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Benefits of Accounting Software: Examples of Leading Solutions Explained

Category: B2B News
What are the benefits of accounting software?
The benefits of accounting software are fast and simple data entry, comprehensive and detailed financial reports, consolidated data, and automated record keeping. It also improves accuracy while increasing efficiency by eliminating repetitive and manual tasks.

While spreadsheets are a huge help in accounting processes, it still cannot meet the modern demands for speedy processing and minimal errors. Spreadsheets still rely upon human intervention to enter data, store information, and generate reports. Additionally, files are not easy to sync and access, especially if you have a large team or managing multiple branches.

Accounting software takes you beyond the simple functionalities of spreadsheets. Most platforms include user interfaces crafted specifically for accounting transactions such as receivables and payables. Furthermore, you can process payroll, cash flow, and more in one place. Generating reports for detailed or high-level analytics are also easy as you have a centralized database.

In this article, we will examine what accounting software can do and its benefits. We will also explore the types of accounting software in the market and show you some of the leading platforms available. After reading this piece, we hope to help you evaluate what kind of accounting application to consider for your business.

accounting software benefits

In the age of digital transformation, speed and accuracy reign supreme. This is why many businesses are choosing to automate arduous tasks that do not require extensive brainpower. As such, deliberate efforts are being made in various industries to adopt automation technology. Finance, marketing, and sales are three of the industries with high demands for automation. In fact, 29% of automated solutions in 2018 are focused on accounting and other related processes.

From organizing financial paperwork and computing payroll to tracking inventory and preparing income tax returns, advancements in cloud accounting technology have proved useful in trimming down the hours spent on these bookkeeping and accounting responsibilities, keeping ahead of their on-premise counterparts.

Source: Intuit

Industry experts have predicted that major accounting tasks will be fully automated by 2020. Sophisticated solutions are now capable of handling processes such as payroll, audits, banking, and taxes without the need for human intervention. Consequently, these innovations are now disrupting industries beyond accounting and finance.

Organizations from industrial manufacturing to governments are considering automation to save money and create more efficient workflows. Now, automation technologies are affecting the bottom line, and companies are taking notice. Up to 75% have increased their IT budgets to get their hands on various applications for sales, risk management, and, of course, accounting.

Utilizing these applications not only saves you time in handling your income and expenditures but also helps you make well-informed business decisions. With the help of accounting solutions, you can get down to the nitty-gritty of your company’s finances without having to take away your focus from what you do best—managing your business. 

Are you still contemplating whether you should invest in financial management programs for your company? If you want accounting software explained in more detail, read on. We’ll discuss the many benefits of accounting software as well as the different features they have to offer, so you can better determine if using one is suitable for you. We also included a few examples of accounting software to help you get started. For more examples, you can always check out our top 5 accounting solutions of 2020 list.

Benefits of Accounting Software

Without an accounting software, you will have to rely on your ledger and a calculator. While this process is time-tested, it could take days before you can even start analyzing the data you’ve compiled. By automating these tasks, you can accomplish more detailed reports at a fraction of the usual time. To add to that, you can enjoy these other benefits of accounting software utilization:

  1. Optimized business operations: Why waste your energy on bookkeeping when you can use it to run your business? With accounting programs, you can work smarter, not harder. Speed up your processing time by eliminating manual calculations from your daily to-do list. This helps you keep your books up-to-date without cluttering up your desk. Additionally, you can optimize your operations because you no longer have to run numbers on different applications—you can view everything on a single screen.
  2. Improved accuracy: Having an accurate record of your finances is crucial to monitoring the progress of your business. Through the use of accounting programs, you can simplify aspects of accounting that may be prone to errors. Many programs can automatically make calculations as you enter data, transfer funds, and adjust assets. It can also generate analyses while reducing the chances of oversights, and if you want to check your record for miscalculations, you can easily find and correct it before finalizing reports. Some even have comment capabilities to allow you to make notes for future reference.
  3. Reduced operation cost: A remarkably small number of companies outsource their bookkeeping. This means the majority of businesses manage their finances and all the related paperwork in-house, diminishing the time they have to work on their actual operations. Now, cost reduction is but one of the many benefits that outsourcing has to offer. By installing a software that suits your business, you can save on outsourcing without compromising the creation of quality accounting reports.  As an additional perk, using cloud-based or on-premise applications can help you save on printing and paper costs, as well as lessen your carbon footprint. You can read more about how much does accounting software cost here.
  4. Secured database: Most accounting software can be password-protected. This capability lets users protect confidential information from being accessed by unauthorized personnel. Also, by having your data stored in a software, you are facilitating its quick access, file search, and retrieval, not to mention safeguarding it from natural disasters. If your data is only accessible digitally, it is invulnerable to calamities like earthquakes, fires, and floods.
  5. Synchronized Files: As your company grows, the quantity of paperwork you have to track and the amount of accounting you need to perform multiplies and becomes complex. Through a software, you can access the information you need across multiple platforms and sift through computerized data without hassle. Furthermore, data migration is made easy because accounting software allows for the synchronization of online and offline databases.  For your convenience, there are also applications that provide real-time status updates, so you can see the changes as they are applied.
  6. Simplified tax compliance: Tax-related responsibilities take around 175 hours per year for all companies in the USA. In other countries, they may even take up to over 400 hours. That’s a lot of wasted days that could have been used to secure new clients, create new products, or improve existing services. With the tax planning features offered by lots of accounting software, you can store receipts, invoices, and income statements in one convenient platform. Some programs even allow for integrations that let you compare ITRs and adjust calculations according to new policies.
  7. Automated record-keeping:  An important facet of financial management, record-keeping can be confusing and labor-intensive. To lessen the effort you need to exert for it, various software solutions provide features that compile the data you input in different applications. Apart from merging them in one comprehensive operating system, it can also analyze business practices and identify trends in your company’s money flow. After which, it calculates your bottom line to show you where and when you are generating more revenue, which aspects of your operations you need to invest more in, and the like.
Freshbooks dashboard

