This article was originally published on 20/08/2019.
‘The global accounting software market is projected to reach $70.2 billion by 2030, growing at an annual growth rate of of 19.6%’. This points to the fact that accounting software might be important in assisting businesses with their day-to-day operations. In this article, we will look at some of the benefits these software have to offer.
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Accounting has possibly been around for a long time. In Mesopotamia, tokens were used to record transactions between buyers and sellers, according to an article by the BBC. Luckily, today we perhaps may not need to record each transaction using tokens, especially with modern options like accounting software. In this article, we will look at some of the benefits of accounting software for small businesses. Before we dive into that, let us first understand what accounting software is.
What is accounting software?
According to an article by business.com, ‘Accounting software is a tool to help you record the flow of your company’s money and examine your financial condition. With it, you can record transactions, generate reports, manage customer and vendor contacts, create purchase orders, track stock levels, bill customers, and monitor account balances.’ Accounting software may also aid in the simplification of these procedures, allowing business owners to devote more time to their goals and less time to administrative tasks.
What is the importance of having accounting software?
Running a business may be a daunting task for small to midsize enterprises (SMEs). They would typically need to take care of everything, from sales to marketing to human resources. In most cases, SME owners may be required to know about everything that is happening in their company. Traditionally, for financial records, companies have mostly relied on accountants or, in many cases, Excel spreadsheets.
Opting for accounting software isn’t mandatory. However, it can be very helpful for a growing business. Having your financial records in one place can potentially help you save time, as well as keep your data safe and increase the visibility of your finances. As your business grows, you’ll also likely have less time to meet with your accountant to go through your finances and other monetary matters. Having software that can help you with tax compliance and the management of your payroll system can possibly make your life easier.
What are the benefits of accounting software?
Accounting software have various features that may assist SMEs in running their business more efficiently. In the below section, we cover three important benefits such software have to offer.
May help in automating tasks
Things like data entry and streamlining of processes can be simplified with accounting software through automation. For example, such software can help with calculating value-added tax (VAT) and producing payslips. As their business looks to scale and grow, business owners could find themselves with less time to dedicate to keeping track of finances and decider to switch to a software solution.
Can assist in reporting and analytics
Many accounting systems provide reporting and analytics support in addition to recording financial transactions. This feature could be of vital importance for small business owners, as it may allow them to have a clear overview of their finances. One of the advantages of reporting is that you can possibly see any potential issues almost immediately and work towards resolving them. In addition, this could help you prepare annual reports and keep track of your company’s financial health.
May facilitate security and compliance
Security is typically essential for all businesses. Accounting software can help companies keep their sensitive data secure through authentication and authorisation. This process can ensure that only the people who have access to the confidential accounting data can view or modify it. Such software can also help businesses stay on top of any new tax requirements that they may need to comply with by providing support and best practices on how to implement them. For example, many accounting software vendors support the new Making Tax Digital initiative launched by the HMRC.
How to pick the right accounting software for your business?
Before deciding on which software to purchase for your business, it may be important to keep certain things in mind. In this section, we will look at some of the aspects of accounting software which can possibly help you with your purchase decision.
Look for the required features
When looking for accounting software, there are a few things that you may want to consider. To start, you should possibly have an idea of what features you are looking for. For example, features such as billing and invoicing may help you create invoices that are personalised with your company’s logo. Similarly, some other features of accounting software users may be interested in are as follows:
- Accounts management
- Expense tracking
- Financial reporting
- Inventory management
- Purchase order management
Decide on your budget
Another important factor you may want to consider before deciding on software is the budget. Once you know which features are most important to your business, you can possibly start looking for the vendors that offer those features. Most accounting software in the market require a subscription, but many may also offer a trial or freemium option. You may want to see what options there are for trying the software before you purchase it.
What is the key takeaway?
Different businesses may have varying needs, and there may not be one tool which can fulfil all purposes. The complexity and sophistication of these software also vary depending on the vendor. To find the right accounting software which may fit your needs, it is important to understand the exact requirements and expectations you have from such tools and look out in the market accordingly.