Business digitization is sweeping the globe, improving all aspects of business operations, including marketing, logistics, sales, and even business accounting. As a result, the way businesses operate and handle accounting activities is rapidly evolving, with many small to large corporations implementing software to automate and streamline their accounting needs.
As per the survey, the global accounting software market could grow to $20.40 billion by 2026. As businesses continue to embrace accounting digitization, it is critical to understand why this shift is happening and what the key benefits of accounting software are that are driving this technology’s popularity.
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13 Benefits & Advantages of Accounting Software
Here are some Advantages of accounting software for business owners
1. Cloud Portability
One of the key advantages of accounting software is its ability to be accessible anywhere. With accounting software, your financial and accounting data are uploaded to a cloud, stored in web servers, and are protected by a Security Matrix.
As long as you have a laptop and an Internet connection, you can access your firm’s financial and accounting data analytics anywhere. Each kind of software will allow you to appoint a specific number of users who can access the data. You can also dictate the access privileges of each person. Because data is stored on the cloud, you can also allow accountants to collaborate with each other.
2. Real-time Data Access
The next key and one of the major advantages of the accounting system is that you get real-time access to data. Every single update on your cash and sales will be seen as it happens, which enables you to come up with better decisions.
On top of that, since your accounting will be automated, you’ll be able to save a lot of time on your part. You can use this time to do more productive things, such as projecting your finances for the next year and aligning them with your company’s growth.
3. Easy Invoicing
The advantages of accounting software do not end with accounting operations; rather, they go far beyond that as well as are far more impressive than the manual accounting system advantages.
By customized invoice, this means that the invoice will have your company’s name and logo, thus making your company look more legitimate and trustworthy. Using your smartphone, you can even email invoices to clients as well. So, this makes it even more convenient and faster as compared to making invoices manually.
4. Minimal Data Errors
Doing things manually is, more often than not, synonymous with multiple human errors in calculation. Without a doubt, data entry errors that result in ambiguous databases have a significant impact on an organization’s overall success.
By getting accounting software, you can avoid these mistakes because the software can automatically do all necessary computations for you and in the most accurate manner possible. To sum up, data accuracy is one of the major advantages of accounting software.
5. Inventory Tracking
Did you know that accounting software doesn’t only solve problems in accounting and your finances but also does inventory tracking for you? Yes, you read that right! Inventory management is one of the major advantages of accounting software that businesses enjoy.
Online accounting software provides real-time data on how much stock you have on hand. Because of this feature, you can track inventory and order at once when you see that inventory is low. This will also save you a lot of time since you don’t need to do things manually.
6. Automated Financial Reporting
Accounting software systems can also provide you with financial reports, so you’re able to see how you are performing financially. Your accounting software can automatically provide you with the reports in just a few minutes. With this, you can see your financial position clearly, enabling you to determine what you need to do moving forward. By having these reports, you will be able to make better decisions, thus making your business more efficient and, most importantly, profitable.
Financial reports also include the computation of taxes, including detailed reports on the different taxes you need to pay. So, with accounting software, you will also be able to comply with your tax requirements seamlessly.
7. Unified Accounting System
As mentioned above, accounting software systems don’t only generate financial information but also tie in matters that are related to your financials. For this reason, accounting software makes your processes more centralized.
Some of the common accounting software features and benefits include the following:
- Payroll solution
- Invoicing
- Schedule reporting
- Financial reporting
- Bank reconciliation
- Transaction tracking
- Inventory Management
- Customer Relationship Management
- Automatic tax compliance
With one product, you are able to centralize many parts of your business and automate these processes. Instead of having to invest in separate software solutions, you can have it all in just one accounting software. This will save you time and money when you run your business.
8. Saves Time & Efforts
Many business owners spend enormous amounts of time just dealing with business financials — recording sales, balancing the books, and other accounting necessities. However, by leveraging the advantages of accounting software, business owners and managers can now spend more of their time on high-impact tasks that could grow the business.
One of the more notable accounting trends you will see today is the vast adoption of automations to help save time. The beauty of software applications is that they use systems to perform repetitive tasks such as data gathering, data entry, and data crunching. Some other automations that accounting software can take care of is data computing, which helps eliminate hours spent crunching numbers.
9. Rich Insights & Data Analytics
The uses and advantages of accounting software don’t end with data entry. Digital accounting tools can also take care of massive amounts of data analysis and reporting. Most, if not all, of the best accounting tools available today have a dashboard feature that gives business owners a better snapshot of how their business is doing financially.
With this advanced reporting generated almost instantaneously, entrepreneurs and executives can then make more informed decisions that will help ensure the financial health of their enterprises.
These reports can also be exported and presented to a deciding team, which might include investors, stakeholders, or an executive department. Data analytics will make it easier for accounting teams or staff to simply explain the company’s financial records and accounting recommendations that will help ensure business health and longevity.
10. Streamlined Accounting Process
Accounts receivables are a crucial part of business sustainability. When you can shorten payment cycles and collect from clients and customers as soon as possible, the better the position your business will be in. So creating an invoice can be a great help to business operations.
However, by leveraging the advantages of accounting software, businesses can greatly improve the invoicing process. Templates for invoicing are available, so you or your finance team don’t have to spend so much time generating or creating them from scratch. Accounting software also comes with invoice-sending features that come with automatic updating and reminders to help speed up the collection process.
