious task of on-going prepaid and accrual accounting more manageable, efficient, and accurate, FinQuery reaffirms its commitment to helping accountants save time with confidence.
The challenge of missed documents
Timeliness is critical to accounting. In real life, however, documents like invoices and contracts often don’t make it to the accounting department in a timely manner. Whether due to vendor delays, miscommunication, or simple oversight, these missed documents create extra work for accountants. The repercussions can be far-reaching depending on the materiality of the missed accounting activity. Late or missed invoices can distort expense recognition, overstating profits or understating liabilities in financial reporting.
Previously, post-close invoices forced accountants into a time-consuming cycle of manual adjustments, period-specific journal entries, reconciliations, and financial report updates. This process was tedious, time-consuming, and prone to errors. Furthermore, these tasks were often performed during busy close periods where there is limited bandwidth and tight deadlines.
Why catch-up entries matter
Catch-up entries for prepaids and accruals seamlessly update existing financial records when an accountant enters an updated contract, corrected invoice, or late invoice related to a prior period after that period has been closed. The system generates a cumulative catch-up journal entry, updated expense schedule, and an audit trail whether this missed invoice is recorded one week or several months after the period closed.
FinQuery’s catch-up entries ensure all financial data is up-to-date and compliant and also generate a reconciliation report of the catch-up adjustments. Anyone who has undergone a financial audit understands the time savings and value of instantly generating a reconciliation report. By comparing original and updated balances, this report reconstructs the account balances as if all documents were correctly recorded, providing auditors with a clear and easily followed audit trail to trace the revisions.
The benefits of automated catch-up accounting
Efficiency
Catch-up entries give accountants time back by automating the process of calculating and recording the entries for missed, late, incorrect, or updated contracts and invoices.
Accuracy
By calculating the precise catch-up journal entries necessary, catch-up entries ensure all financial data is accurate and significantly mitigates the risk of error — either from miskeying information or incorrect calculations.
Compliance
The catch-up entries feature simplifies accurate prepaid and accrual accounting required for GAAP-compliant financial statements. It not only saves time, it reduces the risk of non-compliance and potential penalties.
Easy to audit
Catch-up functionality updates financial reports while creating a trail that is easy for auditors to follow. This eliminates stress when preparing for an audit and ensures a smoother and quicker review process during the audit.
Conclusion
FinQuery’s catch-up entries for prepaid and accrual accounting (and don’t forget lease accounting) give accountants the “Easy” button they’ve always wished for. It simplifies and streamlines the tedious tasks associated with prepaid and accrual accounting in an imperfect world. There will always be late or incorrect invoices, contracts that come out of the woodwork, or other missed documents. But catch-up entries make these situations easier to handle, providing significant benefits in terms of accurate, compliant, and easy-to-audit financial records.
For accountants and controllers looking to streamline their processes, FinQuery’s prepaid and accrual accounting, including catch-up entries, offers a powerful solution. To learn more about FinQuery’s prepaid and accrual accounting solution and other innovative solutions that help accountants save time with confidence, visit our website or contact us at info@finquery.com.
