Batch Processing

Definition

Batch processing is an accounting process of gathering and documenting all organizational documents like financial records (depositing checks, mailing bills), bank statements, payrolls, and employee timesheets, etc., and processing all of them at the same time either on a weekly or monthly basis. A relatable term to this is bookkeeping, hence, batch processing is a bookkeeping practice. It is the responsibility of the bookkeeper to input all relevant documents for safekeeping and easy accessibility.

It is easier for the bookkeeper to process and input all documents in batches instead of taking them one at a time. So they have to wait for multiple employee timesheets, checks, and bills that have been accumulated so they can all be processed at once. The opposite of batch processing is transaction processing which is focused on processing data one at a time.

Batch Processing Explained

Batch processing is a really helpful bookkeeping process as it offers a cost-effective means for organizations to process a large database all at once. However, it comes with quite a few disadvantages as some documents such as inventory reports will be processed late, considering that they occur on a day-to-day basis. This does not apply to all the documents as it all depends on the type of document involved. Since inventory reports require daily updates, most companies opt for online processing for their inventory rather than batch processing. Thereby, enabling purchasing managers the ability to process inventory data and generate immediate reports.

Another downside to batch processing is that the bookkeeper or data processor must pay close attention to every input as a slight mistake or wrong input can lead to an error of the whole batch. The implication of this would be more work and extra costs. Similarly, when the wrong data are inputted incorrect units will be recorded this can affect future operations if not spotted on time especially when trying to balance a company’s account for a year.

Batch processing which started in the mid-20th century has been widely embraced as a financial practice.  In recent times, this practice has become widely accepted as large businesses use batch processing for data compilation and report generation.

Key Points

• Batch processing is the processing of data in batches and on a delayed timeline

• Batch processing is used when delayed data input has no immediate use like generating inventory reports

• Data that requires immediate use are processed with online processing to generate immediate reports

• Batch processing is cost-effective as it costs relatively less to handle all data at the same time rather than handle them one by one every day.

Batch processing is a better accounting or bookkeeping alternative that can be used when a large amount of data is involved. For generating financial reports, daily transactions can be entered in the sales journal until they are posted into the general ledger at the end of the month.