Accounting software is a dedicated tool used by digital-inclined companies to record the flow of their money and evaluate their financial health.
It helps to manage an organization’s day-to-day financial transactions, making it easier for bookkeepers and accountants to record and prepare reports.
According to Admiral Group, a Microsoft Software Consulting company, even though accounting software makes the work of the personnel in the finance department easier, the organization gains more.
Benefits of accounting software
As a company, you stand to gain more than the money invested in purchasing an accounting software. Below are some benefits your small business might enjoy.
Organized and instant financial report
Business books need timely input of expenses, and you should be able to compile the numbers for a quick report.
Doing this manually can be tedious. The time involved in punching your calculator to sum and subtract numbers can be used in doing other tasks.
Accounting software makes the process easy. With a few clicks, you can instantly download your report.
They also come with features that allow you to customize how data are entered and report templates to suit your business need.
For small businesses with a small team, accounting software makes it easier for them to prepare their financial report with little knowledge of accounting.
It can also reduce the number of accounting personnel the organization would need, therefore allowing more investment in other company areas.
Seamless and real-time compilation of financial data
Tracking financial transactions across different departments of an organization can be almost impossible when done manually. Efficient reporting requires documenting data from bank accounts, credit card accounts and payroll services.
Accounting software allows instant recording of any spending to generate real-time financial health of the organization.
It eliminates the stress of seeking data across the spending platform. Once the platforms are integrated into the accounting software, employees involved in the spending can easily record transactions from wherever they may be while the report is instantly prepared by the software for download anytime it is needed.
Easy tax calculation
You can owe your suppliers, and they would understand if you explained the reason for the delayed payment. But you do not want to owe the government.
Not only are you expected to pay your taxes, but it is also mandatory to pay the due amount, as any reduction could cost you a lot more.
Filing taxes is complicated and could be more difficult for small businesses.
Accounting software makes it easier to calculate your tax and avoid IRS problems. It can store receipts, invoices and income statements while making them easy to access.
You will not need to start finding where you kept the invoice for product A and the receipt for product C. They can all be comfortably accessed in one spot with accounting software.
Accounting is a job where mistakes are not allowed, but unfortunately, it is rampant.
Transposition errors like writing 52 instead of 25, unknowingly increasing or reducing a digit by 0, such as writing 1,000,000 as 100,000 are not unusual.
These errors can cost a bookkeeper hours to fix as they are not easy to detect. It will require checking receipts and invoices repeatedly to ensure each tally with the recorded digits.
Accounting software reduces errors. Firstly, it saves the stress of constantly crossing a digit on the balance sheet. Secondly, you can instantly see the sum of digits on a row, for instance, to quickly detect if there is an error.
This helps to reduce overpayment or underpayment issues.
Overpayment and underpayment are common payroll issues. Although it might appear as something that can quickly be resolved, it will amaze you it could lead to a lawsuit.
Recovering an overpayment, for instance, is not easy as it looks. It is a fact that the law empowers the employer to recover an overpayment. However, it is expected to be done such that it does not inconvenience the employee.
Typically, you are expected to recover the money by deducting it from future salary payments of the employee until the amount is paid off. This would deprive you of doing business with the money as it is now with the employee.
Accounting software helps to avoid this. You can automate payments to employees and also use the software features to assess the total payable amount and detect if there is any unusual increase compared to the last payment.
With this, you can easily investigate the differences before the payment is finally disbursed.