It should be remembered that the purpose of financial accounting is to produce financial statements intended to inform third parties and partners about the financial position of the company, based on a material organization. The dematerialization will then relate to the documents to undergo accounting treatments. In the market every broking house or company is allowed to open a trading account but only NSDL and CDSL are authorized to open a demat account of one who wants to trade or invest.
The link between accounting treatments and dematerialization
The accounting treatments consist of sorting, entering and recording the data necessary for the preparation of the summary statements, which are the final accounts as well as the P & L account. They are of course related to B to B or B to C business relations, but also to business relations with employees, social organizations, banks and the tax administration. Dematerialization concerns accounting or extra-accounting documents such as invoices, social and tax documents, bank documents, pay slips which will be integrated into the processing of financial information.
Basic technical elements
The dematerialization generates a succession of computer treatments related to the accounting treatments, and one speaks most often of automated processing in numerical form. We will not check the technical aspects here; just visit the site of the free demat account providers of dematerialization solutions to obtain advanced information in this area. In a simple way, we can remember three important steps in the process of dematerialization:
- Scanning documents using simple tools such as a scanner and a good Optical Character Recognition (OCR), better known as OCR (Optical Character Recognition).
- Archiving documents using the Electronic Document Management (EDM).
- Transmission of documents via tools allowing electronic management of Workflow processes. This tool differs from the GED in that it makes the user active; it is by entering information that will generate a document to integrate into the process of computer processing. This process is used to process document flows by managing, for example, processing times, settlement times, payment agreement levels.
Providers of dematerialization solutions offer integration of accounting treatments at different stages of the dematerialization process. The accounting process starts as soon as the data is extracted by OCR modules or by LAD (Automatic Document Reading). Accounting entries are proposed based on this digital information, and we can then start the processes related to the validation of proposed accounting entries, the transfer of entries to accounting software, and go to the passage of bank orders.
Dematerialization called simple
Billing data are transmitted electronically and can be integrated immediately in the accounting treatments. A duplicate of the paper invoice must be kept by the buyer and the seller, for legal value.
Tax dematerialization of invoices
Invoices are exchanged between the supplier and the customer in the form of structured or unstructured data, in compliance with the rules imposed by the tax authorities. The double paper is then no longer necessary because the electronic invoice is authentic for the tax administration.