Recording and reporting financial transactions is a crucial task for any organization that wants to be profitable—whether it’s an Etsy shop or a multi-million-dollar enterprise. But it can be difficult to keep track of monetary operations, particularly in today’s digital and global workplace. Your organization may not have an office in which the inventories and logbooks can be kept, or you may have to keep up with ever-changing exchange rates when dealing with transactions in multiple currencies.
Accounting software, also known as bookkeeping software, helps accountants and bookkeepers to record, analyze, interpret and report their organization’s financial transactions. There are a number of software providers that offer accounting software for business, and each of these solutions has a unique feature set designed to meet a particular set of business needs. A solution for small businesses, for example, may feature simple invoicing and inventory tools, whereas a larger organization might prefer a solution that pulls in data from different departments, such as payroll for HR.
While this means the perfect solution for your company is bound to exist somewhere on the market, it can make the prospect of finding the right accounting software solution a little overwhelming… But that’s where we come in.
In this article, we’ll explore the most important features to look for in an accounting or bookkeeping solution, no matter the size of your business or the technical ability of your accounting team.
But before we jump into that, you might be asking yourself whether you actually need accounting software. So, let’s start at the beginning—a very good place to start—and discuss some of the benefits of using account software.
The Benefits Of Using Accounting Software
If your business deals with more—or more complex—financial transactions than can be easily jotted in a notebook or on an Excel spreadsheet, then the likelihood is that using accounting software will make monitoring those transactions a whole lot easier. Here’s how:
There are a few ways in which accounting software can help you reduce costs. First, it minimizes the time your accounting team spends recording transactions by automating a lot of information processing.
Second, accounting software solutions have the capacity to store vast amounts of data virtually, without taking up lots of physical space. This means you can say goodbye to the file rooms filled with cabinets of finance folders, and either, save that rental money or turn it into a new coffee zone. Win-win-win!
Third, you could save money that you might otherwise have to spend hiring external accountants. Most accounting software is designed to be easy for anyone to use, including those who aren’t accounting or technical specialists. If your team needs extra help during busy fiscal periods, you can borrow someone from elsewhere within the business, rather than employing an external accountant.
And finally, all accounting software solutions worth their salt come with some in-built security measures to help safeguard the accuracy and integrity of the data your team is working with. This can help reduce audit expense, while keeping some of the most sensitive financial data within your company secure.
Increase Efficiency And Accuracy
Entering data into logbooks is time-consuming and prone to errors. Accounting software speeds up this process; once you’ve entered information once, such as customer or supplier details, the software will automatically find that data for you whenever you need it again. This makes invoicing, creating purchase orders and generating statements and reports much more efficient. On top of this, you’ll save time searching through files and accounts for that one piece of data you can’t find, because everything is stored in one place.
Not only does this automation increase efficiency, but it also reduces the risk of human error; data entered and stored digitally is much easier to read than handwriting. Additionally, many accounting solutions include functionality to detect and mitigate dynamic errors, such as sending an alert if a customer orders something that’s out of stock.
Improve Information Availability
Using an accounting software solution makes it much easier for your team to access financial data. Because all information is stored in one system, employees can access it whenever they need to, from any location—as long as they have a secure internet connection and web browser.
The software also updates data such as account balances and stock levels automatically, so that you’re always working with the latest numbers.
86% of data breaches are financially motivated and the finance industry is the second most common victim of security breaches. Financial data is highly sensitive and very valuable to attackers who may want to exploit your organization for personal financial gain. Because of this, it’s really important that you secure your financial data. Accounting software can help you do this in two ways:
- Accounting teams can assign role-based access to certain accounts, protecting sensitive data from anyone who isn’t authorized to view it.
- Cloud-based accounting software solutions regularly and automatically create backups of your data to prevent data loss caused by an attacker, a natural disaster, or even simple human error.
Simplify Compliance And Reporting
Compliance regulations exist to ensure the integrity and security of your data and your customers’ data. But it can be difficult to keep on top of compliance and auditing requirements, especially if you’re producing your reports manually.
Accounting software solutions offer reporting functionality that not only makes it easier for you to monitor your company’s financial transactions, but also create specific reports to prove compliance. The best solutions enable you to customize these reports to reflect information on specific data sets, such as the time it takes to process payments.
It’s also easy to compare information year-on-year using accounting software, as all data is stored in one system. This can be particularly useful for both internal and external audits.
5 Key Features Of An Accounting Software Solution
Every company has different needs when it comes to accounting software. Some may only require basic off-the-shelf functionality to keep track of the money they’re earning and spending; others may need more complex, customizable features to help them carry out specific analytics tasks.
However, there are some features that will come in handy no matter your company’s size or industry.
Accounts Receivable And Invoice Processing
Any accounting software should keep track of who owes you money, how much they owe, and when you can expect the payment to come through (accounts receivable). It should be able to generate purchase orders for sellers, sales orders for customers, and automatic payment reminders to make sure payment isn’t ever delayed because you’ve forgotten to manually send out an invoice. To help with this, the system must be able to remember basic data without you having to input it multiple times, such as customer names, addresses and account numbers.
As well as knowing how much money is owed to you, your software should help you keep track of how much money you owe to your suppliers and creditors. To do this, it should enter bills and pay out the money automatically to creditors. This will help your operations run smoothly, and make sure you’re up to date on all of your payments.
If you’re selling something, you need to know how much of that thing you’ve got in the storeroom to sell—you don’t want to upset any customers by selling them something that doesn’t exist! But tracking stock can be difficult and time-consuming to do manually, especially if different items are stored in different locations.
So, you should make sure to choose a solution that includes inventory tracking features, such as tracking stock on hand, making inventory adjustments, and sending your team alerts when something is running low.
It’s also important that the inventory tracking feature integrates with the rest of the software, such as any payment gateways, to reduce the time you’d otherwise have to spend transferring information between systems. And speaking of integrations…
Your chosen accounting software should make it easy for you to handle financial transactions. That means that each feature it offers should work cohesively, and it should also integrate with your existing systems so you don’t have to keep copying data across. For example, it should integrate with your payment gateway so that you can collect payments from customers without having to enter their information twice. Not only does this make processes run more quickly for both you and your customers, but it also eliminates the risk of error when copying information across.
Your software should also integrate with your bank account so that you can make direct payments to your creditors and pull in real-time data from your bank account into your accounting software. If you have more than one bank account, the software should be able to coordinate the figures from each of them, so you can access all of your data in one place.
The reason that accountants keep track of their company’s financial transactions is to make more informed monetary decisions that will help the business to grow. For this to work, your team needs to be able to analyze the numbers they’re logging—a task that can take up a lot of time if done manually across various spreadsheets which need constant updating.
To help make this process more efficient, your chosen accounting software should have the capability to create and share financial reports. The best solution will enable you to schedule reports to be generated automatically, and it’ll let your team create custom or “multi-dimensional” reports that provide useful insights specific to your business needs.
Finally, it’s important that the reporting feature is easy to use—data analytics can be complicated enough without having to deal with an unintuitive interface!
Accounting and bookkeeping software can make the work of your accounting team much simpler and more efficient, taking care of the tedious, repetitive tasks so that they can focus on interpreting data and generating insights that will help your business grow.
Discovering some of the most key features that an accounting solution should offer is the first step to finding the right one for your business—now you’re ready to start comparing. But there are a lot of different solutions out there and, while this means that you’re almost certain to find one that meets your business needs, it can also make it difficult to find that solution in a sea of noise.
To help with this, we’ve put together a guide to the best accounting and bookkeeping software for business, which you can read here.