Accounting is asystematized practice, work or process of communicating and tracking financial data. A business organization apply accounting software in their day to day accounting practices for different purposes including internal and external audits, required reports and financial analysis to comply legal or internal managerial requirements. There are various types of accounting software including simple and easy, single-entry programs for individual record-keeping to more urbane, double-entry systems that can process and track accounts receivable, accounts payable, payroll and inventory, among other features and functions.
Why is Accounting Software Important?
Improved Accounting Accuracy
Accounting software benefits compriseimproved accuracy by reducing or eliminating human errors in calculation. Manual bookkeeping processes include making a lot of mathematical calculations by hand. An incorrect calculation early in the process could have a great impact on the end balance.Whereas, computers, on the other hand, are virtually incapable of making such errors. However, it is a known fact that accounting software is not immune to human errors arising from data entry or interpretation mistakes.
Speed of Completion
Using accounting software enables businesses to process their accounts with greater speed than manual processing. Part of this enhanced speed comes from the use of computers, that can process figures far faster than the human brain.Moreover, accounting software enables organizations to improve efficiency by introducing automation. For instance, a business needs to record sales tax on all its transactions. Accounting software could be configured to do that for each entry automatically, instead of having a staff member work out the tax longhand.
Reduced Overall Costs
The benefits resulting from the speed and efficiency of accounting software often go together with reduced overall costs. The use of an accounting softwareenablesevery member of the accounting team to do more in the given time, potentially meaning that a smaller team is needed overall.
This, in turn, can lower the accounting department’s payroll and administration costs. However, these savings should always be balanced towards the cost of the software itself and any extra hardware needed to run it.
Provides Accurate Reports
Accounting software helps businesses to supply the required members of staff with timely and accurate financial information. For instance, a company’s finance director wants a report of cashflow to take to a meeting within two hours. Many accounting software systems have in-built reporting modules that allow users to make this type of report by just filling in a form or clicking a button. But, creating such a report manually would be a time-consuming process.
Reduced Frustration with Tax Filing
Filing your business taxes, sometimes can be a complex process, requiring you to keep close track of all your business’s transactions. Accounting software helps to make this process easier by ensuring that all your business’s financial details are in one place. Moreover, some companies produce tax return software that assimilates with their accounting programs. This permits you to calculate your return itself semi-automatically, rather than spending time and resources working out the required details by hand.