Always get paid on time with your invoices all in one place.

Accounting Software Explained

To understand the purpose of accounting software in your day-to-day business operations, we must first understand its main functionalities and the problems it can solve. In a nutshell, it is a collection of applications designed to gather, record, summarize, and store financial data for interpretation. Programs such as these are meant to minimize the number of effort users have to exert in computing data. Moreover, they speed up the creation of comprehensive financial reports and allow for immediate analysis of cash flows.

Some of its key features include:

  • Automatic Data Backup
  • Budgeting and Forecasting
  • Check Printing
  • Comment Capabilities
  • Cost Predictions
  • Customizable Reports
  • External Application Integration
  • Fund Accounting
  • Inventory Management
  • Password Protection
  • Payroll Management

Types of Accounting Software

There are many types of accounting software available on the market that you can choose from. Some of them are:

  1. Enterprise Resource Planning (ERP) System: Commonly used by large corporations, this type of accounting software can bring your business functions together and merge them into a centralized platform for easier viewing. However, compared to other types of accounting software, this comes at a steep price and requires a long period of time to install.
  2. Commercial Accounting Software: The most common type of software available, ready-to-use commercial accounting programs are easy to manage. Like other applications, they can be personalized to adapt to the requirements of your bookkeeping process. So far, it is generally the most affordable option available.
  3. Custom Accounting Software: All businesses have unique needs. This is why companies sometimes opt to have accounting software created just for them. By going for this option, they can tailor the program according to the requirements of their operations. However, this can be more demanding to maintain compared to its commercially available counterparts.

Likewise, depending on the needs of your business, you may choose between an on-premise software or cloud-based application. If you intend to use an accounting program but want to make sure that all the data can only be accessed within your office, an on-premise installation may be ideal for you. On the other hand, cloud-based software may work best if you want to get hold of your files whenever and wherever.

With the fundamentals of accounting software explained, we can move on to steps on why you should invest in one of these programs for your company.

Leading Examples of Accounting Software

The purpose of accounting software is to simplify back-office responsibilities. By finding the right program, you can store, access, and process all the data you need to run your business with just a few clicks and taps. Whether you want to combine several components of your accounting tasks into one program or find specialized applications for particular facets of your business, there are options for you. Here are some examples of accounting software that you can choose from:

1. Freshbooks

FreshBooks dashboard

FreshBooks is a popular accounting and financial software that is perfect for small and medium-sized businesses. It is a flexible solution that makes complex financial processes simple and efficient. The platform’s robust features allow you to focus on growing your businesses instead of wasting time on repetitive accounting processes.

If you’re interested in trying out all its features, you can sign up for a free trial for a no-cost full experience.

FreshBooks

An award given to products our B2B experts find especially valuable for companies

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The software includes various automated processes such as invoice to payment functionality. You can easily create invoices and send them to clients. Also, you can monitor when the client opens the invoice to ensure that it was successfully delivered. FreshBooks allows you to set due dates, offer online payment options, and even charge late fees.

It also allows you to track expenses easily. You can attach receipts to their corresponding transactions and organize them right on the platform. That means it is easy to track down all these documents and entries once you are ready to prepare your tax forms. Furthermore, you can generate financial reports with just a few clicks. Create profit and loss reports, expense reports, and balance sheets in no time. You can export these documents to a CSV file or other popular formats.

Detailed FreshBooks Review

2. NetSuite ERP

NetSuite ERP dashboard

NetSuite ERP is a cloud-based ERP platform that comes with a fully-featured financial application that suits medium-sized and large enterprises. It includes accounts receivables and payables, fixed assets management, general ledger, and tax management. NetSuite ERP is a full-scale platform that includes other functionalities such as inventory management, order management, revenue management, fixed assets, and more.

The vendor offers a free trial to get you up to speed on its features before committing to a paid plan.

NetSuite ERP

NetSuite ERP

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The accounting application makes it easy to enter all relevant data into the system. For example, in accounts payables and receivables, you can enter, store, and manage receipts, vendor invoices, and purchase orders. It also includes online payment functionalities so you can receive payments easily. Additionally, you can pay your company’s and vendors’ taxes using electronic funds transfer (EFT).

