If you’re trying to streamline your finance department, accounting software is an essential component. The fast-paced business environment of today demands you automate elements of your accounting department so you can focus on larger initiatives and your bottom line.
As a business owner, you need time to focus on sustainable growth and long-term financial viability. Accounting software helps you accomplish that.
But what accounting software should you incorporate into your business structure? And how can you be sure you’ve chosen the right type of accounting software?
In this blog, we’re discussing these questions and more surrounding the types of accounting software. No matter your company’s size, accounting software monitors your financial health. You can ensure you enter all expenses correctly, conduct payroll without any issues, and understand your cash flow processes with clarity and direction.
When you use accounting software, you can maintain sustainable growth and develop lasting financial strategies. Continue reading to learn how.
At Fully Accountable, we’re committed to ensuring you make the most out of your software suite. We can integrate with any type of software to ensure a seamless transition. You no longer need to worry about hiring the correct in-house financial team of experts. With outsourced accounting services like ours, you can focus on your core business principles and bottom line. We give you the benchmark KPIs and financial strategy to do so.
What is Accounting Software?
Accounting software is any suite of apps or software used to manage and process financial data. It consolidates, archives, and reports on numerous financial functions, such as income statements, online payments, accounts payable and receivable, etc.
With accounting software, financial experts no longer need to waste time with manual data accumulation. They no longer gather and enter data. They can simply analyze data, develop strategies, and ensure compliance. They can also create a dashboard that gives insights about critical data.
How accounting software compiles data and what it does with it are what classify the different types available. The different types of accounting software are also sorted by which business environments they serve best. For example, an enterprise-level company will need different accounting software than a small business.
Spreadsheets
Microsoft Excel, Google Sheets, and OpenOffice spreadsheets are the most accessible and common software options, especially for small businesses. They are easily malleable but tedious. They also lack the capability to streamline organizations’ financial structure.
Larger organizations typically only use spreadsheets to complement existing accounting processes. However, there is always room for well-organized spreadsheets within your company’s infrastructure. Just make sure once you grow, you know when to migrate to other, more efficient methods.
Commercial Accounting Software
Commercial accounting software, such as QuickBooks, TurboCash, or FreshBooks can take care of nearly all small businesses’ accounting procedures. This type of software works with nearly all business sizes and it customizes functions to fit your needs.
Commercial accounting software utilizes easily-understood graphs and reports that provide an accurate display of your business’s health and compliance needs.
Enterprise Accounting Services
At the enterprise level, you need more enterprise accounting software to fulfill your more extensive needs. You have more data to aggregate and more workflows to manage. In these cases, you need software that implements real-time reporting in addition to Business Intelligence for accounting and project planning.
Enterprise-level companies that select this accounting software typically enact a multistage protocol. During this protocol, they request information and product demonstrations from accounting software vendors. They might also consult other companies that use the software.
Enterprise-level accounting software gives businesses a complete picture of their financial status. It can also evaluate relationships between diverse sets of information, such as sales volume from different customers. Examples of enterprise-level accounting software include Oracle, SAP, or Microsoft Dynamics GP.
Custom Accounting Software
Often, businesses can create their accounting software. Sometimes, this isn’t even intentional.
Let’s explain: as businesses grow and their knowledgeable technical staff integrates with accounting professionals, they learn about the company’s needs. Internally, these departments can address these issues by devising software that uniquely addresses their problems.
Online Accounting Software
There are plenty of both free and paid software services online typically hosted in the cloud. These products operate similarly to the Software as a Service (SaaS) model, favoring cost benefits and scalability. However, you need to be careful of the type of online accounting software you use due to the following risks:
- Data protection
- Portability of your data
- Business continuity options
- Service level agreements around service provision
- Reliance on internet access and connectivity
Whenever searching for online-sourced accounting software, remember safety is first. You also need to avoid paying for features these services try to sell as add-ons. If possible, check trial versions to see if the software fits within your infrastructure.
Accounting As an Information System
Accounting is the easiest way for companies to understand the financial health and prosperity of their business model. The numbers tell stories and it’s up to your accounting professional to interpret those stories and develop strategies to seize opportunities.
Your finance and technical teams should compile accounting software that develops an easily understood language within your organization. You can’t rely on accounting software that’s too complex for your company to understand. You also don’t want to implement too many pieces of software or software that are too intricate for data analysts to interpret.
Why Are Data Analytics Important? – Click the Link.
Ultimately, your software decides your financial language. If you want your departments to communicate with only spreadsheets, so be it. The simple way might be the best.
