The cheque is in its post era

A company with a turnover of around €2 million can typically save 35% on its bookkeeping costs simply by switching to online accounting. So says Martin Langedijk, managing director of Carlow based Proact. His firm has won a contract to enable 150 pharmacies to use an online accounting service provided by Netherlands based partner Twinfield.

Twinfield won the contract based on its ability to offer cost savings, efficiency and instant access to management information. The pharmacies are all members of the Independent Pharmacy Ownership Scheme (IPOS) network.

When fully implemented, Twinfield will provide timely monthly financial information and will enable IPOS to benchmark the pharmacies against each other, thereby more quickly identifying problem areas.

One challenge faced by IPOS is to gather consolidated management information from each pharmacy. With Twinfield the process can be done in a fraction of the time, said Langedijk. A further benefit is that payments can be made and recorded in less than half of the time needed for cheques.

IPOS CFO Shane Connors said: "One of our key business goals is to increase the timeliness and completeness of financial reports, which Twinfield does in spades."

Langedijk said a medium sized company with revenues of €2 million might spend about €2,000 a month on bookkeeping, billing and monthly management accounts. "By bringing the entire process online, this business can save on hardware costs as well," said Langedijk. "As well as that there's no time spent on backup, software management or installation, and there are no big up front license fees."

He added that, by embracing internet banking, minimising the use of cheques and using an accounts system that interfaces with internet banking, companies could reduce the time spent on bookkeeping by more than a third.

He pointed out that using cheque payments risked an unpredictable cash flow, adding: "The idea that cash flow can be improved by telling suppliers "the cheque is in the post' is no longer of this time. Using the (internet) bank statement as the source for your bookkeeping does away with the monster called bank reconciliation. Indeed Bank of Ireland's own website says that their clients can save approximately 75% on the cost of processing payments by moving to online banking."