The systematic recording, reporting and analysis of financial transactions of a business are termed as accounting. It is a way of communication regarding the financial health of a business of an organization to all interested parties. It is used to assess the assets, liabilities and cash flow of the company. To keep a note on the functioning of the organizations, it is necessary to maintain accounts. The efficiency of the operations of the company is done by reviewing the accounts, which help the owners and the managers to take business decisions and improve the profitability of the company.
Maintaining accounts is a challenging task in any business. Many rely on an accountant, while others focus on saving time and money by using specialized accounting software. Today’s technology has influenced every aspect of life making every day chores easy, one such advancement is accounting software. It is a type of computer software that is used to manage accounts and perform accounting operations. Accounting software package makes accounting quicker and more straightforward. Now a day’s everything is done electronically which makes the whole process time saving and reliable. Accounting software is an accurate method of keeping track of financial functions with greater ease. The information entered is processed according to your need and it is stored for future operations.
The advantages of using an accounting software package are:
Accurate and reliable:
Maintaining accounts accurately is very important, on the whole accounting gets full attention when you view the functions of an organization. In certain situations detailed and specific records are needed. The software is programmed in such a way that the calculations are done automatically as and when the information is fed. Rather than relying on your calculator opt for accounting software packages to automate tasks and reduce errors.
Accounting software saves your time in many ways, by eliminating manual calculations and record-keeping. Instead of working with staff you can save man-hours by using programs that are automated to keep track of the financial operation of the company. You can spend more time working on the betterment of the business rather than doing administrative tasks.
The data is made available instantly to users in different geographic location at the same time. Business can be controlled by producing reports regarding the operations of the company.
Simple to work with:
Computer accounting software packages are user friendly. Transactions regarding banks are automated. Time spent for entering data and manual calculating are greatly reduced.
Everything is up to date:
The accounting records are updated automatically when you do a new transaction. The invoices are fast and accurate, pay roll documents, credit notes, purchase orders are generated automatically.
Accounting software analyze your business practices and help in identifying how money flows through your operation. The software has wide database which makes all transactions simple. It gives a clear picture of how your revenue is distributed among different operations.
Product inventory is important as it helps you to know what you have in stock. Accounting software automatically tracks inventory as you process product orders. Most programs alert you when the stock is less, so that you can order in advance. The role of accounting software in inventory tracking is time-saving and advantageous along with accuracy of results.
It is error free:
Using computers minimize mistakes and decrease confusion. Humans tend to make mistakes which makes us different from computers but accounting software simplify the aspect of account keeping which might otherwise be prone to mistakes. When you use a computerized system, you make fewer mistakes in calculating totals or in typing, decreasing confusion.
GST returns are accurately prepared time to time by the accounting software. The GST returns are compiled using the bank transactions which are recorded in the system.
The whole business can be managed from one central location. Various activities can be done by the staff just by logging in. The outcome of their work is made available instantly on the screen by the accounting software.
The financial statements of your company can be prepared faster with greater accuracy. This helps in providing a detailed description regarding the growth of the company.
Manual accounting records can be lost or damaged easily where as the records stored in a computer are likely to be safer as many systems can be backed up. If the pages in a paper pad are lost, the transactions must be recreated again by conducting research. In case of a computerized system, you simply have to restore the latest backup and add new transactions that were not saved.
The data processed in computer through accounting software is well organized and easy to find. The information is organized in one place, it is classified by type.
The accounting software package takes care of generating invoice, paying wages and providing regular reports. It is a way of doing the work in a smarter way rather than working hard. The accounting software makes the whole accounting process simpler and easier even for those who have less or no knowledge in accounts.
For further reading on Accounting Software you can go through our articles here.