How can the use of accounting software help my business to grow?
There are two ways that a business can account for its transactions: manually through the use of notebooks/exercise books or electronically through the use of accounting software. Each of these has its merits and demerits. However, the benefits the use of accounting software comes with is invaluable and far surpasses the manual approach.
In this piece, I take you through what accounting software is and how it works. I also enumerate some of the ways that its use can help your business to grow. I end by making a list of some of the accounting software you can use for your business and some factors to consider in choosing accounting software for your business.
What is accounting software?
In simple terms, it is a computerized system that enables a business to record, track and manage its transactions. There are two types: the cloud-based, which requires internet and allows users to access data any place and at any time and the traditional type, which requires no internet but installation on a desktop or laptop. With this, data can only be accessed on-premises (thus where the computer system is located).
All that is needed for an accounting system to serve the needs of a business is for the user to be trained on its use to feed the system with the data needed and the system will, in turn, produce the expected output.
How an accounting system helps your business to grow
Accounting systems help in the following ways:
- Revenue and expenses recording – accounting systems help you to account for all the incomes and expenses you have generated and incurred. This gives you an appreciable idea of your performance for any period.
- Cash and inventory management – they enable users to key in information or transactions involving cash and inventory. This helps to determine track and monitor cash and inventory properly.
- Bank reconciliations – they also allow recording transactions with your bankers. Reports generated can then be compared with bank statements for reconciliations. Management’s attention would be drawn to unusual and unexpected transactions for corrective actions.
- Taxation and payroll management – some systems allow users to be able to apply taxes to products and services. This enhances trade as well as proper accounting for tax transactions. They again promote the processing of salaries and wages and other employee benefits. This prevents cases of inaccurate salary and wages payment.
- Financial reporting – accounting systems give you the ability to generate various financial reports like cash flow statements, balance sheets, profit, and loss statements, among others for informed decision making.
- Budgeting – some systems allow you to prepare budgets and compare them with actual performance. Corrective actions can be taken where necessary for improved business performance.
Some of the accounting software we have today
- Tally ERP9
- Wave accounting
- Xero, among others
In your quest to migrate from manual accounting to computerized accounting for your business, remember that there are factors to consider, some of which include the following:
- Business needs
- Type: Cloud or traditional
- The flexibility of change to another, to mention but a few.