Accounting

With a growth of advanced technology – it’s transforming, if not disrupting, every sector of the economy that generates big data, from communications, healthcare, manufacturing, to technology are readily available at our disposal. Accounting Software has not seen much of the innovation except for double-entry bookkeeping – a process of recording both profits and loss is considered one of the most advances in the history of accounting and commerce.

However, the great news is that applying artificial intelligence and comprehensive technology towards the bookkeeping arena is becoming a reality with the automation of data entry, reconciliations and ERPs contributing to the accounting software.

What is Accounting Software?

Accounting Software is an application that performs various accounting and bookkeeping tasks. It is used by bookkeepers and account professionals and business owners. Basically, allows an organisation to monitor the flow of cash for internal and external reviewing and auditing. It also performs an array of business transactions. Accounting Software is a cardinal tool to gauge the financial health of an organisation and for meeting legal compliances.  

Key takeaways

  • Accounting Software is a cloud-based program that consists of accounts recording and reporting firms financial transactions
  • It is an internet-dependent tool which can be installed on your smartphones and laptops. 
  • It automatically enters, stores and analyzes data for you. 
  • It offers various tools like invoicing, bill payment, payroll, and financial reporting
  • Accounting Software can be customized as the different firm has different expectations
  • It ranges from basic off the shelf to conceptual complex software
  • You can easily retrieve old data hence auditing is possible 
  • Companies that offer Accounting Software are Microsoft, SAP, Intuit and Oracle.

Understanding Accounting Software

Accounting Software is a stellar application to steer your business to success.

A mere representation of profit and loss statement and financial business transactions is not the whole and sole purpose of an Accounting Software. It dives deeper into a financial transaction with instantaneous reporting and assessment. Apart from financial requirements Accounting Software also helps in legal procedures where your business is set up.

Beside providing legalities it also helps in automating a labour-intensive task, reducing the risk of human error and critical inaccurate audit information 

A large chunk of data can be stored in this invaluable computer program, therefore, reducing physical storage and thereby cost saving on large office premises.

 Apart from cost-cutting it also helps in bank reconciliation.

As we know technology is an innovative disaster, the more it automates the higher the risk associated with previous technology becoming obsolete. 

AAT 2018 survey shows a positive impact of automation in the accounting industry:

  • 60% believed that generic accountancy will be fully developed and automated within the next 5 years
  • 89% said that advances in technology provide new opportunities for them
  • Three quartered said that it makes their job easier thus enabling them to concentrate on adding value to their customers

Types of Accounting Software

If your business is in the mode of expansion, it becomes difficult to cater to complex operational expenses and other revenue streams. Therefore it’s time to consolidate your accounting process. Depending upon the scale of operations, accounting and finance systems, it is categorized into the following segments. 

Here we will have a birds view on the types of accounting software

  1. Billing and invoice system

Company’s mundane tasks such as check writing and notifying customers about their due payments are taken care of Billing and invoice systems. Billing and invoice systems are required to document the financial report of companies for further validation and authorization.

  1. Payroll management systems

Every company has expenditure and revenue generation sheets. But to preserve control over it you require certain tools. Here the Payroll management system comes into the picture. They handle all your employee’s salaries calculation, salaries deposition, procuring salary and tax form, deduction of taxes. They help in cutting down the expenses and preparing financial reports.

  1. Enterprise resource planning systems

This system is one of the most sought out systems in accounting software. The core rationale is its collaboration with every aspect of the business portfolio be it product purchasing, inventory management, product planning, marketing finance and HR. The modern version also aims for CRM and business intelligence thus ensuring better strategies in future.

  1. Time and expense management systems

They are designed to expedite billing cycles and approve expenses of your businesses. This system enhances faster payment collections and produces a graphical representation of time and resources utilization in the company.

What are the features of the Accounting Software system?

While learning the importance of accounting software you must be impatient to know the various features and its advantages accounting software has to offer in every business sector.

The features span about from a simplified version of invoicing to tax filing complexities

Accounting

A fundamental component in this category is devoted to general ledgers, fixed assets, accounts payables and receivables, and bank reconciliations. However, this is a generic and important feature, while advanced one has more to offer. 

Billing and invoicing

They are quintessentially used for billing and invoicing in the house of accounting systems., but most of them still work in an archaic model. Thus, accounting software helps in automation of these basic work imparting new and effective methods according to the industry standards. They are also essential to curate accounting figures and make the service look more professional and credible at the recipient end while preparing invoices for their clients.

Budgeting and forecasting

This is one of the integrated modules under the umbrella of the accounting system which calculates and interprets annual financial health and helps in estimating the budgets for the upcoming year. This system helps in estimating and setting realistic targets for the sales team.

Management of fixed assets

This system comprises audit history, depreciation calculator, resource allocation, cost records etc. This software may come as an individual entity or inclusive with another system. The fixed assets help in managing financial data more accurately.

Payroll management

A system exclusively devoted to payment management oblige organisations for timely payment of their employees. It helps in calculating the payments and responding to all legal and tax commitments without further delay.

