10 Important Business Benefits of Accounting Software in 2023

Why Should I Use Accounting Software?

Accounting software automates and streamlines the recording, administration, reporting, and sharing of accounting and financial data, saving time for businesses that have outgrown manual accounting practises and procedures. A company can automate a number of processes involving inventory, employee payroll, payables and receivables, as well as reporting and financial statements, with the help of efficient accounting software.

Accounting software is used by small firms instead of manual processes for a variety of reasons, including its ability to:

• Set up reminders and payments for vendors and invoices automatically.
• Boost the precision of data entry.
• Directly entering transactional data into the books will enable timely closings.
• Create accounting reports that are precise and legal.
• For a more expert appearance, customise reports and graphs.
• To make payments and deposits, connect directly to a bank account.
• Become more aware of inventory levels.
• Calculate payroll taxes and employee wages.

Accounting software that is hosted in the cloud requires very little installation and offers regular backups, upgrades, and additional layers of encryption. This enables businesses to free up internal computing and IT resources, saving money, boosting productivity, and reducing manual processes.

Accounting software is used by businesses to reduce laborious and pointless operations so that key personnel may concentrate on jobs that are more crucial to the success of the company as a whole.

Accounting Software: Benefits

The majority of accounting software can adapt to the size and complexity of a business. Depending on a company's needs, add-ons and modules offer additional features and capabilities. Most offer comparable advantages that support firms in digitising, automating, streamlining, improving, and increasing the accuracy of their accounting and financial operations. Here are a few of the primary advantages of the widely used accounting software of today.

1. Automation:

It saves time by sending reminders for payments and invoices along with links to the proper online payment options. This functionality is included in any reputable accounting software. Accounts payable, by planning bank transfers and direct deposits; tax payments, by filling out the most common tax forms and electronically submitting them to the IRS; and payroll, by calculating hours and taxes, processing wages, and paying payroll taxes are other areas where automation can be helpful. By doing away with manual procedures, accounting accuracy is increased and time is saved. Accounting software can also issue notifications and identify mistakes when they do occur. All of this frees up the accounting and financial teams to concentrate on work that has a better return on investment.

2. Access to up-to-date information:

Data isn't very valuable unless important personnel can swiftly make decisions for planning, forecasting, and attaining goals by viewing current, correct information. Transactional firms gain by having access to details about the mode of payment, the timing, and the location of certain product purchases. Management and other team members can easily view the most recent revenues, profits, assets, and inventory on a more fundamental level. Additionally, they may quickly compare data to data from other eras.

3. Improved visibility of more accurate information:

Scratched lenses or an outdated eyeglass prescription make it difficult to view details. The same is true for out-of-date software and outmoded accounting procedures. With today's accounting software, departments may simply examine and track transactions, manage and keep current data, and enhance departmental collaboration. This complete picture aids in error prevention, dismantles departmental silos, tracks accountability, and reduces duplication of effort.

4. Compliance:

Producing, tagging, checking, and submitting financial data manually in papers and spreadsheets takes a lot of time and leads to mistakes. The frustration is increased by having to stay on top of ever evolving rules, laws, and taxation systems. With the use of regularly updated templates for conformity with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), accounting software may automate and streamline those operations, delivering accurate financial statements. The filing of yearly returns and quarterly tax estimates can be automated to save time and hassle.

5. Better judgement:

Making important judgements on the basis of hope and instinct is not recommended. The decision-making process is aided by accounting software's visibility into current data and important KPIs.

Financial health can be determined by factors like revenue, customer purchase rates, product sales, and inventory levels, for example, for a stand-alone coffee shop or a regional bakery with many locations. Comparatively to the static, dispersed, and siloed approaches of old manual accounting practises, this level of control, insight, and collaboration provides a more stable foundation for corporate decisions.

6. Employee productivity increases:

By automating typical accounting tasks, software can change critical personnel from being obedient stewards of financial information to proactive producers of value for the company. The fundamental capabilities of accounting software—increased accuracy, real-time data delivery, visibility, and collaboration—assist teams in creating better business plans and fostering cross-departmental communication, both of which promote more informed decisions.

7. Security and continuity:

The software for accounting protects data and authenticates users using encryption and other layers of security. critical data is also safeguarded in the event of a lost or stolen mobile device, in the event of a fire, or in the event of any other calamity. This is particularly critical for cloud-based software, where the data is stored on a remote server. Additionally, smaller enterprises can get the same level of security as larger ones.

8. Remote access:

The pandemic's effect on remote work has led many accounting departments to incorporate cloud-based accounting systems. These systems enable authorised employees to access real-time data and information from any location, at any time, and on any device. These aspects enhance decision-making, teamwork, efficiency, and accuracy.

9. Scalability:

Accounting software must be scalable as a business grows and its accounting procedures, sales, financial transactions, clientele, inventory, and payroll become more intricate. The majority of packages come with modules and add-ons that manage expansion and link with inventory, bank accounts, credit cards, and other business components. Additionally, businesses can remove superfluous features when there are slowdowns, changes, or seasonal patterns.

10. Less expensive:

Data is transmitted via the internet to a provider's distant servers where it is processed and made accessible to business managers. Thus, money, time, and resources are saved. The cloud-based approach frees up valuable computer space and enables the IT personnel to concentrate on other responsibilities because the programme no longer lives on a company's PCs or network. Fees for new licences, hardware, system maintenance, and integration are eliminated through automatic software upgrades. These advantages are crucial for companies operating in erratic or dynamic marketplaces.

Important Accounting Software Functions

The majority of widely used packages have basic functions that automate and update data entry and administration for general ledgers, journals, accounts payable and receivable, payroll, income statements, balance sheets, reporting, invoicing, reconciliation, and purchase and sales orders. Access to accounting and financial data is also made possible via cloud-based accounting software, regardless of the time, location, or device being used by an employee. The most popular standalone and online accounting software includes the following key features.

i) General ledger:  Accounting software offers a centralised location for managing, updating, and viewing in real time all transactions made to a company's general ledger. Revenue, income, costs, assets, liabilities, and equity are some of these. Both the creation of financial statements and reports as well as journal entries can be automated.

ii) Account payable & receivable: Accounting software can track, classify, and automate payments owed to creditors and vendors through accounts payable and accounts receivable. It has the ability to create, schedule, send, track, and customise invoices as well as automatically notify clients of past-due balances. Most will also permit the establishment of an online payment site by the firm.

iii) Banking links: A connection to the company's bank account is a crucial feature required to support the automation that accounting software offers in order to track and make payments and deposits, as well as import real-time data.

iv) Reconciliation: It is a function that automates the process of reconciling financial institution statements and other external sources' statements with internal records to make sure that money leaving an account equals money being spent.

v) Income statements: Accounting software may generate personalised balance sheets, cash flow statements, and profit and loss statements.

vi) Employee payroll, time and expense management: Accounting software can be configured to automatically determine the amount owing to variable wage employees, handle various pay schedules and forms of compensation, and compute payroll taxes.

vii) Inventory management: It enables companies to automatically track inventory stock levels and trends, place orders for new inventory, and pay suppliers.

viii) Any mobile device can have access anytime, anywhere: The programme is accessible to authorised users worldwide via desktop, laptop, tablet, and mobile devices.