1st February, 2022
This article will explain what accounting software can do for you, as well as what to look for when selecting a new accounting platform for your business.
One of the most demanding tasks for many business owners is accounting.
Accounting requires you to monitor all money coming in and out of your business, along with details of any transaction so that you can not only measure success of operations, but also maintain compliance with local tax legislation.
All of that requires a lot of bookwork and know-how.
Once upon a time, even the smallest of businesses would need to dedicate hours each week to these processes, as well as engaging with bookkeepers and accountants to make certain everything was done correctly.
Luckily, with the availability of online accounting software, it’s never been easier to automate accounting processes to save time, money and stress.
Accounting software is technology that streamlines various accounting and bookkeeping processes for your small business. It makes it easier to keep on top of business finances.
Accounting software has many benefits, including improving the speed and accuracy of all your accounting tasks, which saves you time and money. It also lets you see your business’s financial position in real time.
When it comes to core business accounting tasks, any accounting software must include at least the following key features.
Invoicing done easy. With accounting software, you can generate invoices in a flash, send them via email or print a physical copy.
Point of sale, payments and key customer data points should all flow seamlessly into your accounting back end. A comprehensive accounting software will automate these data flows meaning less time spent re-recording information from one place to another.
When you receive an invoice, you’ll want to save the details of each in a central place so you can easily manage the money you owe, pay your suppliers on time and keep your accountant across all your expenses.
Expense management is a breeze with accounting software. Once you’ve got supplier invoices sorted, your software can manage when and how payments get made.
General ledgers bring together all your bookkeeping and accounting data into subledgers like accounts payable, accounts receivable, fixed assets and more.
Your accounting software makes it easier to record new data to ledgers which can then be reconciled against bank accounts in a flash.
Not all accounting software will offer advanced payroll management features, but they should at least allow you to easily track and update costs associated with paying staff.
When it comes to end of financial year processing, you want to be able to quickly and easily perform reconciliations
READ: How long does it take to get a tax return?
When it comes to reporting, there are a few particularly helpful reporting tools in your accounting software that we thoughts you should know about.
Fast and easy tax updates mean you’re always up to date. Whether it’s managing GST or BAS (for Australian businesses), superannuation and more, accounting software makes tax time processes simple.
Say goodbye to cashflow headaches. Not only does accounting software make it easier to track your cashflow rate, it can help you to follow up on unpaid invoices while keeping a lid on expenses.
It also makes it easier to apply for loans and financing should you ever have a shortfall.
Better yet, analysing your cashflow rate over long periods of time will reveal any cyclical patterns or seasonality, giving you the ability to forecast the need for any capital injections, or to put away extra cash in savings for a rainy day.
Accounting software is the fast and easy way to manage your cashflow and tax compliance requirements. It also includes time-saving features to help take care of day-to-day bookwork.
As technology has evolved, so too have the types of accounting solutions available to businesses. On top of this, different solutions may exist to cater for specific types of businesses on the market.
Here are a few key types of accounting software and how businesses use them today.
There’s no denying the simplicity and effectiveness of using Microsoft Excel or Google Sheets to build out a spreadsheet of financial data, whether it’s simple bookkeeping work, building out budgets or even a Profit and Loss report.
Unfortunately, using spreadsheet software will only get you so far and these solutions lack many of the specialist features a dedicated accounting solution can offer.
While many sole traders may start running their business and engaging with an accountant using spreadsheets, by the time you’re busy enough to require a bookkeeper, you’ll probably already be in need of specialist accounting software.
Back in the late 80s and early 90s, two big changes occurred in the world of business that continue to influence the way things are done today.
First, a new wave of personal computing was putting more technology in the hands of business owners than ever before. Computers were no longer huge, unwieldy machines with extremely prohibitive price tags.
Secondly, tax legislation began to increase in complexity and the introduction of Goods and Services Tax (GST) and other new rules began to make tax more complicated for business operators.
This is when the first accounting software solutions arrived. Sold first via floppy disc and later on compact disc (CD), these accounting solutions could be installed on your computer for use in completing complicated bookkeeping processes and processing taxes.
Today, these solutions have shifted online and are no longer installed locally on a computer. However, on-premise accounting solutions do still exist for larger organisations.
The benefits of using an on-premise solution means the business maintains full control over the management of accounting data — but this is also a downside.
With the costs and risks associated with local data storage continuing to climb year-on-year, managing on-premise solutions is becoming less viable for even mid-market organisations.
On-premise accounting solutions also make it more difficult to stay up to date as new legislation arrives and updates are required to the accounting software.
Online accounting solutions, also known as ‘cloud accounting’, have taken all the features of traditional accounting software in the online environment, meaning they can now be accessed from anywhere you have an internet connection.
Online solutions like this offer many benefits over their traditional counterparts, including enhanced access, mobility and security. In essence, you no longer have to worry about all the administrative burden involved with maintain software yourself — it’s all taken care of for you.
Better yet, these solutions are designed to be able to adapt and scale with your business. When you’re starting out in business, you might only need a few, simple features. Today’s cloud accounting solutions can deliver these in a way that you only pay for what you need. Then, as your business needs grow, you can add in more feature sets as you go.
READ: MYOB vs Xero: More than just beautiful business
For large organisations with complicated payroll and accounting needs, enterprise accounting software helps prevent the burden of admin from creeping up.
At this size of business, it’s rarely just accounting features that are required. Instead, accounting needs to integrate with payroll and other workforce management processes, Customer Relationship Management (CRM), job management and much more besides.
With this level of complexity, you’ll often find that enterprise accounting software is incorporated within an Enterprise Resource Planning (ERP) system, which brings all of these elements together into one, unified platform.
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