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The importance of digital accounting for small businesses | Digital accounting today

Table of contents

Introduction to the digitalisation of accounting

Historical context:

The introduction of digital accounting systems marks a decisive step in the evolution of corporate management. Historically manual processes are being replaced by modern technologies. This change enables small and medium-sized companies in particular to organise their accounting processes more successfully and to better adapt to the requirements of the digital age.

This process began in the 1980s with the introduction of computers and electronic data processing, which grew exponentially in the decades that followed and which no one can avoid today.

Technological progress :

The rapid development of software solutions and cloud technologies has driven the digitalisation of accounting. Entrepreneurs now have access to user-friendly tools that allow them to manage financial data securely. This technological advancement paves the way for more accurate, transparent and faster accounting.

Efficiency and competitive advantage | Cloud Computing:

The automation of repetitive tasks, such as document processing, increases efficiency. Companies that utilise these efficiency gains are better able to focus on strategic business aspects. This gives them a competitive advantage, which is achieved through the optimised use of digital accounting tools.

Decisive advantages:

  1. Access from anywhere:
    Cloud-based accounting solutions enable access to financial data from anywhere in the world with an internet connection. This facilitates collaboration, as team members or tax advisors can access up-to-date accounting information regardless of their location. Mobility promotes flexibility and efficiency in the workflow.
  2. Automatic updates and scalability:
    Cloud platforms offer pre-programmed software updates without users having to intervene manually. This ensures that companies always use the latest functions and security patches. In addition, the scalability of cloud solutions makes it easy to adapt to the growth of the company without the need for additional hardware or software.
  3. Data integrity and security:
    Cloud service providers attach great importance to data integrity and security. Data is stored in highly secure data centres and protected by encryption technologies. Regular security checks and backups minimise the risk of data loss. Cloud solutions often offer greater data security compared to local systems, as they can draw on expert knowledge and specialised infrastructure.

Advantages of digital accounting for your company

Save time AND money with digital accounting:

Digitisation enables companies to save a considerable amount of time and money. By automating accounting processes, manual tasks are reduced, which leads to an increase in efficiency. This in turn leads to lower costs and enables resources to be utilised in a more targeted manner. Collaboration with the tax consultant or payroll office can also be fully automated.

Time !

Data access to all receipts and documents (incoming and outgoing invoices, cash book, bank documents, credit card statements, etc.) takes place in fractions of a second and therefore leads to huge time savings.

It is of course difficult to give exact figures for cost and time savings when introducing digitalised accounting, as this depends heavily on the size of the company, the type of accounting software, the individual requirements and the degree of automation. However, there are general trends and estimates:

  • Faster data acquisition: 
    The automation of data entry processes speeds up the accounting workflow considerably compared to manual data entry.
  • More efficient reporting: 
    The generation of financial reports and analyses is faster and more precise thanks to digital accounting systems. Users can call up up-to-date reports at the touch of a button.
  • Accelerated tuning: 
    Automated bank reconciliations enable faster and more accurate reconciliation of transactions, reducing the time required for manual reconciliation processes.

Cost savings:

  • Reduced personnel costs: 
    By automating recurring tasks, personnel costs in the area of data entry and manual recording can be significantly reduced.
  • Lower error rate:
    Digitisation processes minimise human errors that can lead to mistakes in posting and reporting. This can reduce potential costs due to incorrect accounting or tax errors.
  • Lower paper and printing costs / no more archives: 
    Digitisation reduces the need for physical documents and print materials, which leads to cost savings in the area of office supplies.

Here a Link on the topic.

Real-time analyses and decision-making in the financial sector:

Digital accounting systems offer real-time analyses of financial data. This enables companies to make well-founded decisions based on the latest information. This ability to make quick and accurate decisions improves agility and responsiveness in a dynamic business environment.

Real-time data processing

Real-time data processing is of crucial importance in the financial sector. By continuously analysing market data, transactions and other relevant information in real time, financial institutions can react quickly to changes. This enables a precise assessment of risks and opportunities, as decision-makers can work independently with up-to-date data and make quick, well-founded decisions.

Automated trading algorithms:

Real-time analyses in the financial sector enable the implementation of automated trading algorithms. These algorithms use advanced analysis techniques to recognise patterns and trends in real time and automatically make trading decisions based on them. This not only optimises effectiveness, but also minimises human error. The speed at which such algorithms work is crucial to reacting to short-term market fluctuations and gaining a competitive advantage.

Real-time risk management:

In the financial sector, recognising and managing risks at an early stage is of the utmost importance. Real-time analyses enable financial institutions to continuously monitor and assess risks in their portfolios. This enables proactive identification of potential dangers, which in turn leads to rapid adjustments in the portfolio composition. Real-time risk management thus helps to minimise financial losses and ensure the stability of the portfolio.

Data security and integrity of paperless accounting:

Digitisation increases the security and integrity of financial data. The use of advanced encryption technologies and access controls ensures the confidentiality of sensitive information. This protects smaller companies from data loss, misuse and other security risks.

