THE NEED FOR ACCOUNTING SOFTWARE
Did You Know? The first accounting software was developed in 1978 when Visicalc and Peachtree Software were introduced. Visicalc was the first spreadsheet software that enabled financial modeling on the computer, while Peachtree Software was an accounting software package for the early personal computer.
During the start-up phase of a company, using excel spreadsheets to handle accounting records may be a viable option. However, as your business grows, expands, and begins to handle more complex and large amounts of financial data, the need for an accounting software becomes necessary. Accounting software is a business program that handles various accounting and bookkeeping tasks such as recording and reporting financial transactions, invoicing and billing, tax calculations, project management, client management, bank account reconciliation, and generating insightful financial reports.
Signs that your Business Needs Accounting Software
- You spend a significant amount of time on manual and repetitive tasks such as processing transactions and invoicing customers.
- Your business has a hectic time during tax filing season as accounts are not up-to-date or entries are inaccurate.
- You are juggling between multiple spreadsheets and paperwork to keep track of or retrieve information.
- You are handling an increasing volume of business data and need faster access to reports for decision-making purposes.
- There is an increase in the number of errors from using spreadsheets/manual accounting.
- You lack technical accounting skills. Accounting software will enable you to generate comprehensive financial reports, balance your books etc. without having the technical accounting skills.
What are the Benefits of Accounting Software to your Business?
- Improved Efficiency – Accounting software can handle multiple bookkeeping tasks and information retrieval can be done in a shorter time.
- Increased Accuracy – Accounting software can add income and expense totals, compile reports, and generate invoices thereby increasing data accuracy and simplifying accounting duties.
- Saves Time – Automation of tasks such as issuing invoices, updating client records, sending reminders to clients, recording sales and reconciling books of account releases employees to focus on other tasks such as strategy and growth.
- Ease of Tax Filing – Accounting software organizes company records such that financial transactions can be tracked easily, tax filing can be done faster, and compliance with tax laws can be met.
- Ease of the Audit Process – The audit process will be shorter for a company with formal records than those with hand-recorded books, as the auditor can navigate figures and reports within the software.
- Financial Data Synching – Data from several sources is captured and stored in one place making it easier to track company progress and plan ahead.
- Cost Reduction – Having accounting software means a reduction in the number of employees the business needs to carry out a particular accounting task. Employees also have more time to do profitable work within the business.
- Improved Cash Flow Management – Accounting software can generate more accurate reports, helping the business to gain more insight on company cash flows.
- Information Security – Accounting software prevents data from being jeopardized as structures are present to decide who will have access to the sensitive data.
- Customer Relationship Management – Accounting software works around efficient billing and invoicing thus preventing all sorts of delays and miscommunication.
Conclusion: Investing in the right business automation tools can be the difference between growth and stagnation of your business.
- Aditya Krishnan (2022). Importance, Benefits, & Advantages of Using Accounting Software for Small Business. https://www.zoho.com/books/articles/advantages-of-using-accounting-software-small-business.html
- Amanda Cameron (2016). Why Use Accounting Software for Your Small Business? https://www.patriotsoftware.com/blog/accounting/why-use-accounting-software/
- David Glantz (2022). Do You Need Small Business Accounting Software in 2022? https://articles.bplans.com/small-business-accounting-software-explained/
- Jordan Macey (2022). When do you need accounting software? https://www.goforma.com/small-business-accounting/when-do-you-need-accounting-software
- Katelyn Anderson (2021). Do I Need Accounting Software for My Small Business? https://www.softwarepundit.com/accounting/do-i-need-accounting-software
- Rajesh Gupta (2020). Accounting Software: How it became a need in the business of MSMEs. https://www.entrepreneur.com/article/344978