Continuous Accounting

An approach to accounting cycles management using advancements in information technology

What is Continuous Accounting?

Continuous accounting is an approach to a company’s accounting cycles management that embraces the advancements in information technology and redefines the operations and role of finances in the corporate structure.

The continuous accounting approach is a new alternative to the traditional accounting method, in which the largest amount of work is performed at the end of the accounting period (month, quarter, year).


Continuous Accounting


The new approach aims to optimize an organization’s accounting operations and procedures by increasing the accuracy of reporting, preventing accounting errors, increasing data integrity, and providing skilled employees with more time to work on other valuable tasks.


CFI’s Accounting Fundamentals covers the basics of accounting principles.


Principles of Continuous Accounting

The concept of continuous accounting is based on the following fundamental principles:


1. Use of technology to automate repetitive and mechanical accounting procedures

Continuous accounting implements new technologies that allow automating repetitive tasks. However, the approach does not intend to automate all procedures but as many tasks as is practical. The main objectives of the automation are the creation of free time for accountants, ensuring data integrity, and elimination of errors in the accounting records.


2. Continuous and even distribution of workloads through the optimization of the accounting calendar

The implementation of new technologies allows for smoothing the workloads through the accounting periods. New financial software provides the opportunity of performing several accounting transactions such as reconciliations and allocations on a daily or weekly basis, rather than completing all the transactions at the end of one accounting cycle (e.g., month-end).

The more even workload distribution reduces the stress on employees and eliminates unnecessary mistakes. In addition, the more frequent reporting delivers up-to-date financial information to the company’s managers. Thus, the managers can quickly identify opportunities or address issues.


3. Establishment of a continuous accounting culture

Continuous accounting cannot be implemented without the creation of a suitable culture. The approach requires a dynamic environment that sets continuous improvement as the main goal. The introduction of a new culture is necessary to overcome the inertia and permanent consistency that are attributable to the operations of accounting departments.

Certainly, continuous accounting provides some undeniable benefits to companies. The transition to this accounting method is a major strategic leap for businesses that can help them gain a competitive advantage over their competitors.


Related Readings

Thank you for reading CFI’s guide to continuous accounting. CFI is the official provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification program, designed to transform anyone into a world-class financial analyst. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

  • Accrual Principle
  • Financial Accounting Theory
  • Finance vs Accounting
  • Three Financial Statements

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!