Why is accounting software useful? More and more organizations are switching to an accounting solution to handle their financials; hence, there must be a good amount of beneficial reasons why. If you’re considering of implementing this system to your business, one of the primary aspects to look into is determining the ways it can help with your accounting and bookkeeping tasks. Here’s the summary of why accounting software is useful for business of any size.
In this article, we’ll also discuss the various factors to consider when incorporating one into your workflow which is why it’s essential to get to know the software well to deduce whether it solves and fits your organization’s needs. If you need a more basic introduction to the topic check out our what is accounting software guide.
The accounting system market continues to show a steady growth over the past years as more businesses are realizing its advantages. Analysts from Technavio made a forecast on the market size of business accounting software as per Business Wire. During the forecast period of 2017-2021, it has a CAGR (compound annual growth rate) of over 6% which means it’s projected to grow from $3.06 billion in 2016 up to $4.10 billion by 2021.
This further proves the increasing popularity of this solution among businesses and professionals. In fact, the adoption of cloud accounting for 2018 falls between 45% and 58%. Since businesses and customers alike are opting to automate and streamline this process, it’s an undeniable trend that will elevate you against competitors.
Accounting software programs are used to handle accounting and bookkeeping, including storing your organization’s financial data and performing business transactions. It’s a time-saving solution that eliminates redundant data entry such as filling in your customer’s information on the quote, processing the work order, and then completing the invoice. Still, not everyone may need this system. For instance, a sole proprietor with no employees may suffice without it. However, small businesses with more employees, customers, and inventory handled can benefit from this system.
Before tackling the ways this solution can help you, it’s essential to determine first if it’s meant for you. The following questions may help you decide whether it’s right for your processes:
If you answered yes to most of these questions, then you, indeed, can use the help of an accounting system. With that in mind, let’s proceed on answering the question: why accounting software is useful?
Handling your business’ finances with clumps of expenses, boxes of receipts, and spreadsheets of income and expenses expose your information to potential lapses and deductions. However, this can be resolved with the right accounting solution by providing you with an up-to-date, computerized accounting file which is crucial especially during the tax season. Listed below are some answers to the question, “Why accounting software is useful?”
Data entry is time-consuming. With any popular accounting system, automated payment plans allow you to only enter a customer’s information once. A customer’s payment habits and purchasing history are tracked for reference. When collecting payments is due, you’ll then receive payments without putting in extra work from your end. It also gives you vendor history and aging with reports for each member which makes locating and retrieving invoices and payments faster. The entirety of each transaction history is also saved in the system without you having to manually input the data one by one. Not only does this saves you time, but this also eliminates potential errors from transcribing data manually. Many banks also allow a direct download of your bank account so you can easily input a whole month’s worth of transactions.
Using a good accounting system in place only requires you to record the amount of money you spend and receive in an organized way. This allows you to stay on top of your accounts when compiling and exporting documents and receipts to your accountant with ease. Properly compiled records also make your accountant’s job easier in taking care of your taxes. Some software also complies with tax office rules through formatting invoices automatically so you won’t face headaches during tax season. It also enables audit-proof books which makes the auditing process shorter as IRS auditors may only check and do a cursory review to see if the bank statements align with the software’s records.
In a technology-driven world, paperwork is outdated. Many processes nowadays are empowered by technology. It’s even predicted that by 2022, 70% of software interactions of enterprises will happen in mobile devices which stresses the importance of getting ahead against your competitors. Sending a digital invoice to your customers via email is convenient both for you and your customer. Customers can send their payments with only a few clicks which make collecting them faster and easier. Many accounting platforms nowadays integrate with various payment channels that allow credit and debit cards, bank transfers, and e-wallets.
Managing a business entails a net amount of cash and cash equivalents that flow in and out of your financials. Overseeing all transactions to pay and get paid for may mean having to designate your productive hours in flicking through contact lists, files, and Excel sheets without an accounting program to streamline the task. The software helps you stay on top and keep track of incoming cash, invoices, and overdue payments, among others to ensure you won’t miss a crucial financial transaction. An accounts payable system tracks bills as they arrive so you can plan and forecast future cash flows instead of just cutting checks when bills are due. Having formalized financial statements, such as balance sheets and profit and loss statements, is also necessary for evaluating the progress of your business.
Even if you’re excellent at math, accuracy is a crucial aspect of accounting processes. Despite having an access to all financial records in your organization, there’s still a potential for errors, edits, and lapses in calculations that can cost you time and money to correct. This is even more important as your business grows and you’ll soon have to handle more workers, taxes, bills, and payments with crucial deadlines. It also simplifies bank reconciliation so you don’t miss deductions. A good example of an accounting solution that handles these processes well is FreshBooks. It tracks expenses easily, automates payments for getting paid faster, and creates professional-looking invoices.
