Benefits of Computerised Accounting Software versus a Manual Accounting System
Keeping track of a business’s finances and accounting transactions is an extremely important task. It is a task, however, that can be quite arduous and time-consuming. The introduction of computerised accounting software that automates and digitalises many of the accounting functions has proved revolutionary to this business function. Below we will discuss the specific benefits that can be achieved when migrating from a manual accounting process to an automated computerised accounting software program.
Manual accounting processes use paper systems (or perhaps rudimentary spreadsheet systems) and ledgers to record and process all their accounting transactions. The very basis of the accounting equation dictates that any transaction that is entered must be entered in at least 2 different accounts, if not more. The double entry system in accounts means additional work for a manual system where any transaction must be entered more than once in multiple places in the manual system. In the case of a computerised or automated accounting program, this entry is only needed once, as the correct corresponding ledgers and accounts are adjusted and updated automatically. Invoices, receipts, and other accounting documentation can also be stored digitally, saving time on manual filing exercises as well as the time when searching for specific information again.
An automated accounting software program goes a long way in mitigating human error. Because of the reduction of manual processes, there is a much smaller window of opportunity for human error to creep in. While the old saying goes ‘garbage in – garbage out’- and automated accounting programs are not immune to this should there be a data input error- the sheer number of times information is entered into a manual system, interpreted manually and manipulated manually means that the opportunity for human error is just so much greater in a manual accounting system. Be it incorrect figures, badly written text, or calculation errors, there is a much greater chance of inaccuracy in a manual versus an automated accounting software program.
Greater Visibility and Control
Accounting or bookkeeping by its very nature involves a lot of capturing and storing of documents. From invoices, receipts, bank statements, and delivery notes- these all need to be captured, filed, and stored. In a manual system, this can be unwieldy and prone to error. When working on an automated accounting software system, it is much easier to pull up transactions, the associated documents, and any actions pending against them. It is also much easier run instant reports showing all transactions that have actions outstanding or due to them- this, in turn, gives far greater visibility into the state of the accounts at any one point in time and also gives business managers and financial managers much greater control over their accounts.
Manual accounting systems are much more vulnerable to security breaches. Often information kept and generated in such systems is sensitive (e.g. profit statements, payroll figures, or key customer information). Accounting software programs allow for specific user security levels so that sensitive information or reports can only be accessed with the appropriate seniority levels.
Faster, More Accurate, and Flexible Reporting
When reporting enters the equation, Accounting Software really shows its advantages over a manual accounting process. In the case of manual systems, not only do you have to capture all the data manually, but you also have to run and calculate the reports manually. Setting up any new kind of report is laborious and time-consuming – not to mention the additional room for error. Accounting software systems, and especially systems like Omni Accounts with its Report Writer function, make reports available at almost the touch of a button. Ageing reports, trial balances, income statements, accounts receivable, revenue by customer…the list goes on. All these reports are available in real-time, always updated with the latest information in the system. In the case of flexible report writing, you can arrange reports as you wish and can manipulate your data as you wish to show you the information you need. Such flexibility is simply not possible in a manual system.
As is required by law, companies need to have their annual financials audited annually. In a manual accounting process, simply finding a simple transaction can be a drawn-out process. In an accounting software program, it is far easier for auditors to find the information they need. This is helpful as it minimised inconvenience to you as the client- indeed the auditors may be able to spend very little time on-site which will minimise the impact on the daily operations of your business. Also the faster the auditor is able to move through your case, the less money it will cost you in audit fees.
There is very little benefit in staying in a manual accounting process. One barrier to entry may be start-up costs, but these costs will soon be offset by the multiple benefits of moving to an automated accounting software program. Manual processes can become somewhat of a dead-end, as they grow more and more cumbersome as a business develops. A computerised system, such as Omni Accounts can grow together with your business.