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Understanding the vocabulary of digital accounting
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Understanding the vocabulary of digital accounting

After the first and the second industrial revolution, the third industrial revolution began with the development of computing and automation, followed by the fourth industrial revolution (Industry 4.0). What differentiates this one from the previous "industrial revolutions" is the rapidity of development and the changes it has brought about. Thanks to the Internet and the continuous progress of technology, numerous innovations have made it possible to constantly evolve accounting management towards increasingly digitalized accounting.

The processes of a digitalized accounting make it possible both to drastically reduce time-consuming tasks by relying on automation and for companies to get precise and real-time accounting, with easy access to essential information.

 

Do you sometimes get a bit lost when the person you’re speaking with mentions "CAMT files" or "OCR"? This is quite normal, these terms fall within very technical fields in some cases, but it is crucial to comprehend their meaning in order to understand how digital accounting works today.

 

Vocabulary of payment harmonization

Since the introduction of the ISO 20022 standard (check our article on the digitization of payments), as part of the harmonization of payments, the digitization and unified functioning of banks have created new terms linked to processes that now allow us to pay an invoice in a few clicks or to synchronize the information of a banking establishment with those of an accounting system.

 

What is a CAMT file?

Since the implementation of the ISO 20022 standard, the detailed movements linked to a bank account have been provided in the form of a CAMT file (acronym for cash management) by the banks. For example, BVR receipts appear in the CAMT file.

 

What is a Pain file?

With ISO 20022, payment orders, called before DTA or OPAE, are now processed in PAIN files, acronym for payment initiation. This is the new name of the payment files which have moved from a DTA to an XML format.

 

What is XML?

The extensible markup language, abbreviated XML, is a markup language for displaying hierarchically structured data as text files. XML is used for the exchange of data between computer systems, in particular over the Internet, regardless of platform and implementation.

As the ISO 20022 standard is based on XML messages for electronic data interchange in the financial industry, it is playing an increasingly important role globally. The Swiss financial center has adopted this very useful standard, which can simplify payment transactions and achieve a higher degree of automation in payment processes.

 

What is the XBRL language?

XBRL stands for Extensible Business Reporting Language and is an open XML-based standard for the electronic exchange and collection of financial data over the Internet. Originally developed by the Association of American Accountants, it is now used in more than 40 countries around the world.

 

What is Electronic Banking Internet Communication Standard (EBICS)?

EBICS is an international standard for the secure exchange of payment traffic data over the Internet between the customer and the bank. Thus, companies can send and receive data directly from all connected financial institutions, from their ERP system. With a single access for all commercial transactions and the use of electronic certificates, this protocol ensures the confidentiality of information, the identification of stakeholders and the integrity of the files exchanged.

 

Technology vocabulary

In addition to the terms related to the harmonization of payments, there are those related to new technologies or systems that are involved directly or indirectly in the digitization of accounting.

 

What is an ERP (Enterprise Resource Planning)?

We use ERP for programs that manage the planning of the company's resources. Organizations use an ERP to drive their daily activities such as accounting, supply chain, customer relationship (CRM), project management, human resources... An ERP software integrates different functions into a complete system in order to streamline processes and information. In accounting, this allows rigorous management, for example by collecting transactional data from multiple sources, thus avoiding data duplication.

 

What is OCR (Optical Character Recognition)?

OCR is an optical character recognition process implemented, most often, through a scanner, or a cell phone.

OCR integration makes it possible to transform PDFs, scanned invoices or credit notes into structured data that can be automatically processed as electronic documents.

Thanks to this technology, Synergix provides its customers the convenience of scanning or sending their invoices by email so that the team members gradually process them. The IODD application uses that system similarly; from a simple photo taken with a smartphone, expense reports are easily added to a user's account.

 

What is EDM (Electronic Document Management)?

EDM brings together all the techniques and practices necessary for the management of the various document flows within a company. Electronic Document Management enables rigorous, paperless archiving and tracking and facilitates research when necessary.

 

What is an API (Application Program Interface)?

API is a programming interface. APIs operate on an agreement of inputs and outputs, like a gate, allowing different systems to communicate with each other and simplify software creation and integration.

For example, the IODD platform uses different APIs to retrieve the information needed to create dashboards. In this way, each company can have real-time access to its financial situation.

 

More than just vocabulary, these technologies allow systems to work together and are now the key to intuitive and relevant accounting management, in real time.

If you would like to know more about how our next-generation fiduciary uses modern processes to deliver digital accounting, please contact us.