Accounting is the practice of communicating and recording all financial information. This can be done for an internal and external audit, recording financial information and analysis to meet certain legal requirements.
An accounting software is a kind of computer software that accounting professionals use to perform and manage accounting operations.
While looking for a good accounting software for your business, you have many options to choose from.
An accounting software can range from single entry small business accounting programs (keeping records) to more sophisticated double-entry large business accounting programs (features including accounts payable, accounts receivable, payroll, and inventory).
The qualities of a good accounting system that you choose should match the requirements of your company.
If you want to manage your business accounts all by yourself, business accounting software is the perfect choice for you.
It helps you with several benefits, including simple and fast data entry capabilities, running reports for your business analysis, reduced operational costs, bookkeeping, managing your consumer invoices, simplified tax compliance, and improved productivity by reducing the approval processes.
It is a cost-effective option that helps you keep all the data accessible and in a digitized format.
There are many key features of online business software that make it a tool of utility.
Let us try to understand some of them:
Accounting is the key component of all the online business accounting software in the market.
It is the first preference that you should be looking for in a good accounting software.
Accounting software tools make basic accounting functions like general ledger, fixed assets, accounts payable, and receivable work more effectively with no delay.
If your business is the kind that generates and sends invoices online, then accounting software is the right pick for you.
It not only initiates online invoices but also provides a seamless payment experience to your customers.
The ability to remind them about the payments and mail them about the same helps get paid faster.
Specific online business software requires third party integration for payment processing, while some require in-house payment processing services.
If your business consists of many employees or contributors, it requires online business accounting software.
It not only helps you keep account of an array of employee payments but also enables you to prepare, print, and process their checks within no time.
There are systems entirely dedicated to payroll management, but offering the benefit of it as a feature in online business software with many other significant features is a cherry on top of the cake.
Inventory management is broadly used for non-capitalized assets or what we call stock control, required to give your business a higher shelf life.
If you own a retail or a distribution business, an accounting business software that tracks inventory and helps you with a purchase order is the right choice for you.
It will, in turn, help you optimize fulfillment, reduce costs, prevent loss from theft or any spoilage, and provide a better customer experience.
Most businesses use accounting software that is mostly automated but requires updates from time to time.
This feature helps you to remind your customers about their past and upcoming payments.
Mostly, there is a sample text template sent out every time a customer is to be reminded of the payment process, which helps you get paid faster.
Some tools also allow sending gratitude emails to the customers after receiving payments, which can also be done using a simple text template.
When you reconcile your business bank account, you compare your internal financial records with the ones sent out to you by the bank.
Filtering these records manually can be a tiresome task.
Smart reconciliation tools in the online accounting software identify potential matches between your internal records you have entered into the software and the bank transactions, helping you identify any unusual transactions that might be fraudulent or caused due to error.
You can choose to accept or deny the same, based on your preference.
All the online business software in the market will not match the exact requirements of your business since there is “no one size that fits all.”
However, they are highly customizable. Screens can easily be changed. Forms, reports, and statements can be customized according to your immediate needs.
This will give you high ease of use, along with reliable support if needed.
Accounting software helps businesses complete financial statements, such as income statements or balance sheets more quickly and accurately than using labor-intensive manual methods. Leading accounting software includes customizable, role-based, real-time dashboards and analytics that enable financial teams to keep tabs on key financial metrics and drill down to explore trends and issues.
Advanced analytic tools provide detailed insights into the company’s current financial health. For example, managers can analyze data to identify the most valuable customers, payment trends and patterns in expenses. Some advanced platforms use machine learning to determine trends in historical data and help businesses make smarter decisions about the future.
Mobile-friendly accounting software is no longer a luxury that only enterprise businesses can afford.
Most of the online accounting software helps you with Android and iOS applications.
Some of them might be able to help you with the tracking of expenses only, while the other might perform functions like creating and sending invoices too.
The operations of the most popular ones are just the same as the desktop versions of the same, making your cumbersome tasks extremely convenient.
Businesses can use a combination of historical and real-time data to create budgets and forecasts that help managers project future business performance. Companies can then track actual performance against the budget to identify and address any problems.
Managers and financial specialists can drill into the details to pinpoint specific areas that have exceeded the budget, quickly determine issues and make adjustments to improve business performance. Analyzing the information also allows businesses to create more accurate forecasts for the future.
As companies grow, manually entering and tracking financial transactions becomes more cumbersome and time-consuming. Manual accounting also creates other challenges, from data entry errors to duplicate data and difficulty complying with regulatory and tax requirements. Accounting software can help with many of these challenges.
Here are some of the most common reasons why to adopt accounting software:
A good accounting system with these features should have the following qualities that are important for a system to meet the needs of the business and its stakeholders.