Software options and selection criteria | Accounting software

Variety of software solutions / accounting programmes:

The variety of digital accounting solutions offers small and medium-sized companies a wide choice. Cloud-based platforms, integrated systems and specialised software address different requirements. Companies should analyse their specific needs in order to choose the most suitable software for their business. In doing so, they are permanently bound by the principles of proper double-entry bookkeeping

Digitise accounting in your practice - saves time and money!

Scenarios of some selected programmes for small and medium-sized enterprises


DATEV is a leading accounting software in Germany and is specially tailored to the needs of tax advisors and their clients. The platform enables digital collaboration between companies and tax advisors, makes accounting processes independent and offers numerous functions for financial planning and greater transparency.

With the "Datev Unternehmen Online" programme module, companies can transmit records and documents to the tax consultant in electronic form instead of on paper as part of the preparatory bookkeeping.

This saves a lot of time and helps to reduce costs.

The following video outlines a possible process:

Digital document posting with DATEV Mittelstand

Digital document posting with DATEV Mittelstand

2nd agenda

课程大纲 provides a clear platform for data entry. Users enter their financial data, including invoices and receipts, directly into the software. Certain recognition functions for data such as amounts and account numbers can be used to improve accuracy.

The software enables efficient classification and account assignment of the recorded data. Companies can define predefined rules to automatically allocate certain transactions to the correct accounts. This step minimises manual intervention and promotes consistent accounting.

Agenda supports electronic bank reconciliation. Bank transactions are compared with the recorded accounting data, allowing differences to be quickly recognised and corrected. This contributes to the accuracy of the financial data and saves time during manual reconciliation.

3. Lexware:

Lexware offers various accounting products for small and medium-sized enterprises (SMEs). With user-friendly interfaces, Lexware makes digital accounting easier and also offers solutions for payroll accounting, order processing and other business management requirements.

4. QuickBooks:

QuickBooksdeveloped by Intuit, is a popular accounting software that is particularly suitable for SMEs. The platform enables the automation of accounting processes, including invoicing, expense tracking and financial reporting. Cloud integration allows accessibility from anywhere.

5. Sage 50cloud:

Sage 50cloudformerly Sage 50, is a comprehensive accounting software for small and medium-sized companies. The cloud-based version offers access from various devices, self-running bank reconciliation and invoicing, as well as functions for inventory management and financial analysis.

User-friendliness and training:

The selection criteria should emphasise the user-friendliness of the software. Intuitive interfaces and easy-to-understand functions facilitate integration into everyday working life. Comprehensive training for employees is crucial to ensure that the team can use the software effectively and derive maximum benefit from it.

Integration and scalability:

The seamless integration of digital accounting into existing business processes is essential. Companies should make sure that the software they choose is scalable and can adapt to growing requirements. The ability to integrate with other business applications improves overall efficiency and data consistency.

Implementation and training of employees is very important

Structured implementation plan | compliance with Gobd | retention period:

The successful introduction of digital strategies requires a structured implementation plan. Companies should define clear steps to ensure a smooth transition. This includes the migration of data, configuration of the software and definition of process changes. A well-thought-out implementation plan minimises disruption to operations and ensures a seamless transition.

Comprehensive training:

The training of employees is a Key factor for success. Companies should ensure that their teams understand the functionalities of the new software and can use them effectively. Training can take place both online and on-site and should be tailored to the needs of the employees. Ongoing training ensures that the team is always familiar with the latest features and best practices.

If employees are not involved in the introduction of accounting digitisation and receive comprehensive training, you have lost!

This is of course a continuous process in which all new colleagues must also be involved.

Feedback and customisation | Workflows | Accounting in practice:

During implementation, an open communication channel for feedback is essential. Employee feedback can be used to make adjustments and ensure that the software meets the needs of the organisation. This iterative process promotes a positive attitude among employees towards digitalisation in the workplace.

A possible procedure could look like this:

