Accounting lettering is an operation designed to associate the accounting entries for an invoice with those for its payment, thus making it possible to check that invoices have been paid correctly, and to detect any delays or errors. In practical terms, this involves assigning a unique code, often a letter or combination of letters, to the entries corresponding to the debits and credits linked to a transaction. This technique makes it easier to track payments, by distinguishing between lettered entries, representing paid invoices, and unlettered entries, indicating pending invoices. Lettering can be carried out manually or automatically, and contributes to the preparation of closing accounts by ensuring the consistency of customer and supplier accounts.
In this article, you’ll discover the 6 most time-consuming tasks involved in manual lettering, and we’ll show you how to optimize these tasks and thus boost the efficiency of both your team and your accounting management.
Customer identification
One of the steps in the accounting lettering process is to identify the ordering party, but this step can be particularly time-consuming, especially when the required information is not clearly indicated in the payments, or turns out to be incomplete or ambiguous.
When faced with a payment received without explicit mention of the payer, accountants often find themselves having to carry out extensive research to identify the payer. Accounting teams find themselves having to consult various sources, such as invoices issued, communications with customers, or even contact them directly to clarify information. The time spent carrying out this operation means less time for your teams to devote to higher value-added tasks.
To optimize this task, it is possible to use automatic accounting lettering software. These tools are based on artificial intelligence and are capable of automating accounting lettering by automatically associating payments with principals based on customizable criteria.
What’s more, these tools are able to learn your customers’ payment habits, improving the accuracy and speed of principal identification. Software such as CashOnTime enables automatic detection and identification of principals, reducing the time your team needs to perform this operation.
Analysis and manual reconciliation of invoices and payments
Manual reconciliation of invoices and payments is an essential part of a company’s accounting process, although it can be time-consuming and tedious.
This work involves reconciling invoices issued or received with the corresponding payments, ensuring that each transaction is correctly recorded and attributed. When done manually, this reconciliation requires several steps, such as retrieving invoice data, examining bank statements, and manually entering information to match invoices to payments.
This task is performed manually in many companies, and requires a certain level of care and attention to avoid potential data entry errors or incorrect reconciliations.
The risk of error is high, particularly when information is incomplete or unclear. For example, if the order number or ordering party is not explicitly mentioned on a given invoice, the accountant has to carry out additional research to identify the associated transaction. This not only increases the time required for reconciliation, but also increases the risk of human error, which can have a significant impact on account accuracy and cash management.
Complex situations, such as partial payments or the settlement of multiple invoices in a single operation, make the process all the more delicate and error-prone.
Each transaction must be carefully examined by the accounting teams to confirm that the amounts, dates and references are correct, which represents an additional challenge, especially for companies receiving a high volume of transactions.
Automating accounting lettering can save time in this task. These automation tools enable invoices and payments to be reconciled according to predefined matching rules. Automatic accounting lettering software lets you configure algorithm-based matching rules, enabling automatic and simplified reconciliation of invoices with the corresponding payments. These tools drastically reduce the time needed for reconciliation, while eliminating human error.
Management of accounting discrepancies and lettering errors
Managing discrepancies and errors in accounting lettering is an essential but often complex and time-consuming task. These discrepancies, caused by input errors, differences in amounts or adjustments such as discounts, must be identified and corrected manually. This involves a careful comparison between invoices and payments, taking into account any adjustments, which can quickly become tricky, especially for companies handling a high volume of transactions.
Accounting lettering errors can have a major impact on financial reporting and cash management. Unresolved discrepancies can lead to inconsistencies in the accounts, which can affect the reliability of balance sheets and income statements. Effective mechanisms for detecting and correcting such discrepancies quickly and accurately are therefore essential.
To optimize this time-consuming task, the use of automatic alert systems and suggested adjustments can be highly beneficial. Automatic accounting lettering software can automatically detect discrepancies between invoices and payments, and generate reports listing payments on which human intervention is required. You can set the parameters in the accounting lettering solution for the special cases you face (discrepancies due to deferrals on customer accounts, rounding discrepancies, etc.) so that you can manually letter discrepancies, making discrepancy management much simpler and faster for your teams.
Manual payment tracking and management of large invoice volumes
Manual payment management for a large volume of invoices is a delicate task. The difficulty increases considerably when you have to letter hundreds or even thousands of invoices for a single payment, making the identification of suitable lettering combinations particularly complex, if not impossible.
Each invoice needs to be carefully examined to ensure that the payments received correspond exactly to the amounts invoiced. This verification can be tedious and error-prone, and is complicated by the need to identify discrepancies in a large volume of transactions. Deductions, debit notes, discounts and other adjustments must be identified and managed with precision.
For example, if a customer settles an invoice by applying a deduction, it is essential to identify this information accurately to maintain account consistency. In addition to being time-consuming, this manual management is also a source of potential errors, which can affect cash management.
To improve the efficiency of this task, automatic accounting lettering software, such as CashOnTime, can automatically process payment advices sent in advance by customers. Interpretation of these payment advices enables us to reserve invoices that have been announced and have no discrepancies, and to highlight anomalous lines (deduction, debit note, difference in amount). The time saved on these extremely time-consuming transfers is considerable.
Manual follow-up of partial or delayed payments
Manual tracking of partial or delayed payments is a challenge for a company’s accounting teams, becoming particularly complex and time-consuming. This task requires careful verification of each payment to ensure that it is correctly attributed to the invoice concerned, especially when customers choose to pay in instalments or encounter delays.
This requires reviewing bank statements, comparing amounts received with invoices issued, and adjusting records accordingly. Checking each partial payment to identify the corresponding invoice can be particularly complex, especially when there are numerous invoices awaiting payment.
This manual follow-up can have an impact on the productivity of the accounting team. To meet these challenges, it may be wise to adopt an automatic payment tracking solution, enabling automatic reminders. Software such as CashOnTime makes it easy to track partial payments in real time, generate pre-payment notifications and/or promises to pay, and send automatic reminders, thus reducing the time required to complete this task.
Chronophage reporting and analysis
Reporting on the status of accounting lettering is essential for efficient financial management. Performed manually, this task involves collecting and compiling data from multiple sources (bank statements, invoices, accounting records), while ensuring consistency.
This tedious task requires a great deal of time and rigorous attention, especially when it comes to preparing accurate balance sheets and financial statements. What’s more, manual work increases the risk of errors, which can affect the reliability of the accounts and influence strategic decisions.
Accounting lettering tools integrate reporting tools, saving your accounting teams considerable time. These tools facilitate real-time report generation, by automating data collection and compilation. These technologies reduce the time needed to create reports, while improving their accuracy and facilitating rapid, informed decision-making.
Conclusion
Manual lettering in accounting is a series of time-consuming operations, including sender identification, manual analysis and reconciliation of invoices and payments, management of discrepancies and errors, follow-up on incomplete or late payments, and financial reporting. These activities are not only time-consuming, but also increase the risk of errors, which can compromise accounting accuracy and cash management.
Automating the accounting lettering process is therefore essential to improve the efficiency of these tasks.
Automated solutions, such as specialized software, offer the ability to automatically match invoices and payments, identify discrepancies, produce real-time reports, and proactively follow up on customers with overdue payments. These tools don’t just save time; they also increase the efficiency and accuracy of accounting processes, and help harmonize processes.
By integrating automated solutions, accounting teams can then focus on higher value-added activities, such as financial analysis and the development of cash management strategies, or the collection and monitoring of receivables.
Automation thus represents a fundamental pillar for boosting the productivity and reliability of accounting processes. It’s time to take the plunge and take advantage of the benefits offered by modern accounting lettering technologies.