The financial management software can be expanded using NetSuite ERP’s other features and modules. It seamlessly integrates with CRM, inventory, ecommerce, and order management tools. That means you can easily scale your platform as your operations grow without having to pay for another application.

Detailed NetSuite ERP Review

3. Tipalti

Tipalti dashboard

Tipalti is used by many C-level executives and over 250,000 payees worldwide, processing over $1 billion annually in international bank transfers. And there is a reason for this: Tipalti is simply secure, powerful, and simple. It automates all stages of payment processing that you wouldn’t even know it was there, from onboarding to tax compliance, and it does this by complying with the tax regulations of 190 countries, accepting payments in 120 currencies, and supporting 6 payment methods.

You can try all its premium features at no cost when you sign up for a Tipalti free trial.

Tipalti

Tipalti

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Tipalti leads its category in terms of automation. It eliminates over half of all tedious, manual tasks related to accounting, and streamlines processes in AP/AR, payment reconciliation, and financial reporting. It can integrate as well to the ERP systems to further reduce downstream and human errors by checking all tax data against 26,000 local and international standards.

Finally, Tipalti also has an advanced analytics and reporting engine. It creates automatic reports based on payments, taxes, and other transactions. Even better, it takes regional policies into account and collates them with the reports so you can get an accurate and actionable insight on your financials.

Detailed Tipalti Review

4. FreeAgent

FreeAgent dashboard

FreeAgent is a powerful accounting platform that was specifically developed for small businesses and freelancers. It can handle all core finance-related tasks with feature-rich tools from payroll to expenses. You can even connect the application to your bank accounts for a more seamless workflow.

You can easily sign up for FreeAgent free trial and get to know the features firsthand at no cost and without commitment.

The accounting platform allows you to create invoices and send them to your clients right away. You can track upcoming payment due dates and paid projects all in one place. Additionally, you can manage your expenses by taking a photo of receipts using your phone and uploading it to the system. That means you can associate entries with their corresponding supporting documents, so you do not have to rummage through your physical files again.

FreeAgent makes it easy to monitor your current financial status using its intuitive interface. The Overview dashboard is designed to show relevant and important information effectively. You can even explore your main cash flow and transactions in the past months. The dashboard also provides quick access to your Projects, TimeSlips, Invoices, and Estimates.

Detailed FreeAgent Review

5. Zoho Books

Zoho Books dashboard

Zoho Books is a part of the popular Zoho family of business solutions. The accounting software is suitable for small business with its smart and innovative solutions. It is easy to remain on top of your cash flow with its intuitive interface and controls. You can quickly make data-driven decisions in real-time with its powerful reports and analytics.

You can use all the features for free for a period of time to see if the software matches your needs. Simply sign up for Zoho Books free trial.

You can create invoices and send them to your clients right on the platform. Offer online payment options to your clients so they can send funds easily. You can also set up payment reminders for your customers. Also, setting up recurring payments is fast and easy. The system also allows you to import bank and credit statements to reduce manual entries. 

Zoho Books is also packed with more accounting functionalities that allow you to create and generate documents such as P&L, balance sheets, cash flow statements, and much more. Payments, expenses, and revenue are associated with each project. That means you do not have to hire a dedicated accounting team just to manage these tasks. 

Detailed Zoho Books Review

6. Sage Business Cloud Accounting

Sage Business Cloud Accounting dashboard

Sage Business Cloud Accounting, previously called Sage One, is an intuitive accounting application powered by cloud technology. It includes a robust dashboard with detailed data visualization so you can easily see your entire cash flow. This allows you to identify opportunities and minimize risks right away.

If you want to investigate the features closely you can easily do so when you sign up for a Sage Business Cloud Accounting free trial.

Sage Business Cloud Accounting

Sage Business Cloud Accounting

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Much like some of the platforms on this list, Sage Business Cloud Accounting is made especially for small businesses. The system handles expense management, accounting, project accounting, and compliance management. Furthermore, you can also generate documentation such as price quotations, invoices, estimates, and statements without reentering transactions and repeating any tasks. 

Aside from a powerful dashboard, you can also compute tax easily using the available transaction data. The application can also forecast cash flow and cash requirement estimates based on your transaction history. You can also track vendors, bills, and related data. You can even add notes, categories, and pricing details.

Detailed Sage Business Cloud Accounting Review

Should You Consider an Accounting Software for Your Business?

Modern businesses are required to operate with speed and accuracy in order to compete with the rest of the market and increase revenue. This includes accounting tasks and processes. Accounting software does not only store your financial information but allows you to automate tasks that would otherwise take much of your time.

Financial management platforms allow you to create detailed and accurate records while focusing on the most important aspects of your business. Furthermore, these applications allow you to easily generate reports that will allow you to make the right decisions at the right time. Whether you are a budding start-up or an already established brand, having an accounting software will help your team develop and maintain an efficient workflow.

Of course, accounting is not the only part of your business that needs a robust platform. You can also explore other business process management software to take advantage of various solutions that you may apply to various aspects of your operation.

Jenny Chang

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

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