Accounting software is a genre of computer programs which helps in managing financial transactions of your business. The types of such programs vary much in scope- some are meant for rudimentary bookkeeping while others help to manage the complete financial activities of big businesses.
Using cheap accounting software helps businesses to use the functions of their accounting departments in an efficient manner and can reduce mistakes in bookkeeping. Medium and small size businesses can now purchase ‘off the shelf’ accounting programs at very less cost. Large businesses use accounting programs which are customized as per their business.
Accounting software programs perform functions such as dealing with payments, invoicing, preparing regular reports for accounting like balance sheets and payment of wages. Computerized accounting systems provide substantial benefits such as accuracy and speed of operation and most important, the ability to gauge the real time financial position of the company.
Computerized accounting packages offer facilities like:
- On screen input and print out of sales invoices
- Record of invoices of suppliers
- Automatic updating of customer accounts in sales ledger
- Automatic updating of accounts of suppliers in purchase ledger
- Making payments to suppliers
- Recording of bank receipts
- Automatic updating of general ledger
- Automatically adjusting stock records
- Automatic calculation of payroll and associated entries.
- Integrating business data base with accounting program
Accounting software helps raise accuracy of records by eliminating or reducing possible human errors that maybe made in calculation. A wrong calculation early on in the process of accounting will produce a major impact on the end balance. But in case of computers, such errors are also not usual. But accounting software may be subject to human errors arising during data entry.
Accounting software permit businesses to process their accounts with more speed than manual processing. The major part of this speed comes from utilizing computers that are able to process figures faster than human calculations. Also, accounting software permits organizations to enhance efficiency by introducing automation. For example, when a business requires to record sales tax on all its transactions, it can use accounting software which is configured to do this automatically for each entry. This saves the need for a staff member to calculate the tax in long hand.
The advantages accruing from efficiency and speed of accounting software often go simultaneously with lowered overall costs. By using accounting software, every member of the accounting team does more in a given time, implying that a smaller team is needed for the overall process. In turn, this can reduce the administration and payroll costs of the accounting department.
Accounting software supports businesses to supply required members of the staff with accurate and timely financial information. For instance, there is the case of a finance manager who requires a cash flow report to present to a meeting in a few hours. Most accounting software has built-in reporting modules which enables users to make this type of report by simply clicking a button or filling in a form.
These are some of the advantages of using business accounting software.