Incorporating accounting software into your organization helps you excel without hassle. With the advancement in technology, it is easy for you to manage finance with online accounting applications. When technology is at your disposal, nobody wants to be stuck with all the complicated procedures of analyzing, measuring, and processing to create financial reports manually. Manual accounting requires a highly qualified person, and many businesses do not afford them. While buying accounting software within their range makes everything easy for them. Organizations must use accounting applications and avoid these issues.
A question arises; what if we don’t use accounting software for our business? The answer to this lies in the size of your organization.
It is handy for small enterprises you calculate their finance with bookkeepers and accountants. In large companies, you need a lot of accountants, IT, and hardware. However, the world of technology gives you software for accounting and finance management without hiring several accountants. Computers calculate better than humans, and there are zero percent chances of human error, whereas when apps work on accounts, you must monitor them. Moreover, a single application can do different types of accounting, i.e., managerial, cost, tax, and financial accounting.
Accounting software provides features such as cost planning, expense monitoring, transaction management, and tax computation. In addition to managing the accounts, it also secures you from fraud. The manager must consider a few points and look for features that best fit the organization. In this article, you will find out the functions of accounting applications and how they will help you manage accounts.
What Features Can Accounting Software offer?
Accounting software provides all the features that an enterprise requires in managing accounting and finance. The following are some basic features of accounting applications.
1. Finance Reporting
The process of creating documentation and conveying activity data within a tenure (period) is known as financial reporting. So, gather the data and save it for future use by accounting apps. With accounting apps, you can get reports immediately and serve the advantage in case of growth and profitability. Financial Report creation has some objectives, which you can consider, such as cash flow and liabilities evaluation. The software engineers developed accounting applications that can efficiently create financial reports.
Following are the two points that financial reports consider:
· Detect revenue and Expenditure
Income and expenses calculation on a specific project is a priority when creating financial reports. It gives insight into the areas that need more investment, and you can measure the debt-to-asset ratio. The debt-to-asset ratio is valuable when an investor reviews a company’s financial report and analyzes whether the company can pay debts and produce profits. The Stakeholders also ensure compliance and avoid sponsoring organization that does not fulfill legal requirements. Accounting software can do all these things without fuss.
· Analyze the Financial Condition
Analyzing the financial condition of a business is necessary as it helps the company in; budgeting and funding accordingly. Communication is the key to the success of a business, so you must tell the investors and stakeholders about the risks in a project. Accounting software will predict the risk and show it on the dashboard. It will tell you about the areas of expenditure and your performance history through balance sheets and revenue statements.
2. Transaction Scheduling
The software will manage your transactions and create a sheet. It will provide you with both accrual accounting and cash accounting. Mostly, the transaction is a simple process between the buyer and seller. However, complication arises when an organization involves a third party like investors and stakeholders. These procedures are tiresome and hectic if you do them manually, but with the help of technology, it becomes a piece of cake. Mainly, it serves the details of paid, pending, and unpaid transactions.
Budgeting is the most valuable aspect of a business when starting a project. You must know the product’s worth and demand in the market before spending money on it. There are several steps in budgeting to keep in mind, i.e.
i. The company’s income.
ii. Expenditure on the product.
iii. Realistic profit goal.
iv. Spending according to the product requirements.
Accounting apps can make budgeting easy for you by applying all the above steps. The two essential features of budgeting are as follows:
· Cost Planning
Before manufacturing a new product or starting a new project, you can plan the expenses of the product. Accounting software technology will make it easy to decide the investment amount in a product/project because it can consider every risk and then tell you about your mistakes in planning.
· Economic Performance
Unacquaintance with the performance of your company is the downfall of the company. So, before beginning a new project, you can look at the company’s economic performance history. You will have the company’s actual condition in front of you by clicking on your accounting software app,
4. Tax Computation
Tax calculation or tax computation is mandatory in a business. In the past, it was a daunting task to calculate taxes and pay them accordingly. Now, with technology, working sheets, financial statements, and other related documents are already lined up, and you can pay taxes. These taxes include employment tax, income tax, payroll tax, sales tax, license and permit taxes, etc. The software contains tax accounting that makes strategies to lower a company’s tax liabilities.
5. Sale–Purchase Calculation
In manual bookkeeping, maintaining sale and purchase details is a frantic job. Over time, new technologies develop which can keep various information, from customer details to sale-purchase logs. For instance, you can find a regular customer’s purchase detail by entering his name and address in the search bar of the software.
- Vendors are always connected with your business, especially when you are a seller, not a manufacturer.
- With an accounting app, you can have data on all the vendors you are working with, and by creating an invoice, you can see the delivery address, previous balance, etc.
- You must be familiar with the remaining cash add-on to the next Uber ride.
- International companies use accounting apps to save customers’ information and calculate credit.
6. Inventory Supervision
Accounting apps have a ledger that stores all the entries and sets the items according to the categories. For example, if you do business in cosmetics and poultry, you can make separate categories and make your work easy. Plus, it will manage the stock and alert you; before the end of the goods. You can locate the wares in different warehouses with the help of the app’s search bar. You can have details of;
- Department of goods.
- The region of a customer.
- Credit limit of the customer.
You can supervise the inventory from the app as it provides you with a list of items and a search feature to comfort the app buyer. The software will serve easy access to information regarding the journey of goods from the seller to the buyer, along with the destination and routes of arrival/departure.
7. ROI (Return on Investment) evaluator
Profit is the goal of any organization, and how to get this profit is always the question. The foremost thing you can do is find the demand for the product in public before making it and then targeting a specific social group. The investor wants a return on the money they invested in your product, but manually it is impossible to know about profitability beforehand. You can evaluate ROI earlier with accounting apps.
8. Profit-loss Reports
Accounting apps are beneficial as they can create Up-to-date Profit and loss reports in seconds. You can find out the loss in the past as it saves loss and profit logs. As a result, you can decide about the product, avoid previous mistakes, and invest accordingly.
What are the disadvantages of using conventional bookkeeping methods for accounting?
In developing and under-developing countries, business owners use bookkeeping for accounting purposes. The huge disadvantage is fraud and dishonest bookkeepers that can steal money from the company without anyone noticing. There is no security of your accounts with manual systems, and creating an excel sheet is another hard duty. Furthermore, bookkeeping is time-consuming, and you do not have back in case of loss.
- If you add aenzine
- ll the entries to the computer, there are chances of human error.
- But if you buy and install accounting apps for your organization, it will assure the security of your accounts with effective accounting techniques.
- It can convert your data reports into excel sheets by the ‘convert to excel’ option.
Accounting is an essential characteristic for business owners, and managing it proves to be a strenuous task. An accounting app is crucial to your business if you are a wholesaler, distributor, trader, importer, or retailer. It will make your life easy and smooth for business; financial reports, sales- purchases reports, budgeting, and tax calculation are just one click away through accounting software. You can make your business secure with account apps instead of bookkeeping and avoid fraud with your business.
Sally Hickman Green is a 30-year-old who enjoys blogging for online accounting software, internet marketing, and social media marketing. She is inspiring and generous in blogging. She has a post-graduate degree in computer science.