Accounting and bookkeeping are of vital importance for the proper functioning of the business. They refer to the recording of transactions and financial management in all its forms. Without a well-established accounting system, businesses face challenges in financial analysis, planning, and reporting – let alone performing routine transactions.
A business may find it inconvenient to carry out its financial transactions manually. First, it is a challenge for the self-employed and small businesses, where an employee, as a rule, performs a wide variety of tasks. In such a situation, that employee can easily be confused by multiple numbers or get stuck on annual reports. Second, manually recording journal entries saves you valuable time that could otherwise be spent on business meetings, new project creation, or business planning. Finally, manual accounting requires punctuality in compliance with financial laws. Ignorance or simple oversight in submitting reports or tax returns results in penalties and damage to reputation.
Of course, a business can outsource its bookkeeping and accounting to an outside agency. However, if a business owner wants to keep control of their company’s current financial situation, outsourcing may not be the right solution. Plus, no outside agency is ever more interested in making the best financial plans for a business than its director. And this is only possible when the manager is familiar with the flow of funds within his company.
Accounting software automates basic accounting tasks, such as journal entries, reports, analyzes and forecasts. It simplifies accounting procedures and makes them clearer, even for non-professionals. An automated system calculates the numbers for a balance sheet and other reports. Plus, it presents data in cutting-edge formats that are easy to read, convenient to send, and easy to read.
Accounting systems have a number of interesting features. They protect financial data by introducing access privileges and other security solutions. Accounting applications make information available when needed thanks to its clear structuring and storage in the cloud. These applications help businesses understand their current financial situation, help them perform analysis and forecasting, and build credibility with their partners and customers.
Basic accounting software typically includes the following functions:
1. Keeping of accounting records
Creating general ledger entries for accounts payable, accounts receivable, purchasing, and inventory is one of the essential features of accounting applications. The system then automatically transfers this data to a general ledger and performs the necessary calculations. This forms the basis for income statements, balance sheets and other regular reports.
Digitization such processes give stakeholders flexibility in terms of resource management. Automating the accounting process, generating reports and analyzing business assets will no longer require a lot of human time. This, in turn, will allow the company’s employees to be managed more competently, assigning them to key tasks.
2. Billing and invoicing
Automated systems make it easier for accountants to issue invoices and monitor payments. Thus, companies have better control over incoming payments. Accounting apps also send notifications to counterparties, reminding them to pay.
Customized accounting software creates tailor-made invoices adapted to the specific needs of each company. Doing this manually can be tedious and slow. In addition, software of this type will help eliminate the human factor that can damage the reputation of the company.
3. Report generation
Accounting applications produce all kinds of reports, giving business owners real-time information on the state of their business. Custom financial analysis software focuses on reports that are important to a business and its partners, such as reports on the performance of particular departments. In addition, the reports are produced in usable formats and can be sent instantly to the parties concerned.
4. Financial projections
Personalized financial planning software allows businesses to track the performance indicators most relevant to them. It also does various types of planning – depending on whether managers want to estimate profits, rely on taxes, or assess risks.
5. Depreciation of assets
The assets of the company are subject to depreciation. These calculations can also be automated. Such an approach is advantageous for facilities with manufacturing equipment, vehicles, machinery and other assets. Accounting software will help avoid human factors risks and speed up the process of calculating asset depreciation.
6. Bank reconciliation
The interconnection of an accounting system with a bank allows companies to reconcile their financial records with bank statements. This ensures the accuracy of separate journal entries and all monthly or annual reports generated by the app.
7. Tax administration
Financial analysis software is able to adapt to the latest developments in tax legislation. In addition, it calculates taxes based on the location of the entrepreneur and displays the amount of different taxes based on the income and expenses of the business.
8. Payroll accounting
Automated systems manage staff payroll, taking into account any deductions due. The accounting software complies with compulsory insurance and pension fund contributions. It also takes into account vacation pay, salary bonuses, sick leave and the family situation of each employee. All this allows companies to be precise in the payment of salaries to their teams.
The complexity and set of features of accounting software vary from company to company. It depends on whether the user is an individual entrepreneur needing a simple single entry platform or a large enterprise implementing a complete solution.
Accounting software development can be tailored to the needs of each business by adding industry specific modules and tools. Accounting applications vary in terms of usability, cost, number of users, and available transactions.