Businesses are evolving at a fast pace in today’s time as technology keeps becoming smarter and faster. Not just big organizations, but also modern small businesses, are hunting for smart digital tools to gain advantage in the market. And as a matter of fact, accounting software is one of those digital tools.
As your business grows, your financial operations also expand and become more complex. The modern businesses can’t afford accounting errors, wastage of human resources, and confusing presentations with lots of time taken, as happens with traditional accounting. Therefore, the businesses have started opting for a scalable accounting softwares with not just spreadsheet accounting, but a wholesome solution is a best accounting software. This trend is also quoted by Fortune business insights which claims that the global accounting software market will reach more than $20 million by 2026.
Technically, accounting software is a collection of tools designed to collect, record, analyze, and store financial data for easy interpretation. It serves a plethora of key features to revolutionize accounting into highly accurate and efficient accounting standards.
- Budgeting and forecasting
- Automatic data backup
- Cost forecasting
- External application integration
- Fund accounting
- Inventory management
- Automatic invoicing and payment
- Payroll management
- Data security
There are different types of accounting softwares in the market on the basis of the utility of the businesses:
- Enterprise Resource Planning (ERP) System
ERP accounting software is usually preferred by large corporations, as it allows you to connect all the business processes with each other and merge into a centralized platform for easier monitoring. It basically covers the company’s all the major management functions – financial, supply chain, and customer relationship, and operates them in a single comprehensive, integrated system. Moreover, this system is costliest and requires a long time to install on the system.
- Commercial Accounting Software
It is the common-type of accounting software, with ready-to-use accounting programs which are easy to equip and manage. It gives an option to personalize the software as per the accounting business requirements. Also, it is considered as an affordable and efficient accounting software solution.
- Custom Accounting Software
The custom accounting software allows you to purchase an accounting software designed specifically for your business requirements. This helps the businesses to focus only on those features and benefits of accounting software which their business requires. It can be more demanding when it comes to maintenance as compared to its available commercial counterparts.
Also, there are two available versions of accounting software to choose from – cloud-based accounting software and desktop based accounting software. Both have their own pros and cons which need to be accessed as per the business requirements.
With this, let’s understand why modern businesses are opting for accounting software?
1. Calculating Income & Expenses Automatically
The process of calculating income and expenses for daily transactions is a cumbersome process. It is difficult for the businesses with large data to calculate the financial numbers using traditional accounting methods. Modern businesses are focusing on important human-needed tasks while their accounts are handled by their accounting software.
Additionally, Accounting software allows the businesses to process the financial data automatically in connection with the business bank account, credit and debit cards, and online UPI accounts, which keeps the user updated with the transaction numbers constantly.
2. Generating Automatic Invoices And Payment Alerts
The businesses which generate invoices and send payment alerts manually to their clients, are missing big growth avenues.
With accounting software, the businesses can generate invoices with customized templates having their company’s logo and contact information. It automatically saves the templates and then the users can quickly deliver them to the customers via any device.
The software also helps the businesses schedule timely payments. With traditional accounting methods, it is cumbersome to track the customers missing the payment time specified in the invoice. The accounting software also sends timely payment reminders to the clients along with the invoices automatically for transparent and seamless transactions.
3. Offering Feasible Payment Options
In a traditional accounting system, there is a limitation when it comes to their payment methods like scheduling payment reminders to the clients, waiting for the clients to process the payments, etc. This leads to unwanted delays in the processing of financial operations.
Whereas, the accounting software attaches direct payment options with the invoice which enables quick and easy payment from the clients. It also offers all kinds of payment methods to the clients like PayPal, debit card, credit card, NEFT, etc., which shows inclusivity and helps gain customer confidence.
4. Generating Professional Financial Reports
Usually, the accountants prepare financial statements and cash flow reports of the company using traditional accounting methods, which consumes more time and brings in human errors along with limited creativity of the team.
Accounting software with its new reporting feature allows the users to generate financial reports and statements in an organized and updated industry report format. The software also gives the freedom of improvising the reports as per the business standards in the market. With this the businesses are always updated with the latest financial performance data in the form of profit and loss statements, income and expenses, accounts receivables and payables, tax reports, etc.
5. Updating Tax Compliances
There are lots of amendments and compliances which are very frequently used in the bookkeeping process like, tax brackets, essential items list, items in different categories, etc. Handling it all manually is not only a bull’s work but also an obsolete way of bookkeeping.
With your UK bookkeeping software, you can decide your custom rules and the software will automatically sort all of your transactions into corresponding tax categories. It also provides automatic calculations of HST, GST, QST, and PST, so that you have all your taxes calculations without doing those.
6. Forecasting Finances And Cash Flow Numbers
For finance cash flow forecasts and estimates, the traditional accounting methods do not provide accurate and real-time results which makes it obsolete to practice.
The Financial insights feature of the accounting software provides personalized data-driven reports to keep the business numbers at your fingertips. Also, you can predict your cash flow calculations months ahead to know your standing and get prepared for future financial obligations.
7. Enabling Easy Bank Reconciliations
The accounting softwares also allows the businesses to connect their business bank accounts with the software for easy and timely bank feeds for every bank statement.
It also allows the businesses to customize the bank rules and criteria in the software to categorize and match bank transactions automatically. After verifying the transaction match, it’s just a click task to confirm the reconciliation to the account. This keeps the businesses audit-ready throughout the year.
The key to the success of modern businesses is how quickly and effectively businesses adapt to technology. With accounting software the modern businesses are enhancing the key accounting operations to smart approaches like automatic invoicing and billing, customized dashboards, simplified client financial reports, mobile app integration etc.
This way the accounting software pushes the modern businesses ahead in the market with better customer experience.