7 things you need to know about accounting software

06/02/2020

Accounts, tax, VAT and financial statements are all going digital – and company owners and managers need to keep up. After all, accounts and finances are the pillars on which successful businesses are built.

The best way to adapt to this ever-changing landscape is with an accounting software upgrade. So, if this is what you need to keep your business moving forward, what actually is it? How does it work? And why should you use it?

1. What is accounting software?

Accounting software helps your business automate its financial management. Accounting systems and apps include a number of features that make your accounting tasks more efficient, and your team more productive. They also guarantee greater accuracy for your financial data.

Finances are at the core of how you run your business. That’s why accounting apps are essential in any business software solution. And more importantly, a good solution. The right accounting software for your business can better ensure security, consistency, and stability for your business finances.

2. How does accounting software work?

Accounting software is essentially bookkeeping and management accounting systems combined. Forget handwritten ledgers, calculating income and expense manually and transaction journals. Everything in an accounting app is completed and stored online.

Accounting systems are made up of different functions and features such as accounts payable, accounts receivable, general ledger, payroll, sales tax, and cost accounting. Everything your accountants or bookkeepers may need is available from one easy-to-use platform.

These apps can be as simple or advanced as your business needs. They may also be supplied within a complete business software solution.

This is one of the most common – and efficient – ways to run your business’s accounts. No more redundancies, transfer errors, or important financial data gone missing.

3. What is the difference between finance and accounting apps?

In simple terms, accounting focuses on the everyday whereas finance looks at long-term concerns. For example, cashflow, income and expenses are accounting issues, whereas the management of liabilities, assets and revenue are financial concerns. But the two concepts are closely linked, and accounting or finance applications often include features of both. In fact, the best accounting software always contains financial elements.

4. Why should a business use accounting software?

They’re invaluable support for accounting professionals. Not only do they boost efficiency, they also hugely improve the quality of work produced. From time tracking expenses to digitalising tax procedures, your finance department will become a well-oiled machine.

Here are the main benefits of using accounting software:

· Better financial control.

· Greater visibility of your financial position.

· Automated operations.

· Simplified access online or mobile.

· Higher data accuracy.

· Stronger security measures.

· Improved GDPR compliance.

· Reduced costs.

Whether you’re a small business or a large company, there are apps tailored to your needs. From sole traders to enterprise CEOs, a clear overview of your finances means you’ll be making smarter decisions and growing your business quickly.

5. Why do I need a cloud-based accounting system?

An online accounting software will save you money. With no need for outsourcing, storage, license fees, or expensive hardware, your operational costs will plummet. And by eliminating hardcopy printing, you’ll be doing your bit for the environment. Eat your heart out, Greta.

Hosting your data on a centralised SaaS system with cloud accounting will also strengthen security. Instead of file drawers, your financial statements are protected by countless firewalls. You can also ensure that sensitive files can only be accessed by those who have permission.

6. What are the best features of an accounting application?

It goes without saying, but App features are key. Here are the top functions you should look for in any accounting system.

Financial Report Management is the most popular feature of any management accounting software. Manual input in spreadsheets and paper ledgers just isn’t efficient or accurate – human error is bound to happen. Not only can accounting apps automatically generate financial statements, but these reports will also provide real time data and are always regulation compliant.

As a business owner, you need Billing and Invoice Management. If your eyes are hurting with the tedious job of creating and managing bills; switch to e-invoices. Their components can be changed and generated in a moment’s notice. With such an efficient system, your monthly payments should come rolling in without being chased.

Tedious jobs also result in mistakes. Bank Reconciliation will fix this all for you by comparing your accounts and statements and ensuring they match. Don’t waste time and worry on correcting errors – put your feet up and let the software do its magic.

Cashflow Forecasting is necessary for any business with a long-term perspective. It helps you better organise your budgets with profit, loss, and expense predictions. It also provides information that potential investors need to see. Despite being so crucial, it can be hard to find. Complete solutions, like Microsoft Dynamics BC, are the most common source.

Let’s not forget Asset Depreciation Management. No matter the industry, companies have fixed assets which add value to the business. Their value, however, isn’t fixed. This app feature can evaluate the worth of an asset in seconds, helping you keep track of their inevitable depreciation over time.

But ultimately, it’s no use having these tools if they don’t work with the rest of your system. That’s why you should get an app that champions integration. And another thing – looks matter. A well-designed display can make all the difference in understanding your data.

7. How do I choose the best accounting software for my business?

Understand your business goals and then evaluate how different systems can help you achieve them. The features above are the most prolific and useful app features every business should have. But there are plenty of other industry-specific functions.

For example, invoice and transaction management is extremely helpful for trading companies. And if you’re an international company, foreign exchange features could be a lifesaver.

If you’re a large company or small business looking to expand, you may be looking for a long-term system. You may want sustainable features such as automatic updates and advanced forecasting. A start-up on the other hand, probably wants something affordable and easy-to-use.

Even with all the right information, making a decision can be daunting. Every software out there will claim it’s the best on the market. Free trials are a great way to test out your options and see for yourself. Alternatively, talking to a provider is a great way to get some more insight.

Good accounting software is an integral foundation for your business – so take the time to make sure it’s right.

If you want to find out more about accounting and financial software, have a chat with one of our professional services experts.