Getting Smart with Computerized Accounting for a Trustworthy BusinessDecember 16, 2021 2021-12-16 16:01
Getting Smart with Computerized Accounting for a Trustworthy Business
Getting Smart with Computerized Accounting for a Trustworthy Business
Looking for an in-depth knowledge on Computerized Accounting, then u have reached the right destination. Your one stop knowledge hub is here and please go through my blog for a accounting exposure.
Why to Shift from Manual to Computerized Accounting?
There is a world of difference between a computerized accounting system and a manual one. First is the cost. A computerized accounting system may cost more in the short term, but this is if you do not factor in the ensuing productivity and savings in the long run. Speed is also a prime consideration. The same amount of work can be performed by a computerized accounting system in a fraction of the time that a manual system can do it. Hence there is a major shift in computerizing the accounting. There are other factors which I will discuss in brief going forward.
Why a Computerized Accounting Software is the Only Way to Go?
Computerized Accounting software is now a basic necessity and no longer a luxury among businesses of whatever orientation and size. In the past, accounting was done manually by business owners. The process proved time-consuming and prone to human error. There were also problems with storage and retrieval of information, consolidation and reporting. Computerized accounting systems have revolutionized the way businesses are conducted. They have enabled companies to showcase a more accurate picture of their organization’s financial performance and to make comparisons and across places and periods of that performance.
A computerized accounting system will work with whatever type of business. This is because any business in general, whether it produces products or delivers services, has a basic structure: input, process and output. There are uniform reporting requirements and accounting principles to comply with and use.
What are the Highlights of Computerized Accounting Software?
The unique features and characteristics of computerized accounting software are mentioned below:
- It is aided by the technology of a computer.
- Accounting with the help of computers yields accurate and efficient results after data interpretation.
- It is capable of storing very large quantities of accounting data. Data of the past 10 years can be stored in the accounting database.
- Computer accounting systems make precise accounting reports that are of good quality.
- It is capable of interpreting very large quantities of accounting data.
- Converting journal entries into ledger accounts can be done with ease and precision.
- Accounting with the help of computers reduces the process time drastically.
- Adopting computer-based accounting will ensure that you stay updated with the needs and changes in the company.
- This type of accounting demands accountants to have a strong subject foundation. They should also have adequate knowledge of working with computers.
- Accounting information can be stored online (cloud facility) for longer durations. This frees up system space, speeds up the RAM and increases performance.
What are the Pre-requisites to Operate Computerized Accounting Software?
To use the software’s, we need to learn, understand and execute in day to day activities. Computerized accounting is not a very complicated process. It is beneficial if the organization is fully equipped with the necessary requisites. The requirements for implementing effective computerized accounting are as follows:
- An effective accounting policy which determines the financial functions and ethics of the organization.
- A computer system with (or without) satisfactory internet connection.
- A well-organized accounting database.
- Well-trained, efficient and competent accountants who have adequate computer knowledge.
- An appropriate accounting software that is compatible with the computer specification as well as the organization’s needs.
- A well-established and organized accounting framework and operational strategy.
- In case of technical glitches, an alternative accounting software is of paramount importance.
- An effective backup arrangement of all accounting database is necessary in order to avoid technical crash and loss of data.
Now let’s look into the Advantages and Disadvantages of Computer Accounting Software.
Computerized accounting software is the need for the hour and is being adopted by domestic as well as global industries. Considering its high demand, it is needed by every organization for the following reason:
- Automation: All routine tasks are handled efficiently by computerized systems, which update records automatically, and on the go. All calculations are done automatically in software programs, minimizing errors and increasing efficiency.
- Accuracy: This accounting system is designed to be accurate to the minutest detail. Once the data is entered into the system, all the calculations, including additions and subtractions, are done automatically by software. Another key benefit is that this type of accounting reduces operation cost due to errors and repetitive working.
- Data Access: It ensures standardization of process which helps individuals to access accounting data outside of the office, securely and thus the end-results.
- Reliability: Computerized accounting improves financial performance and efficiency which results in accurate year-end statements and presentations.
- Scalable: When your company grows, the amount of accounting necessary not only increases but becomes more complex. With computerized accounting, everything is kept straightforward because sifting through data using software is easier than sifting through a bunch of papers.
- Speed: It processes data quickly and saves a lot of business time. Furthermore, statements and reports can be generated instantly at the click of a button.
- Security: It also ensures the security of accounting information from thefts and frauds, natural and man-made disasters like earthquakes, fires, floods, arson and terrorist attacks. In case of a disasters, the system can be quickly restored on other computers. This level of precaution is taken by Clever Accounting.
- Cost-Effective: Computer accounting reduces the amount of paperwork, manpower efforts, investments in training costs, reduction of manual work force.
- Reports: Unique accounting techniques and procedures which are relevant to the particular organization can be created. This helps the team to present the reports, using charts, pie-diagraphs, graphs etc. Computerized systems can also provide instant reports on stock evaluation, profit and loss, receivable and payable reports, payroll and sales analysis, again, allowing faster adjustments in your business strategy.
- Compliance: Compliance is one of the crucial activities for any business, more so now, because of the introduction of GST. it is almost next to impossible in the current day to handle all of this in manual books. Computerized accounting is the way forward, which allows for quick checks for transaction level compliance, matching of books and ultimately filing accurate returns based on accurate business data and be audit ready anytime.
There are disadvantages to adopting the computer-based accounting system. The complexities are discussed below.
- This system explicitly steals human jobs as manpower, in particular, is replaced by computers, which needs heavy investments.
- A must buy the any additional licenses necessary for other users and computers. Some software requires you to purchase upgrades or updates for additional features. You must also ensure your computer is capable of running the software. If not, you’ll need to upgrade your computer as well.
- Furthermore, there is a requirement for special skills among employees performing accounting tasks.
- This accounting system will eventually depend entirely on the system. As a result of this, there will arise the added risk of system failure and hindrance of business operations.
- Editing of data that has been misplaced under the wrong category can be very challenging.
- Spotting of errors that occur in the middle of the accounting process will be difficult to identify and locate.
To sum up the entire article, accounting software definitely adds life to your business, however be aware of the latest trends and modifications in the accounting world. Remember to rule the business world, be a master in the software applications which will generate your thought process on business improvement ideas. Be vigilant all the time.
“Assess the requirements, explore the opportunities and Implement the changes and Succeed – Sky is the limit.”