A reliable accounting system is essential for any business, regardless of its size.
For some businesses, keeping hand-written ledgers and spreadsheet-based accounts may be entirely sufficient. For others, computerised accounting can simplify many tasks and offer clear advantages over keeping manual accounts.
Advantages of using accounting software
Accounting software can help you save time and money, and offer you valuable insight into your business. It can do so by:
- simplifying data entry – inputting data is fast, straightforward and only needs to be carried out once
- speeding up processes – eg reducing delays between making a sale and generating an invoice
- automating reports and analysis - on profit and loss, debtors and creditors, customer accounts, inventory counts, sales, forecasting, etc
- automating tasks – such as calculating pay, producing payslips, automatically calculating VAT, etc
- reducing errors – by computerising calculations that would have historically been done manually
- supporting other functions, such as online banking and e-filing
If you choose the package carefully, investing in accounting software can be one of the best decisions you can make for your business. Find tips on choosing the right accounting package.
Disadvantages of accounting software
Not all businesses will benefit equally from using accounting software. If you’re thinking of switching from manual to computerised accounting, you should consider these possible drawbacks:
- Price - the package cost, although small in relation to your other costs, is higher than a paper-based system.
- Implementation - you will probably need some initial help setting up an accounts package. This will usually be a chargeable service, perhaps obtained from your accountant or the system provider.
- Support - you may need to purchase yearly maintenance and support for your package.
- Specialised needs - an accounts package is designed to suit most types of business. However, if your business is very unusual you may find that you need to change the way you operate to suit the package, or pay to have the package adapted to suit your needs.
You can’t successfully manage your business without some sort of an accounting system. Whether you choose manual over computerised solution, it’s entirely up to you.
Consider your accounting needs carefully to decide which accounting system would suit your business best. You can use our accounting requirements checklist to help you assess and prioritise your needs.