11. Better Mobility
The COVID-19 pandemic showed us that remote or hybrid work is not only possible but highly beneficial. With 37% of accountants in the United States planning on working remotely, we’re seeing that a major shift is now happening in finance and accounting. Employees and entrepreneurs want more flexibility in their work.
With flexible work arrangements, accountants and business owners have more flexibility. Moreover, it can save a lot of resources in the process as companies can now go paperless, reducing printing and paper costs significantly.
12. Improved Accuracy
Another reason why businesses are using accounting software is because of the accuracy it brings to accounting and finance operations. Human error has always been a pain point in accounting, resulting in several hours of lost time just trying to figure out which decimal point messed up the whole trial balance.
Nevertheless, by leveraging the benefits and advantages of accounting software, a business can automate all computations, reducing or even eliminating traces of human error. With more accurate reports, accountants and entrepreneurs are unburdened from having to review faulty reports.
13. Enhanced Collaboration
Accounting software improves collaborations online. Leveraging cloud-based software systems, teams can effectively communicate with each other and divide the accounting load equally among the respective teams.
The accounting staff or anyone in charge of expense tracking doesn’t have to encode all expenses themselves. They can share the responsibility with other members of the team by asking other managers or department heads to take care of inputting their respective department’s expenses into the software backend.
Cloud-based software is best for this scenario as it allows several employees to access the same backend wherever they may be. Just make sure that your company complies with the best practices of cyber security to avoid any hacks or other data privacy issues.
Factors To Consider When Choosing An Accounting Software
Now that you’re aware of the many benefits accounting software brings to a business, the next question you might be asking is how to select the right one for your context. Along with the advantages and disadvantages of accounting software, there are several factors to consider when selecting one.
Here’s a guide on how to choose an accounting system that suits your business needs.
1. Set a Budget
Determine how much your business can set aside to pay for an accounting system. Take into consideration the other expenses you’ll be able to save, like printing costs or manpower hours you’ll be able to save for staff in charge of finance and accounting.
2. List the Key Features
In small business accounting, each context and use case is different. So not all the features and advantages of accounting software will resonate with all businesses. Choose which features you need most in your business and select the accounting software that provides all those. The best accounting software system for small businesses is the one that meets your specific needs best.
3. Multi-currency Transactions
When rolling out a system, try not to dump all of it on your accounting team in one go. Even if you’re a business owner running it yourself, give yourself time to learn the ins and outs of a system. You don’t have to maximize the software on the first day. Roll out in tranches and give yourself and your team time to get familiar with all the ins and outs of the system.
4. Third Party Integrations
The fourth important feature to look for in accounting software is third-party integration support. Third-party application integration is critical for today’s businesses because it allows you to connect multiple systems and processes, ultimately increasing efficiency.
Third-party integrations also enable you to quickly add features and tools to your business processes that would otherwise take months to develop. In a nutshell, to ensure you get the maximum advantages of accounting software, go with the one that supports third-party integrations.
5. Data Security
Another factor to consider when choosing accounting software is system security. As you are aware, accounting software houses highly confidential and personal data of your clients, which must be protected at all costs. For this reason, always invest in accounting software that is equipped with all necessary security protocols and measures, such as SSL (Secure Sockets Layer), a firewall, a secure storage facility, extended validation, and so on.
6. Service & Support
As a user, you will always expect the software to perform optimally and assist you in achieving the goals for which you purchased it. And for that, you will certainly require 24/7 customer service.
The provider’s support is an important factor to consider when investing in accounting software. We recommend that you always choose an accounting software provider that guarantees timely support whenever you need it.
7. Cost
The seventh and final important factor to consider when selecting accounting software is cost. Make certain that the product you select is cost-effective. Keep your budget in mind as well.
Avoid purchasing accounting software that is considerably costlier than your budget because it may impede your other expenditures. Also, don’t forget to consider all the other hidden charges, maintenance fees, and other costs.
The Bottom Line
Getting your accounting and finances right is critical for the survival and growth of your business. However, manual accounting system advantages are limited, and the system is inefficient in modern businesses. This is why you require cloud accounting software. However, don’t forget to consider the advantages and disadvantages of accounting software, as well as the seven factors we discussed above, in order to pick the best one.
Frequently Asked Questions
The five main advantages of using accounting software are payment tracking, online payment, valuable insights, tax compliance, and bank reconciliation.
A comprehensive accounting system assists businesses in tracking transactions, improving asset management, minimizing errors, automating payables and receivables transactions, saving time and effort, and more.
The benefits of an accounting system for small businesses include improved visibility into the company's financial health, a streamlined accounting process, tax and regulation compliance, and more.
One of the few disadvantages of accounting software is the cost. Many startups and small businesses may find the accounting software cost high. Also, you will need basic technical knowledge to operate the accounting system optimally.
The benefits of cloud-based accounting software include improved portability, on-demand scalability, bank-grade security, zero maintenance costs, no need for standalone hardware, and so on.
Amaey Anand is a certified accountant with over 10 years of experience in the finance industry. He has worked with various organizations to streamline their petty cash management processes and reduce inefficiencies. He has also written several articles on financial management for leading publications such as Zensuggest and The Wall Street Journal.