Inventory management

THe most scattered department in a company is Inventories. IT is difficult to manage this department without a proper system, therefore, this becomes an indispensable unit to avoid chaos in the organisation. Inventory system handles all the availability and movement of the product. This also helps in reporting any issues regarding overstocking and understocking, therefore, a great tool to avoid any wastage of any stock.

Fund accounting

These are useful in government and nonprofit organisations to track donation expenditures, GASB (Governmental Accounting Standard Board), grant receivables, and financial suite reports.

Project accounting

This system is used in vertical industry software where they are simultaneously used by construction operators and software developers. The main aim of this software is to estimate overhead costs, cost related to labour, material, types of equipment and many more. 

Importance of Accounting Software

Accounting Software is regarded as one of the most valuable assets in all financial professionals. It not only improves the efficiency of the financial department but many more important things. 

When you are using the software you should know why accounting engagement is important. It helps in the management of cash flow. It creates financial investment opportunities, establishes financial policies and helps in structuring the capital needs of an organisation. 

Accurate accountancy

Humans tend to err while computers are incapable of making any errors but software helps in detecting the potential mistakes and minimising the overall impact on the end balance. Accounting Software helps in detecting those errors early and saves lots of time on the professional end. 

Speed of completion

When you have Accounting Software to process your accounts. You can sit back and relax because they allow organisations to increase efficiency by introducing automation. In Spite of automation, how can it be calculated faster? The answer lies in using computers, they are able to process figures faster than the human brain.

Reduce overall cost

Software and AI are meant to replace humans with their job, their main aim is to reduce cost, time and minimize mistakes. Therefore, when a software is able to work for you within the stipulated time there is no need for a big number of members in a team thereby reducing the cost. However, these savings should be considered against the cost of software for any hardware required to run it.

Provide accurate reports

Accuracy is key for any organisation to install the software. Be it calculations or providing conclusions on the company financial health. If you have to take an urgent decision with a click of a button you can easily access any reports and display it to your company directors.

Hassle-free tax filing

This is a mandatory thing any business owner has to do. It also requires you to keep close track of all your business transactions, But with Accounting Software you do not need to work details by hand. With automation and a few integrated systems, you can find all your financial details at one place and fill your tax forms without frustration

The main objective of financial management is to ensure market share, business longevity, maintenance of cash flow, minimize capital expenditure and maximize profits. Without stable financial management, it is difficult to achieve your goals and without proper planning, your business could lead to bankruptcy.

Benefits and Uses of Accounting Software 

Simplification

With the ease of usage even a non-accounting person can perform calculations on a desktop or mobile device. This software does not even aim for special training and all accounting operations can be done complying with legal standards. 

Cost savings and time saving: 

Automation is a key point of Accounting Software. Its simple functioning helps any layman person to do the calculations, administrative work and revenue structure. Therefore, a need for outsourcing account professionals can be ruled out hence saving the budget.

The sense of security also lies in your hands when the external experts are not involved. When manual calculations take years and years to complete,  your Accounting Software can do the job with few clicks. Apart from calculations they can also send recurring invoices, send due notifications to your clients, front end and back end transactions are easily maintained without manual bookkeeping. The financial records can be gauged with proper monitoring and issues can be solved within a few minutes.

Transparency

When cost and time save you from the mirth it also adds one more feather in its cap by addressing the issue of human error. Man is bound to make mistakes nevertheless he scrutinises everything in detail. Therefore, with transparency involved costly errors or business crises are avoided.

Forecasting

A rationale for getting Accounting Software is that it provides detailed analysis and precious pearls of insights. Hence, a good estimation of business transactions with an eagle eye view can be monitored. It also helps in taking decisions based on your financial health and gives you an idea about the direction of your business.

Productivity

When the cost, time and transparency all cards are played together there are high chances of account professionals using their time for some other important work thereby increasing their productivity.

Improve Customer Relation

When the account professional or the business owner are not immersed with piles of balance sheets, LIFO FIFO statements or busy in taking big decisions they will utilise their time in improving customer relations. Although customer relationships have little to do with accounting but with advanced and specialized software there are high chances of presenting yourself professionally and credible. And you can also avoid any miscommunications. Thus, by investing in Customers is an added advantage you get when you install Accounting Software after all customer is the king.

Security

Financial information is the most valuable information about your company. All your financial health certificates are lo secured in this system and must be prevented from falling into wrong hands, or may get lost by mistake. The job of an account professional is to prevent any such information leaking outside the organisation. With automated systems, the need for internal security can be built where only trustworthy people can have access to sensitive data. This also sees that when no external expertise is involved the chances of fraud are less.

Centralisation

Accounting Software can control all the functions effectively therefore if you end anything regarding the finance you can without any chaos use the software and enlighten yourself. This helps in streamlining the process and avoid any chaos in the accounting business.