Reliability is fundamental in an accounting system. It must consistently provide accurate and error-free information.
If users cannot trust the data, it undermines decision-making processes.
A reliable system should also have features that detect and flag discrepancies, thereby minimizing the risk of errors due to database corruption or communication failures with integrated systems.
An effective accounting system should provide information that must be relevant to business decisions. This means that data should be timely and detailed enough to reveal trends and insights that inform strategic choices.
The system’s ability to generate reports that reflect current business conditions enhances the relevance of the information provided.
An easy-to-understand accounting system is vital for user adoption and effective utilization. If users find the system complex or confusing, they are less likely to use it fully which can lead to errors and inefficiencies.
A user-friendly interface with clear navigation helps ensure that all employees can engage with the system effectively, reducing the likelihood of mistakes.
The quality of comparability allows users to analyze financial data across different periods or business units easily.
Reports generated by a good accounting system should use common units of measurement and formats that allow stakeholders to identify trends and make informed comparisons. This feature is critical for performance analysis and strategic planning.
The choice of software is important in deciding how well an accounting system functions.
Modern cloud-based solutions offer automatic updates and remote access, making them more flexible than traditional software. This reduces maintenance efforts and allows for real-time collaboration between accountants and other stakeholders which improves the overall efficiency.
An accounting system must be accessible that allows users to retrieve financial data quickly whenever needed.
This accessibility supports timely decision-making and operational efficiency.
Cloud-based systems often excel in this area, as they enable access from various devices without compromising security.
Usability is a key quality that determines how effectively employees can interact with the accounting system.
A good system should require minimal training for users that promotes productivity rather than hindering it.
The design should facilitate intuitive navigation and support various user needs within the organization.
The online business software should be capable of growing in size and scope, both. If you decide to upscale your business, the accounting software that you possess should either be able to accommodate by itself or must be easily upgraded. It must have the capability of accommodating a larger user base, more transactions, and growing financial data.
Cloud-based accounting software helps growing companies expand efficiently by making it easier to add functions and users without buying expensive new hardware or installing on-site software. Some accounting software is also designed to support the increasingly complex needs of growing businesses, such as support for international operations, multiple currencies and multiple subsidiaries.
When it comes to running your core financial processes for any business, it’s important to choose the right accounting software. You need to start by examining closely what your business needs today and what you will likely need in the future.
An accounting system may be able to support the number of employees you currently have but will it be able to scale up as your business grows? Will it integrate easily into ERP suites as your company’s operations expand? Does the supplier/ vendor offer essential features, such as fixed asset management, project accounting and advanced forecasting? Do your employees find the software intuitive and easy to use?
So just sit relaxed and think about how effectively the software automates all your accounting operations and customize workflows to match your needs. Also, check if your accounting software can handle all the regional and international tax requirements for your business now and in the future or not.
If you operate internationally or plan to do so in the future, it’s important to consider the software which supports multiple international subsidiaries and both GAAP and IFRS accounting standards. However, if your staff needs access from anywhere other than a single central office, make sure the software allows you to access your data from multiple locations and mobile devices. To facilitate informed decision-making, determine whether the software offers real-time data analytics and reporting tools that help track key performance indicators (KPIs), cost per invoice, gross profit margin, operating cash flow and much more.
It is a matter of enhancement and not a replacement to consider cloud-based accounting software.
A study reveals while 89% of the accountants are happy to integrate new technologies and focus on strategic tasks instead, 67% have adopted cloud-based accounting management.
Accounting software manages and records the day-to-day financial transactions of an organization, including fixed asset management, expense management, revenue management, accounts receivable, accounts payable, subledger accounting, and reporting & analytics.
Modern accounting systems allow you to automate and streamline key accounting functions. But beyond that, they allow you to gain deeper insight into your financial data. With these systems, you can unify data from different books, ledgers and locations. Plus, use the flexible reporting functions to analyze that data more effectively.
Companies use accounting software for many reasons. They include increasing accuracy and efficiency, supporting business growth, obtaining real-time insights into financial information, monitoring cash flow, managing invoicing and payment processes, facilitating reporting and complying with accounting standards and tax regulations.
Accounting software can create reports upon request or automatically at the end of every financial period (weekly, monthly, quarterly, etc.), depending on the specific product. It can help businesses generate their financial statements, as well as more detailed reports that examine specific aspects of the business, such as lists of outstanding bills and invoices.
Advanced accounting software comes up with various features including support for multiple currencies and international subsidiaries, advanced analytic capabilities, such as machine learning, project accounting, fixed asset management and sophisticated customizable workflow automation tools.
