Digital accounting is expected to save businesses time and money, contributing to greater efficiency for both businesses and government agencies. In light of this, Vietnam is increasingly focusing on digital accounting as it strives to digitalize its middle-income economy and attract revenue-generating FDI.
The COVID-19 pandemic has accelerated the shift toward digitalization for many businesses not only in Vietnam but globally. It highlights the importance of technology and digital transformation to the survival and evolution of businesses of all sectors. Of that, further development in digital accounting will play a role in modernizing the business environment in Vietnam, which in turn will help generate revenue and attract foreign investors.
Digital accounting refers to the creation, representation, and transfer of financial information into an electronic format. Instead of using a physical paper and pen, all accounting transactions are conducted electronically.
Digital accounting is performed on digital accounting systems. Essentially, digital accounting systems allow users to sync their business bank accounts, transactions, and credit cards with the relevant software.
The system then syncs all these and transactions flow into the accounting software where they are separated into different categories and accounts. Once a business syncs its bank accounts and credit cards with the appropriate accounting software, financial transactions start to show in a queue and are classified into various categories.
Using such digital accounting systems, a company can save time and run a financial report to compare costs and revenue, review profitability, check bank and loan balances, as well as predict tax liabilities.
Fundamental functions that a digital accounting system can provide include:
Despite common concerns, digital accounting complements accountants rather than replacing them. By enhancing technology, digital accounting frees accountants from repetitive tasks like compiling, managing, and categorizing data while allowing accountants to focus on more strategic tasks allowing for better decision making.
A digital accounting system can be achieved through integrated software solutions set up by the company itself or through the software as a service (SAAS) approach, or through other cloud-based system approaches. However, whatever approach is used, there will always be flexible platforms available, which provide digital accounting solutions for free or with upfront fees.
Digital accounting has gradually become a norm in Vietnam, where many businesses, financial institutions, and household businesses have tried to implement digital accounting into their accounting process. However, there is still room for development and standardization.
This article was first published by VietnamBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected]