Importance of Accounting Software
With the growth in Digitalization, we all have seen a rapid growth in the business field as well. Business Firms these days, no matter small-scale, medium scale or large scale, require an Accounting Software in order to maintain a smooth flow of their work. Before going more into Accounting Software, we should first understand what exactly an Accounting Software is.
Introduction: An Online Accounting Software is a type of computer program that allows bookkeepers and accountants in collecting, recording, analysing and reporting a firm’s financial transactions. It is designed especially for a particular purpose. Therefore, it can differ from product to product and from business to business. The large firms may use a customized software that integrates a vast amount of data from different departments of the company, whereas small firms may not use customized software. The main aim of any accounting software is to make the accounting process more efficient.
Let us now discuss some examples of accounting software-
FreshBooks, Xero, QuickBooks, Wave, Zoho Books, Merchant etc.
It is also important to understand the types of Accounting Software in brief-
1-Billing & Invoicing Systems.
2-Payroll Management Systems.
3-Enterprise resource planning Systems.
4-Time & Expense Management Systems.
Importance of an Accounting Software-
- Organization –
An Accounting Software helps in organizing the financial document of any business which gives accurate information regarding the financial position of any business at any point in time.
- Efficient –
An Accounting Software saves a lot of time while inputting the data, as it is more efficient than the traditional method of maintaining ledgers. It also saves storage cost of managing financial documents as nowadays, the data is stored virtually.
- Accurate History –
It provides a history of the financial position of the company over the years through which we can easily make a comparison.
- Taxation –
It helps in determining the amount of tax payable to the government in any financial year.
- Billing & Invoicing –
There are many Accounting Software which is exclusively designed for billing and invoicing. Thus, this software allows customers to automate their day-to-day collections, adjust operations to the new and effective payment methods and industry standards, and prepare accurate and in-time invoices for their clients.
- Budgeting and Forecasting –
An Accounting Software calculates and interprets finance performance for the current year and helps to estimate the budget of the upcoming year. By using Accounting Software, companies can prepare their estimates and set up feasible and optimistic sales targets.
- Payroll Management –
An Accounting Software helps business to find out and process employee payments, prepare and deliver their cheques without any delays, and respond to all legal activities and tax commitments without making any mistake. There is many accounting software which is designed especially for payroll management and is used by many businesses to meet their financial obligations.
- Fund Accounting –
These features are found in Accounting Software designed especially for government agencies and non-profit organizations.
- Inventory Management –
Inventory management is a tool developed for stock control which enables businesses to control the availability of raw material, work in process and finished goods and timely movement of their products from company to customers. Thus help in avoiding delivery issues such as overstocking or understocking.
- Secured Database-
An Accounting Software is password protected. This capability of Accounting Software allows business (users) to protect confidential information from being accessed by unauthorized people. When data is stored in any software, then you are providing its quick access, file search, and retrieval to the users. If the data is only accessible through a digital platform, then it is invulnerable to unforeseeable situations such as earthquakes, fires, and floods.
- Automated Record-Keeping-
An Accounting Software is having the feature that combines the data business enters in any applications. It not only merges them in one comprehensive operating system but also analyse business practices and identify trends in a company’s money flow. After that, it calculates and analyses the trend to show when and where businesses are generating more revenue and which aspects of the business company need to focus more.
In this article, we have tried to explain what exactly an accounting software is and how can a business firm draw benefits out of it. Share your experience of using an Accounting Software in the comments section below.
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