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RFID Technology in Accounting

  • Akansha Sharma
  • Jun 13, 2023
  • RFID
RFID Technology in Accounting

RFID is a kind of Automatic Identification & Data Collection (AIDC) technology that uses radio waves to work. These systems have very popular applications in almost every industry in the market and most departments. One example is accounting, these operations have a lot to do with the movement of assets. With the integration of this technology, businesses can optimize their accounting departments.

So, let’s check out everything you should know about RFID technology in accounting.

How to Use RFID in Accounting Operations

Radio Frequency Identification technology works by forming a network of communication between different sectors/components/items/framework of a business’s environment. This system allows multiple operations to work in coordination by sharing information constantly. Such capabilities, provide this technology with a variety of applications within the accounting operations of a business.

Asset Movement Tracking

The primary application of any RF system is to enable tracking of the movement of assets/items. Users create an infrastructure of antennas and readers throughout the facility, each antenna has a specific zone of influence/interrogation. This helps it divide the facility into different areas. These readers are connected to a centralized computer/database through either cables or a Wi-Fi network.

 With the help of this, anytime a tag (mounted on an item/asset) enters or exits a zone of influence, the antenna picks it up and sends the information to the reader. The reader then translates the data and sends the identity of the item and the zone it detected to the database.

Calculate Sales Performance

With the help of this technology, users can keep real-time track of the influx and outflow of stock and assets. Whether it is from incoming supplies, sales, shipping, inventory replenishing, etc. By implementing radio frequency systems at the billing/sales station, the users can get live updates on the sales performance of their organizations. This information is then directly fed into the accounting database, which also provides more accurate and automated revenue statements.

Employee Monitoring

Businesses can also set up access control systems integrated with employee attendance systems. By providing employees with customized smart ID cards, businesses can not only automate the attendance systems but also keep an accurate eye on their movement in and out of the facility. This helps in keeping an accurate record of work hours, attendance, break time, etc, and allows users to prepare a more definite revenue-to-operating cost analysis.

Inventory Management

Keeping an accurate record of the stock in one’s inventory is essential to maintaining accurate accounting records. With the integration of RFID, businesses can maintain concurrent records of any changes in the inventory. These systems also assist the users in making replenishment requests before the stock for items runs out.

Business Management Software Integration

People are always looking for more ways to automate as many business operations as possible, due to the reduction in cost, error reduction, and efficiency. For this purpose, many businesses use business management software like ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), and SCM (Supply Chain Management). However, these systems need to be manually fed information regarding the operations, sales, movement of items/assets, etc. But with the integration of radio frequency identification technology, users can connect the front-end operations with such software and automate them.

Benefits of RFID in Accounting

As you may already know by now, there are so many different applications of this technology in accounting operations. But there are other forms of AIDC technologies like barcodes, which are far cheaper in comparison. So, why choose RFID? It’s simple, they provide a lot of benefits over other AIDC systems and manual operations, like:

Real-Time Capabilities

The biggest advantage of RF systems is their ability to communicate information in real time. Operations like inventory management, database updating, and accounting records are usually done at the end of the day. Depending on the volume of items and the size of operations, inventory management might even be a weekly task. But with the help of radio frequency identification, users can have access to real-time operational information.

Introduces Automation

Another significant benefit of this technology is that it injects a good degree of automation into daily operations. Tasks like attendance, access control, inventory management, billing, etc. This allows operations to conduct at a faster rate and saves the company costs by reallocating resources to more productive tasks.

Improved Efficiency

By providing benefits like automation, accuracy, live data collection, etc, these systems provide a massive boost to an organization’s efficiency of operations. Which means more productivity, which means more growth, and jobs.

Accurate Readings

The biggest issue with manual asset identification and tracking is the margin of error. Even systems like barcodes have a small margin for misreads or errors while reading, these not only increase time consumption but also have a possibility of creating an inaccurate record. With RFID users don’t have to worry about such things. That’s because these systems do not require a line of sight to work and they can identify and read up to 1000 tags in a second.

Connects Virtual & Physical Inventory

To manage inventory using a computerized database, users have to create an electronic record and then match it item by item with the physical items. This can become an increasingly tedious task as the volume of items increases. With technologies like RFID, businesses can cut downtime by connecting virtual and physical inventory. By tagging assets, the readers can scan all the items within their range and match them with the virtual inventory automatically.


Accounting is an essential part of running any organization, it helps the users determine the total cost, revenue, profits, and losses of a business by recording and analyzing the inflow and outflow of assets and liabilities. However, as the size of an organization grows, recording these movements becomes difficult due to the rising volume of items.

But, with the intervention of RFID technology, businesses can automate and optimize these operations to a greater degree. Allowing greater productivity and growth.

Frequently Asked Questions

Q1. What is the RFID technology used for?

Ans - There are a lot of applications of RFID technology in a variety of industries. Some of the major uses of this technology are – Asset Identification & Tracking, Inventory Management, Access Control, and Employee Attendance Monitoring.

Q2. Is RFID used for payment?

Ans - Yes, radio frequency identification technology is being heavily used in monetary transactions presently. Most debit/credit cards today have an in-built RFID inlay that helps users conduct payments using NFC technology (contactless payment).

Q3. What is the biggest advantage of using RFID?

Ans - The primary advantage of this technology is that it provides a significant level of automation to many time-consuming operations within an organization. Thus, saving costs and promoting growth.

Disclaimer: The information presented here is for general information purposes only and true to best of our understanding. Users are requested to use any information as per their own understanding and knowledge. Before using any of the information, please refer to our Privacy Policy and Terms and Conditions.

  • Created on Jun 13, 2023

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