Business accounting involves a wide range of activities to capture a business’s entire financial picture. It is a very time consuming and a complex process when done manually. But accounting software (such as Xero accounting) has simplified these processes, providing company owners some extra time to concentrate on the management and implementation of their policies.
Accounting software is a digital solution with which small and medium size business owners, Bookkeeping Services professionals and accountants can easily process transactions and maintain their business accounts. The accounting software is normally designed by a 3rd party for small businesses, although big corporations have their personalised accounting software. In this article, we will discuss the benefits and drawbacks of using the accounting software, which are:
Manual data entry is tedious and prone to errors. With the help of your bookkeeping services the software such as Xero accounting can be setup in 30 minutes. Once the software is established with bank accounts, debts and vendors, the business owner only needs to update information as it comes in. Also, this software needs you to insert data only once and will automatically derive your data when you require to formulate a transaction. This software works with minimum manual data entry and increases efficiency. Accounting software provides quick and accurate invoicing, and fast generation of documents, as reports can be drawn straight from the software. All documents, including invoices, credit notes, purchase orders, printing statements, and payroll, can be automatically generated.
A good accounting software solution such as Xero, effectively removes the risk of human error, as only one accounting entry is required as opposed to two or three when done manually. The accounting software is programmed to be simple and user friendly. The calculations are reliable and accurate, so a business owner can precisely monitor available funds at any time. The accounting solutions work on Invoice software, that allows you to enter a tax rate when relevant, with the system doing all the math. This is very advantageous when you have detailed invoices where different products are charged at different rates. Once a system is set up properly, you choose items to be invoiced, and the rest is done for you. There are many low risks of blunder and error in accounting software.
Data entry in Xero accounting software can be done quicker than manual processing because of its built-in databases of customers, supplier details, and stock records. Once you get the hang of the software, or whenever it’s being implemented, you’ll find lots of extra time on your plate thanks to its ability to crunch numbers and present all sorts of data by making a few a click. Additionally, despite common assumptions, there is lots of low-cost accounting software in the market. Thus, you can easily get access to primary accounting benefits without surrendering all your cashflow at once. The software has some upfront cost as you might need to contact bookkeeping services provider to set up the accounts and train the business owner, but it quickly becomes cost-effective. The owner is not required to pay for anything beyond the software purchase and setup. Most programs work with operating systems for years and only require a few inexpensive upgrades.
Generally, manual accounts are easier and more flexible to set up than accounting software. Depending on the software you choose, you may or may not find it challenging to operate. Some comprehensive accounting software covers just about every aspect all in one secure cloud-based area. There is always a potential threat of users to perform the software tasks inaccurately, or if a user tries to do something but inadvertently does something else, it might take some work to undo the errors. Thus, to avoid these errors, you will probably need some initial help in setting up accounting software. Our company provides such initial training and back supports to help you avoid such errors. Although once setup, the user can save significant amount of time and money.
Frauds and security threats:
Dependency on computers sometimes leads to bigger problems. Data stored electronically can be manipulated and accessed if accurate security measures and controls are not in place. With more information being stored in the cloud, there are more possibilities for hackers to access your firm’s financial data and utilise it. There is also a chance of someone within the company accessing the information, possibly stealing money from the daily deposit, and modifying the data in the program. Thus, strict controls are needed to make sure only authorized personnel use the accounting software and have access to reports. Since business data can be confidential and sensitive, using accounting software may increase the potential for fraud. Having said that, the accounting software called Xero is one of the most secure software that we have come across. The high level of security and implementation of the GDPR ensures the data is kept safe.
Overall, we can see that the benefits of having an accounting software overrule its disadvantages, as the accounting software generate accurate numbers through automation and improves the efficiency of the bookkeeping process. On the other hand, the disadvantages can be easily overcome by taking a few simple measures like initial training and strict control on the access of the software data. Thus, it can be said that having accounting software is beneficial for small business owners.