CEO Fridays: #Preaccounting: The Job We All Hate, But Must Do
Everybody knows what accounting is:
Accounting [uh-koun-ting] (noun)
The theory and system of setting up, maintaining, and auditing the books of a firm; art of analyzing the financial position and operating results of a business house from a study of its sales, purchases, overhead, etc.
But what is “preaccounting”? Not everybody is as familiar with this newer concept, so I’ll go ahead and define “preaccounting” as:
Preaccounting [pri–uh-koun-ting] (noun)
The system through which financial data is gathered, coded, aggregated, and normalized so as to enable accounting to occur; accounting processes executed by non-accountants, including expense management, time tracking, etc.
In layman’s terms, preaccounting is the super boring, tedious work that nobody wants to do, but that absolutely needs to be done before the truly valuable accounting work can begin. Unlike accounting, which is clearly the job of accountants, preaccounting is nobody’s job.
Where Does the Responsibility of Preaccounting Fall?
To be clear, even though it’s nobody’s job, everybody needs to do it. Business travelers don’t define their job as “putting receipts in my pocket and trying not to lose them,” but they still need to do it. Accountants don’t define their job as “sorting a pile of crumpled receipts and chasing down business travelers to find those they lost,” but they need to do it as well. Preaccounting is one of those things that nobody wants to do, but that everybody needs to do, at least some of the time.
But since it’s such an informal responsibility, everybody procrastinates as long as they can. For reimbursable expenses, employees make a half-hearted attempt to keep the receipts but otherwise ignore them until the amount they are owed becomes unbearable. For non-reimbursable expenses, employees make no attempt to keep the receipts, until the accountant needs to reconcile the company card and finds they lack the information necessary to do their job.
In either case, preaccounting creates a steady stream of angst: everybody does the absolute minimum, at the absolute lowest frequency tolerable, until something snaps and all of a sudden there is a tremendous pile of incredibly low-value work that needs to be done right now. This has the effect of minimizing speed and efficiency, while maximizing anxiety for everyone involved.
Taking the First Step to Minimize Preaccounting for Everyone
Thankfully, the workflow doesn’t need to be this way. Tools like Expensify can take this unwelcome burden off of everybody’s shoulders by using mobile apps and artificial intelligence to:
- capture the receipt image immediately, without you ever putting it into your pocket,
- read the receipt using OCR,
- route it through the correct workflow,
- export it to accounting, and
- reimburse it to your bank account within 24 hours.
This technique of processing the receipt in realtime breaks the “cycle of dread”, where last time around was so bad that you procrastinate even more next time, quickly finding your maximum threshold for pain – and then staying there forever.
We’re thrilled to be leading the revolution to help lift the burden of preaccounting off everyone’s shoulders. If you haven’t already, please go ahead and check it out. No human likes expense reports, so we built an AI who does. Put it to work!