Accounting is an essential activity for any business operation. Large corporations and small enterprises need to have accurate and updated books to ensure optimal operations as well as adhering to complete compliance with local and national taxation laws. For decades, businesses were required to outsource their bookkeeping tasks to third-party (accounting firms), while larger corporations had to create their own accounting departments. This would cost a considerable sum of money to the business.
However, thanks to the advent of automated accounting software, the process of bookkeeping has become increasingly easy and cost-efficient as well.
Why do businesses need accounting software?
There are several prominent reasons that indicate the essential nature of accounting software for business enterprises. The software helps to transform the way a business corporation works.
The software offers an incredible level of data security by storing sensitive personal, account, and financial information on password-protected cloud server accounts. The software helps to minimize mistakes by immediately correcting input errors, checking digital documents quickly and easily, and avoiding calculation errors effectively.
The automated accounting systems are able to simplify the complicated tax compliances by providing a reliable source of information for taxes and help to prepare for audits as well as keep notes to help with more efficient auditing in the future.
The software systems are extremely flexible. It can easily adapt the accounting process to your specific needs according to numerous parameters. It also generates and exports reports in an efficient and common format, such as Microsoft Excel spreadsheets.
Accounting systems also provide excellent customer support through notifications for any changes in the programs, replying to customer queries via emails as well as providing effectively helpful support links. The software system is an excellent way for companies to cut back on expenses of hiring or outsourcing accounting tasks to third-party accounting firms.
What are the important features of accounting software?
Online accounting systems have several key performance indicators (KPIs) that notify employees and management regarding the efficiency of the accounting department. They help to streamline the activities of employees with the goals of the business enterprise.
Some of the major features of online accounting systems include generating or calculating:
Financial close cycle time – These are the number of working days that are required to complete accounting and close the books before submitting the final financial reports to account managers.
Cost per invoice – This is the total amount of expense divided by the total number of invoices that have been processed to date.
Finance staffing ratio – This is a representation of the total number of employees per finance employee.
Percentage of payments – This is the number of processed payments on approved purchase orders and helps to make payment approvals more efficient.
Inventory discrepancies – The accounting system coordinates and manages the warehouse and analyzes inventory employees to identify and solve potential inventory issues.
Vendor payment processing time – This is the time required by a business to process a single invoice from a vendor.
Vendor invoice error rate – This is the number of invoices in percentage sent by vendors to the Accounts Payable department.
Distribution center operations – This represents the daily operations of distribution centers.
Payroll staffing ratio – This shows the total number of employees per payroll employee.
Are there different types of accounting software?
Yes, there are different types of accounting systems available in the market today. These can include modular solutions that resolve specific requirements for processing accounting information from multiple transactions (such as procurement module, sales module, material accounting module, etc.) or may have integrated multi-modular solutions.
There are two types of online accounting software in use today. They are:
- Financial Accounting Software (FAS) – These include modules such as sales, procurement, general ledger, books, staffing, fixed assets, and earnings.
- Management Accounting Software (MAS) – These include modules, such as resource planning, cost calculations, business process reengineering, and production management.
What to look for in the latest accounting software?
If you want to ensure that the latest technology is at your disposal for accounting, you need to know the latest advancements in accounting software systems. These are essential to have an extra edge, which will make your accounting processes even more efficient and easy.
So, before you choose any automated accounting system for your business, make sure to check and determine that it has:
Cloud computing – This enables users to access and retrieve accounting information from anywhere and at any time. It helps to control the use of resources and optimize their utilization according to your needs. These allocate resources that can serve a large number of users simultaneously.
Intelligent scanning – These have optical character recognition technology, which removes the need for manually entering handwritten account data, checks, and printed receipts. Using this, business organizations can convert printed materials into soft accounting data automatically.
Make sure to check that the accounting system contains the modules and features which are specifically required by your business organization on a regular basis. This foresight will help to make your accounting processes easier, more efficient, and secure.