6 Benefits Of Using The Right Accounting Software For Your Business

If you have been in the business for quite a while now, you must be perfectly aware of how accounting for your transactions can sometimes be very complicated. This is especially true if you are either doing it manually or using software just for the sake of using it, without taking into account your company’s specific accounting needs.

Reasons are abundant when it comes to why you need to consider getting the right accounting software for your business. But, perhaps, convenience and savings are the top considerations when it comes to the best convincing factors. Choosing wisely can spell the difference between achieving your goal and getting stuck with a program that you either cannot maximize or prove to be not useful in the long run.

Having said these, what are the different benefits of using tailor-made software for your company? Some of the most compelling rationales of all are the following:

Saves Time

Being able to record each and every transaction day in and day out through an accounting software can spare your company from having to deal with backlogs and higher professional fees. This is, of course, depending on how big your company is and how suitable the accounting software is for your business.

A perfect-fit program lets you do data encoding and importation with much ease. It spares data from having to go through useless processes; instead, these go straight to where they belong in terms of account titles being used and what specific reports they should fall under.

For example, the purchasing department can set up an accounts payable account upon receiving an item or service from a vendor, which will generate a default entry and an accounts payable voucher (APV) number. Without this specific feature in your accounting software, you (or your bookkeeper) will have to do the entry yourself after you receive the invoice from the purchasing department.

When you collect the payment, you can just tick off the said voucher number instead of creating a journal entry to reverse the accounts payable and the acceptance of cash.

Minimizes Errors

If you started your company manually recording your transactions using spreadsheets, you most definitely know how hard it is to check for errors if, for instance, you unfortunately failed to balance your trial balance. If only you can just pay for the missing amount!

Using an accounting software that is right for your specific business transactions helps you minimize or even totally eliminate errors and mispostings. You get to post each transaction to its own correct modules and accounts.

Automates Entries

You can say goodbye to your notes that remind yourself of the recurring entries you need to record every month. Some of these accounts include depreciation, amortization, interest expense, interest income, insurance, rental, etc. The journal entries and the amounts for these are always the same every month. The exception is if there are changes in the figures, like additional equipment in the case of depreciation.

Being able to automate entries is a crucial part of saving time and creating accurate entries. Instead of having to remember recording these supposed memorized entries, you just need to click a particular option in the program for it to create them. Without this option, the possibility of missing these entries is possible, thereby rendering your records inaccurate.

Enables Timely Reporting

When you save time recording transactions, it automatically affects how you generate the program’s finished products, which are the different financial reports that a lot of users anticipate. And, who are these users you need to furnish with the generated reports besides yourself?

These are the IRS for tax purposes, investors to help them determine if it’s feasible to invest in your company, banks and financial institutions if you need to secure a loan or mortgage, the city government for your business permit, etc. Imagine what will happen if you let these entities wait for those much-needed financial statements, balance sheets, and cash flows? Some of the consequences are so grave that these can have a tremendous effect on how you operate as a business.

Compatibility with IRS

Another reason to ensure that you use the correct accounting software is the fact that you need to submit accounting records and reports to the IRS for tax and compliance purposes. This government body requires that such documents should be submitted in backup files in CDs, DVDs, or flash drives.

Because of this, you have to make sure that the accounting program you will be using will be readable by the IRS. This is to ensure a smooth audit of your company and avoid any hassle of printing and submitting paperwork or having the IRS itself go to your office to check your files.

Cost Savings

The bottom line benefit of it all is the overall savings . Saving a lot of time recording translates to a lower cost of manpower. Not having to look for another accounting program that can be readable by the government body and can be more suitable for your operations can be just as cost-effective.

The positive effects on the cost are just incredible, which cannot be readily apparent until you dig deeper or have a close look.

How Do You Choose?

To be able to reap the benefits above, choosing the perfect accounting program would seem like a tall order. However, it doesn’t have to be that way when you consider the following factors:

1. Identify What You Really Need

Not all accounting software are the same. They may basically do the same functions, but they are mostly created to fit certain business models. Even the most popular accounting software needs to be customized for all their features to work smoothly with the rest of the business processes.

So, the very first order of action is to consider the type of business that you have. Are you a manufacturing business that needs to monitor the inventory of raw materials, work-in-process, and finished goods? Are you a service-oriented business? Or, are you in retail and trade? This consideration will have a significant impact on the particular accounting software that you need to choose.

2. Determine Which Other Processes Need Integration

When considering purchasing accounting software, you may want to think about the processes that may need to be interconnected. This saves you more time and costs since you don’t have to do an upgrade when you decide to do it later on.

Some of the processes that can be integrated with accounting programs include payroll, CRM, POS, etc.

3. Reflect On Your Past Experience

You might have used different types of accounting software before, so it’s important to remember about your experiences with each of them. Familiarity plays a crucial part in your choice, as this can let you jumpstart your accounting operation right away without the need for rigid sets of training. Except, of course, if there have been upgrades made from the last version you have tried.

Also, because you had the chance to try them beforehand, you can easily tell the provider what needs to be improved with the software.

4. Consider Your Platforms

The kind of accounting software suitable for your business also depends on how you need to access it. Does your recording happen in the office alone, or do you need access to the Internet for your off-site workers?

This kind of consideration is essential if you will need an Internet- or intranet-based accounting software, or if a cloud-based software is necessary. If the latter is required, you also need to consider if your Internet connection is reliable enough to handle it.

5. What Do The Regulations Say?

You might think that these are not really important, but they actually are. Regulations or legislation can impact the way you decide how you choose your accounting software provider.

These may involve ensuring that the software suppliers are compliant with all the legal requirements that a state, city, or county is requiring.

6. How Much And What Way Are You Willing To Pay?

Depending on the software company, each has their own acceptable payment schemes. You may choose the one which can give you more breaks in terms of how you can pay for the software, the technical support included.

Some may require outright payment for the whole software package, which may cause a considerable dent on the immediate budget of your company. Others allow affordable monthly payment, which is beneficial to your cash flow.

7. Is It Worth Investing In?

For the sake of saving some costs when purchasing accounting software, always consider what

your company really needs and discard what it doesn’t. This is because every feature or process to the program is equivalent to some costs that you can use in other aspects of your business.

Assess from the get-go what accounting process of your business needs to be automated. If your business doesn’t deal with inventory and you only have very few employees, you can just get the basic or the free version of the software.

Final Thoughts

The right accounting software for your company should be cost-effective, time-efficient, accurate, compliant to legislation, and compatible with IRS. Anything short of these will create some hiccups in your accounting process.

But, remember that no perfect accounting software can perform perfectly and deliver the best results without the help of the skilled people operating them.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.