- By 2026, the global accounting software market size is expected to reach $ 117 million.
- According to Statista, the percentage of small business owners using accounting software is 64.4%
- 56% of accountants say that accounting technology has increased their productivity, reports Sage.
- According to Medium, almost 75% of jobs in the accounting business can be automated using accounting software.
About important things
Accounting software has become an essential part of any business, as it allows business owners to track financial transactions and instantly generate various financial reports.
Before learning about the importance of accounting software for businesses, you need to first understand what accounting management is.
What is accounting management?
The word accounting refers to the process of dealing with the financial system of a business. A financial system includes transaction history, auditing and interpreting all sorts of financial reports. People used to manage all these things manually. But accounting software has reduced the system loss that used to come with the maintenance of papers. Everyone is considering the importance of accounting software in business now.
What is accounting software?
Accounting software is a software, that accounting professionals use to process financial transactions like accounts receivable and payable, invoicing, tax compliance, general ledger, cash flow analysis, trial balance, income and expense statements, balance sheets, payroll among others.
Types of accounting software
There are many types of accounting software available on the market that you can choose from. Some of them are:
- Enterprise Resource Planning (ERP) System: Commonly used by large corporations, this type of accounting software can bring your business functions together and merge them into a centralized platform for easier viewing. However, compared to other types of accounting software, this comes at a steep price and requires a long period of time to install.
- Commercial Accounting Software: The most common type of software available, ready-to-use commercial accounting programs are easy to manage. Like other applications, they can be personalized to adapt to the requirements of your bookkeeping process. So far, it is generally the most affordable option available.
- Custom Accounting Software: All businesses have unique needs. This is why companies sometimes opt to have accounting software created just for them. By going for this option, they can tailor the program according to the requirements of their operations. However, this can be more demanding to maintain compared to its commercially available counterparts.
Benefits of implementing accounting software
To accounting professionals, accounting software are company’s valuable asset that significantly helps improve the efficiency of the finance department. Apart from that, there are still more important benefits that this software provides.
Optimized business operations
Why waste your energy on bookkeeping when you can use it to run your business? With accounting software, you can work smarter, not harder. Speed up your processing time by eliminating manual calculations from your daily to do list. This helps you keep your books up-to-date without cluttering up your desk. Additionally, you can optimize your operations because you no longer have to run numbers on different applications—you can view everything on a single screen.
The most important advantage is that accounting software saves a lot of time over manual bookkeeping. For instance, you can write checks, create bank deposits, and prepare customer invoices in the solution, and the software will record all the transactions.
Manual accounting increases the chances of errors in calculation. You can avoid this by opting for accounting software which automatically performs all calculations accurately. This is a big benefit especially if you need to prepare detailed invoices in which specific items or worked hours are billed at various rates.
Improving decision making
Without an automated accounting solution, you will have difficulty understanding your business financial condition. It provides you with numbers that can help you figure out where to cut expenses or where to invest more. With a clear overview of your current financial state, you will be able to develop smarter strategies and allocate resources more easily.
Improving financial data security
Financial data is company’s most confidential information and, so it must not fall into the wrong hands. An accounting system ensures your financial data remains safe by storing it in a centralized system that is protected by firewalls. Thus, only those who are granted access rights can see the data.
Check out the next part , where you’ll learn about what accounting software should you start with?