  1. Data preparation:
    The digital accounting process begins with the careful preparation of financial data. This includes collecting receipts, invoices and other relevant documents. At this stage, automation can already begin by using document recognition tools to extract information from paper documents.
  2. Digitisation and recording:
    The physical receipts are converted into digital formats. Companies use scanners or mobile apps to digitise invoices and receipts. The captured data is then uploaded to the accounting software. Here, a combination of OCR (Optical Character Recognition) and manual verification can ensure accuracy. This is where the transformation from traditional document filing in folders to paperless accounting takes place.
  3.  Automated data acquisition:
    Modern accounting software optimises many data capture tasks. AI-supported systems can categorise transactions, allocate amounts and generate posting records. This minimises human error and increases efficiency. Regular updates to the software enable the use of more advanced self-running functions.
  4. Classification and categorisation:
    The digitally recorded data is automatically classified and categorised. The software allocates transactions to the correct accounts and thus ensures correct posting. Companies can define predefined rules to customise the automation process to their specific needs.
  5. Integration with bank accounts and payment platforms:
    The accounting software can be seamlessly integrated with bank accounts and payment platforms. This enables quick reconciliation of transactions upon payment and facilitates the monitoring of income and expenditure. Integrations with payment service providers provide a real-time overview of financial transactions.
  6. Preparation of financial reports and other analyses:
    The digital accounting data serves as the basis for the creation of financial reports. Companies can easily download up-to-date information and generate customised reports. This supports management in making informed decisions and facilitates compliance with legal requirements when preparing reports for the tax office.
  7. Tax compliance:
    Digital accounting systems help you to comply with tax regulations. They calculate tax obligations at the touch of a button and create meaningful reports for tax purposes. The ability to quickly search through scanned documents in electronic form and other data also makes tax audits easier.
  8. Backup and archiving:
    Backing up and archiving digital accounting data is crucial for double-entry bookkeeping. It is important to comply with all the criteria of the German Generally Accepted Accounting Principles (Gobd) and also to guarantee the retention periods. regular backups protect against data loss, while archiving ensures compliance with retention obligations. Cloud-based solutions offer a secure and accessible storage option.
  9. Monitoring and analysis:
    Monitoring financial data in real time enables companies to precisely understand their financial situation. Analyses can be used to identify trends and create forecasts. These insights are valuable for strategic planning and the management of business risks.
  10. Audits and testing:
    Digital accounting systems facilitate external audits and internal reviews. Access to digital records is more successful, which speeds up audit processes. The traceability of changes ensures the integrity of financial data and contributes to compliance.

Success stories from small companies

The integration of cloud-based applications using artificial intelligence offers many advantages:

Increased efficiency and time savings:

Many entrepreneurs have achieved impressive efficiency gains through digitalisation. The automation of recurring tasks has led to significant time savings. Examples show that by reducing manual errors, the accuracy of financial data has improved, leading to better informed decisions and sustainable business development.

Transparency and improved collaboration | everything in order?

Successful companies emphasise the improved transparency. The ability to share and analyse financial data in real time promotes better collaboration within the team and with external stakeholders. This helps to react independently and quickly to changes and to make strategic business decisions based on sound information.

Scalability and growth:

Companies that have successfully implemented this often report improved scalability. The flexibility of digital systems makes it possible to keep pace with the company's growth without losing efficiency. Such success stories emphasise the role of digital accounting in promoting sustainable growth.

Challenges and solutions

Resistance to change:

One of the main challenges when introducing digital accounting is the potential resistance to change on the part of employees. Companies should focus on open communication, addressing fears and highlighting clear improvements through digitalisation. Training and support can help ease the transition.

Security concerns for double-entry bookkeeping?

As digital data increases, so do security concerns. Companies need to implement robust security measures, such as encryption and access controls. Employees should be trained to consciously handle sensitive data. Transparent security policies and regular audits are crucial.

Technical challenges?

Technical problems, such as software incompatibilities or system failures, can occur. Good support from software providers and clear escalation processes are crucial. Companies should also pay attention to regular updates to ensure that their software complies with current standards.

Future developments and trends


Artificial intelligence (AI) in accounting:

The integration of AI into accounting software is an up-and-coming trend. AI can completely take over repetitive tasks, recognise patterns and make well-founded forecasts. Future developments could further increase efficiency and help companies make data-driven decisions.

Blockchain technology:

Blockchain is increasingly seen as a transparent and secure method of accounting. Future software solutions could use blockchain technology to maximise the transparency, integrity and security of financial data.

Integration with other business units, business partners, the tax consultant:

The future development of digital accounting will increasingly focus on seamless integration with other business areas. Companies could benefit from integrated platforms that connect accounting, sales, marketing and more to enable holistic business management.

Tips for digital accounting | Weighing up the advantages and disadvantages

3 basic tips for all switchers | Benefits for your company

  1. Thorough training of employees
  2. Secure data migration and backup strategy
  3. Regular updates and customisations

Case study

In the case study of a tax consultancy firm that has gone through this process, the 3 biggest mistakes made during the introduction are named:

3 fatal mistakes in digitalisation with DATEV - Interview with Prof. Dr. Christoph Juhn

3 fatal mistakes in digitalisation with DATEV - Interview with Prof. Dr. Christoph Juhn

Conclusion | Digitisation of accounting

It is high time to tackle the issue. Don't put it off until tomorrow, but preferably yesterday. Companies that don't jump on this bandwagon will lose out in the medium term.

It is important to be aware of the opportunities and possible risks and to involve all stakeholders in this process.

Last sentence on my own behalf. If you want to learn the basics of accounting from scratch and master the digital implementation in practice, I recommend taking a look at our Courseswhich Packagesa look at the buying guide (red button in the top right-hand corner) or a quick chat with our chat bot Mojo (bottom right-hand corner), who is a funny little chap, never at a loss for an answer and speaks many languages.


Ralf Hundertmark
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