Automating your accounting tasks saves you money in the long run. It eliminates the need for hiring a bookkeeper or allotting extra hours of their shift to handle all books, invoices, and transactions. In business, time is equivalent to money and optimizing this process greatly reduces bookkeeping hours. Furthermore, the software has subscription-based pricing models with low costs to pay on a monthly or annual basis. Subscribing to a plan gives you regular updates, support, and tools which enables you to focus on actually running your business.
If your accounting system lives in the cloud, you can access it anywhere you are at any time when you need to. Matters regarding finances are hard to put off, hence, immediately solving any issue is critical. A cloud-based accounting solution doesn’t limit your access to your office or desktop. You can use native apps for mobile devices even when you’re on-the-go. In fact, 83% of users are more satisfied when their vendor offers a solution for mobile devices.
Accounting solutions are useful and crucial for your business. That’s why it’s important to be careful in choosing which one to implement with the wide array of options available nowadays. There is no ‘one size fits all’ solution for your own business, but getting to know your needs through business evaluation and being aware of vital factors to consider for the software is essential. You should also consider how much accounting software costs. Here are some examples of things to keep in mind when choosing a solution:
FreshBooks is an excellent option to start looking into, especially for small businesses as it’s fast, easy to use, and secure. It’s built for agencies, firms, consultancies and self-employed professionals to use. This cloud-based software effectively eliminates paperwork and helps you create professional-looking invoices while being extremely easy to use as its interface is simple and intuitive. You can easily try it out and see all key features in action with a great free trial offered by the vendor. You can sign up for FreshBooks free trial here.
It’s packed with all the necessary features such as invoicing, expense tracking, time tracking, project management, payment transactions, and reports. It also has a mobile app that enables you to access your accounting tasks anywhere. FreshBooks have their client’s needs in mind that’s why it integrates with industry-leading apps to leverage your business processes making it an over-all reliable and robust solution.
Xero is a highly efficient accounting management system designed for small businesses across all industries. It’s easy to use for everyone, even those without prior accounting knowledge. Xero achieves this feat by simplifying complicated financial concepts through flexible templates, providing a comprehensive summary of your entire financial operations, and streamlining your workflows, to name a few features, all of which are found on Xero’s dashboard. Due to its cloud-based nature alongside a secure two-factor authentication for approvals, users can from around the world can work on accounting tasks at the same time with minimal risk of financial fraud. A Xero mobile app also allows you to easily manage your business on the go.
QuickBooks is a great choice if looking to utilize a breadth of organizational functionalities for optimal management of your small business’ accounting data. This includes payable bills, accounting notes, and other standard tools for accounting operations. Other standout features include blazingly fast payments by connecting invoice to credit cards or bank accounts, clear and automated reporting with the capability for creating and running custom reports, and much more.
Zoho Books comes from one of the leading software providers that offer over 20 solutions, giving you a breadth of applications to enhance your operations from a single account. Zoho Books is designed with speed and efficiency in mind, helping small businesses remain on top of their cash flow by streamlining all financial processes, automating mundane tasks, send professional-looking invoices, and quickly receive online payments. Managing several projects is also a breeze with its robust collaboration features, offering simple communication through a client portal alongside role-based permissions to easily engage them with the payment process.
Tipalti specializes in handling large-volume payment processes for both clients and vendors, offering the capability to automate and streamline global mass payments across 190 countries in 120 currencies while ensuring compliance with tax and regulation standards. This drastically eliminates countless hours of manual work from your team so they can focus on other financial operations. Tipalti also comes equipped with an advanced, automated payment reporting system that normalizes data across all payment gateways.
Book Keeper is hybrid accounting software that can handle all accounting-related tasks, whether you’re online or offline. With its hybrid nature, Book Keeper automatically syncs offline data to the online database regardless of your platform of choice, ensuring parity with the latest information on your entire accounting processes at all times, be it inventory management, financial reports, and taxation, among others. This comprehensive accounting software also comes equipped with warehousing and POS software functionalities, making it an ideal application for those in the manufacturing or retailing business.
FinancesOnline is available for free for all business professionals interested in an efficient way to find top-notch SaaS solutions. We are able to keep our service free of charge thanks to cooperation with some of the vendors, who are willing to pay us for traffic and sales opportunities provided by our website. Please note, that FinancesOnline lists all vendors, we’re not limited only to the ones that pay us, and all software providers have an equal opportunity to get featured in our rankings and comparisons, win awards, gather user reviews, all in our effort to give you reliable advice that will enable you to make well-informed purchase decisions.