Nowadays, it is not common to find a company that does not use accounting software packages or relies only on spreadsheets. This is because even small and medium businesses can now purchase ‘off the shelf’ accounting programs at very reasonable prices.
As for large companies, they can get customized accounting programs for their business. Such accounting programs can implement functions such as paying wages, keeping track of payments and invoices, and offering regular accounting reports (balance sheets, profit and loss accounts).
The introduction of easy online accounting software offers major benefits like accuracy and speed of operation. More important, it enables capacity to view the real-time position of the finances of the company. This is why you never hear of business which has upgraded to a computerized system of accounting, returning to manual accounting.
A typical package of software for accounting offers various facilities. These include:
- On-screen inputting and printing out of sales invoices
- Automatic updating of customer accounts in the sales ledger
- Keeping records of invoices of suppliers
- Automatic updating of accounts of suppliers in purchase ledger
- Keeping records of bank receipts
- Automatic updating of general ledger
- Making payments to suppliers and covering expenses.
- Automatic adjustment of stock records.
- Automatic calculation of payroll and related entries.
- Integrating business database with an accounting program.
Software for accounting can provide instantaneous reports for management like:
- Summary of debtor’s figures- a summary of accounts of customers showing overdue amounts.
- Balance sheet, Profit and loss account and Trial balance
- Sales analysis
- Stock valuation
- Variance analysis and budget analysis
- VAT/ GST returns
- Analysis of payroll.
When using software for accounting onthe computer, input screens are designed for easy use. The main benefit is that every transaction needs to be input only once as opposed to a manual double entry, where two or three entries are needed. The ledger system which is computerized is fully integrated. This implies that when a business transaction isan input on the computer, it is recorded in numerous accounting records, simultaneously.
The main benefits of software for accounting are as follows:
- Automatic production of documents: It enables the accurate and fast production of credit notes, accurate invoices, printing statements and purchase orders which are done automatically.
- Speed: Because of formatted screens and built-in databases, data entry into the computer with stock records and supplier details can be conducted far faster than any manual processing.
- Accuracy: There is less space for errors since only one accounting entry is required for every transaction, as against 2 or 3, in a manual system.
- Information availability: Data is available instantly and can be made available to various users in various locations, simultaneously.
- Updated information: there is automatic updating of accounting records, and hence, accounting balances will always be updated.
- Management information: Some reports may be produced which will aid management to control and monitor the business. For instance, aged debtor analysis will reveal which accounts of customers are overdue.
- VAT/ GST return: There can be automatic generation of figures for regular VAT/ GST returns.
These are some advantages using software for accounting.