If you believe you would benefit from the more in-depth analysis enterprise-level software provides, that’s perfectly understandable. The specifics matter less than the outcomes you generate.
Size Matters
The number of employees your business has matters. It should dictate your financial management software. But here’s the bottom line: you need accounting software to consolidate the information you need for you to strategize. Your IT staff shouldn’t be scrambling to understand how to work common accounting software or enterprise-level software.
If you’re a small or medium-sized enterprise, the information technology you use should generate strategies your organization can unite under. If you have 50 million data points, it won’t matter how many hours you put into custom accounting software development. Simple is best and the internal controls you use will determine success.
What Are the Benefits of Accounting Software?
Automated Processes
Who wouldn’t want to automate those mundane bookkeeping tasks? Whether for invoicing, credit card payments, payment reminders, or imported data, automation streamlines your organization’s accounting procedure.
Real-Time Reports
You need information immediately. It’s the only way to keep up in a fast-paced and rapidly changing economy. Accounting software provides real-time reporting in the format you desire.
You will no longer have to compile numerous reports to make a decision. Most accounting software features a dashboard, meaning you can use a single location for all of your financial analysis needs.
Unless you’re germinating as a tiny company, you should begin to consider the possibility that spreadsheets are cumbersome. Accounting software eliminates the need for manual entry. With accounting software reporting, you can generate meaningful information in a presentable fashion. Think of the labor costs you can save.
Streamlined Tax Filing
There are two certain things in life: death and taxes. The tedious way you do your taxes might just cause your death. Accounting software automatically collects the information you need to submit compliantly. It stores receipts, invoices, and income statements in an easy-to-navigate platform so you never have to scramble.
Organized Records
The last thing you need to deal with is sloppy books. Accounting software automatically organizes your books with receipts, invoices, and any other useful records. With this type of software, you never have to worry about inaccurate records again.
Saves Time. Saves Money.
You’re a business owner and every second counts. You can’t afford to waste time and intellectual effort on trivial bookkeeping and accounting tasks. Accounting software reclaims your day with features such as invoice payment reminders and automated tasks.
Automated accounting software can also automatically cut costs associated with your operations. It will identify gaps in your accounting software suite and ensure you optimize your accounting procedures.
Reduces Human Error
Human errors are as common as grains of sand. Human error is especially common in accounting due to the tedious nature of its associated tasks. Automation reduces these errors and lets your entire organization consider the impactful obstacles your company faces.
How can you ensure a healthy cash flow? Where should you procure capital next? Is a merger or acquisition a viable strategy in the short-term. When your financial professionals aren’t worried about simple data entry, they’re free to strategize.
You can justify paying for a solid financial strategy; it’s more difficult to justify paying for a numbers-cruncher.
Some of the accounting mistakes accounting software eliminates:
- Transportation errors
- Reversing entries
- Errors of omission
- Not reconciling your books
Accounting software eliminates the blunders we all know too well. Besides, there’s no sense agonizing over the accuracy and organization of your books when you can complete it automatically.
Easy to Share Financial Information
One of the underrated benefits of accounting software comes from the ability you have to share financial information with multiple vendors. If an accountant helps you with a certain aspect of your books, you can easily unify them with other financial professionals.
Accounting software consolidates every aspect of your books. Depending on the software provider, you might be able to give your accountant direct access.
Recap:
Accounting software can be split into groups. The groups are as follows:
- Spreadsheets
- Commercial accounting software
- Enterprise accounting software
- Custom accounting software
- Online accounting software
- Which type of accounting software you use depends on the size of your organization and your accounting needs.
- The benefits of accounting software include automation, real-time reporting, streamlined tax filing, organized records, expense savings, reduced human errors, and the ability to share accounting information with different team members.
Contact Fully Accountable to Simplify Your Accounting Today
With a fractional accounting team, Fully Accountable can seamlessly integrate into your organization and simplify your accounting procedures. Our controllers, strategic CFOs, and digital accounting methods are here for all your tax compliance, data analysis, and financial strategy needs. No matter your company size, we ensure you maximize your resources and achieve sustainable growth.
Contact us today at 1 (216) 616-8019 to learn more about what we can accomplish together.
Fully Accountable is an outsourced accounting and fractional CFO firm that specializes in ecommerce accounting for online businesses. As a Inc 5000 fastest growing companies award winner, our diverse team of accountants, bookkeepers and CFOs can help you improve your cashflow and effectively manage and grow your bottom line.