Potential issues of Accounting Software 

There are no such issues but with ever-changing technology, every business owner is in a speckle of doubt as to whether it should turn obsolete as  soon as it is purchased

Specialisation

A trend of industry-specific accounting systems has gained immense popularity, but with its high-cost people tend to buy standard software with general functions. So make sure all the features you need are there in whichever system you choose to buy.

Customization

In finance and accounting there is little scope for creativity thus resorting to customization will not let your software be outdated in a few years. However, when choosing the software you may implement your business rules and your course of action specifying your needs thus you cannot replace the system even when your business has developed.

Lacks open to configuration system

The accounting software may not integrate with your third party system. Therefore, do not settle for less than open integration infrastructure that integrates with various other software like CRM, Sales software, project management app, business intelligence and other services

How to pick up the right Accounting Software

A good Accounting Software is of paramount importance in today’s digitally oriented business. Beside addressing accounting and financial transactions it should also automate labour-intensive and reduce fallible human errors in the workplace. 

Of course, investing in Accounting Software does need lots of brain cracking and considering favourable factors are essential steps to avoid any wastage of money you are investing in. 

Here are a few of the key criteria on what you should be looking for while purchasing Accounting Software:

An Integration module system

There is no “ one size fits all ” accounting system(especially in Accounting Software where the category is mostly diverse). Apart from core operations, it should be able to integrate with other software. This will spare you from the trouble of investing in additional software. Having an open API will also help in better connectivity with any system you want.

Customization

Regardless of a basic version of billing invoice functionality, Check on the software which can function more than 2-3 program easily or at least lookout for a particular system that, matches to your business model or find a flexible program which may also avoid investing in an additional program or migrating to other programs

Ease of use

If you are purchasing Accounting Software because it involves time and energy to do the calculations manually. Select software which will allow you to perform calculations within minutes and all the functions are neatly available on a single dashboard

Security

As we have already pointed out in accounting, all the sensitive data and financial transactions are involved thus relying on a trusted vendor with your software is always important.

Mobile utility

When all our life revolves around smartphones why should accounting lag? Having operations in Android or IOS is no more a luxury for enterprises and will ensure that it will have the same scalability when using it on the desktop or laptop.

Future of Accounting Software

As we step into the fourth industrial revolution there is some silent disapproval of new technology as it is speculated that the human job will be replaced, if not by a machine but Artificial Intelligence(AI)- Superior to machines and extension of human thinking. 

This isn’t the first time we have experienced a backlash against the new technology and fear that it will destroy society. 

In the 19th century, textile workers were faced with a similar situation that they feared the industrial revolution was a threat to the livelihood of craftsmen and later on resistance from the working class as well. 

We must understand that machines do not steal our jobs – they free us from mundane repetitive tasks and provide us with the opportunity to focus on more creative, productive and fulfilling tasks.

Far from a cataclysmic event, we are entering into the AI age where the respect for automation has raised to manifolds due to its efficiency and insights behaviour in productivity, manufacturing and analysis. Therefore other sectors are on the cusp of mass adoption of AI. 

In accounting, the software developers are busy in preparing workflow automation where the mindful task won’t be operated daily. 

Cloud hosting will be the new age in accounting trends which is considerably safer, faster and affordable alternative.

Is Artificial Intelligence (AI) or Automation the Future of Accounting?

If you are also confused between the two, lets us know the difference between them :

AI is all about mimicking human ability to think and do. 

Automation is a pre-programmed system where it follows the set of orders and rules  

A thin line differentiates AI with automation because AI often underlines Automation. The power of accounting will clutch the hands of AI and rise above to get rid of low value and redundant tasks, thus giving humans more time for creative capabilities

. 

The Practice of Future Accountancy

Data entry will be of the past

NO manual data entry will be seen shortly. Data will be in a transitional phase from clients bank to accountant system. 

Protect from fraudsters

SInce real-time relationships with client and accountant will be near-instant. There are few chances of clients fooling the accountant. As accountant will have a constant check on the bank accounts of the client

Notifications and Warning

SInce accountant has detailed the client’s account history there will be an automated notification informing clients to pay their dues or the warning to the organisation if the client is in bad debt or his credits are ratings is low.

Anticipating Problems

Since there is a lot of time to spend futile when automation is considered Accountant will have more time to solve minor issues arising daily instead of waiting for year-end corrections

Expensive but Better Value

With AI being adopted the accountants will be able to spend more time with clients and minimisation of errors is also ruled out so there are higher costs for better value.

Conclusion

Though people are hesitant towards accepting new technologies when it comes to getting heavy lifting from their shoulders they respond better.

The Sage Practice of Now 2018 reports that:

  • 66% of business owners are ready to invest in AI. Respondents seek aid from AI to weed out data entry, number crunching and mundane tasks
  • In the next 3 years, many of the accountant professionals are ready to adopt AI in their businesses. 
  • Experts believe that humans’ jobs won’t be affected instead this will be a helping hand towards decision making and empowering lucrative and in-depth analysis.
  • Acceptance of automation in accounting will increase in the short term and long term
  • Automation will empower in-house accountants 50% of the firm will use cloud-based Accounting Software