Image by © Royalty-Free/Corbis on flickr.com

I was reviewing the closing process with a new client.  One area I touched on was the credit card charges.  It turned out they were waiting for the statement to come in the mail each month.  They were using American Express and commented that the statements took awhile to come in each month.

There are two areas of opportunity here:

1. When they get the information.
2. How they categorize and record the charges.

At other clients, I typically put in a more automated process.  Charges are downloaded from online information, which usually only has a couple day time lag.  From there I automate the bookkeeping process, since many of the charges are repetitive, like travel, meals, and office supplies.

I will cover the mechanics more in a second blog entry.  For now, let’s go over the benefits.

1. Less error prone.  Working off a paper statement is a very manual process.  By human nature it is begging for errors to happen.
2. More consistent.  There are usually judgment calls on where some expenses get categorized.  Normally credit card charges don’t come with the same level of backup.  The result is that a similar charge could get booked differently in one month versus a prior month.
3. Better documentation.  Usually some of the messiest work is the credit card statement accounting.  There are lots of transactions on a page, with little space to write on.  Then how do you show how you generate the totals?  It can be a nightmare to try to backtrack and recreate.
4. Better information for the flash reporting.  If you wait for the paper statement, you don’t have it in time for the flash financial report right after month end.  By using online data and capturing it during the month, you have most of the data already for using with your flash reporting.
5. Faster month end.  With online data, you finish one part of your month end accounting faster.
6. Save time.  You can dramatically cut down the time accounting spends on credit card charge reporting.

Take charge.  Don’t wait for paper.  In a second blog entry, I will show you how.