Spreadsheets and ledgers are great tools for managing your finances when you're just starting out your business. But once your business starts to grow, the number of customers and vendors you deal with grows as well, and even simple tasks like keeping track of the money moving in and out of your accounts can become tedious. When you reach this point, combing through a million spreadsheets or piles of paperwork will no longer suffice. This is where accounting software can come in handy.
What is accounting software?
Accounting software is a tool that records and processes all your business' accounting information digitally. It's designed to help accounting professionals and business owners manage all their financial operations from one place. Today, most accounting software is cloud-based, meaning you can perform all your accounting tasks from any device with an internet connection. What's more, the cloud acts as a secure, centralised database for all your organisation's financial records, so you don't have to rely on filing cabinets or hard drives.
Why accounting software is important for your small business
Now let's be practical. At the end of the day, for any business, the goal is to remain profitable. So how well you manage your finances can be a crucial factor in determining your success. With accounting software, you can manage your financial transactions easier and simplify your workload. And if you think the upfront cost is too much for your budget to bear, think again. Accounting software may come with a recurring fee, but it also saves your employees time and cuts back on the office supplies you need to purchase each month.
The features, plan, or product you choose may be different from that of a larger corporation, but the right software solution can give your small business the boost it needs to stay competitive in today's digital market. Here are just some of the key benefits that you can expect from accounting software:
Reduces human error
People make mistakes, and it's impossible to avoid them entirely. That said, accounting software practically eliminates the need for manual data entry. By using a digital program to handle your numbers, the potential for errors in your financial calculations goes down dramatically. This allows you to be more confident that your outputs are accurate, and it also helps you stay in compliance with regional, national, and (if you do business overseas), international regulations.
Speeds up your work
Time is money for any business. Accounting software can save you a ton of time by automating workflows and helping you perform repetitive and complex tasks within seconds. Apart from bookkeeping, an accounting tool also facilitates other operations like invoicing, billing, and reporting. Some software programs can even integrate with other applications you use. For example, your accounting software might integrate with Uber so that your business' monthly ride statements will be automatically uploaded to your system. These statements will be imported as bills for you to pay without you having to search for and calculate them manually. All of this time you and your employees save can help you concentrate on other strategies to build your business.
Keeps your data secure
It can be difficult to retrieve important data from a spreadsheet that's been deleted, lost, or corrupted. On the other hand, cloud-based accounting software can save you the trouble. When all your financial data is securely stored on the cloud, you can easily access it whenever you want, and you no longer have to worry about data loss. It's also easier to give secure access to new employees as they join your team by simply assigning login credentials and enforcing two-factor or multi-factor authentication.
Saves you money
Aside from the time to money benefit, accounting software can also help you cut down on your actual purchase expenses. Because all your data is stored on the cloud, you can go paperless and save money on office supplies while also doing your part to protect the environment. Not to mention that you will not have to purchase hard drives or additional space if you are transitioning to a cloud system from legacy software or spreadsheets.
Accounting software features
Here are some essential features you should look for in your accounting software:
Invoicing and billing
Invoicing is a key function for a business, regardless of size or industry. Therefore, you need software that can help you perform this basic function. Your accounting system should automate this process by sending customised invoices and gentle payment reminders once an order is placed. Good software will even let you send estimates and automatically convert them into invoices once your customers approve them.
When you get paid faster, you improve your business' overall cash flow. With a payment gateway integrated with your accounting system, it's easier for your customers to pay directly from their digital invoice. Then, your system will automatically mark these invoices as paid instead of you having to keep track manually. While choosing your software, be sure it integrates with any major banks and payment gateways you and your customers use. This way, you can receive quick payments through different modes like credit cards, debit cards, and online bank transfers.
Just as important as it is to get paid, you also need to keep track of all your paid and unpaid expenses. Your software must help you monitor your entire business' spending from one place. It should also let you scan expense receipts and automatically collect information from them. All this data can help you identify which areas you've been spending more on, give you a clear picture of where your business stands, and allow you to create better financial strategies going forward.
To ensure that your financial data is accurate, you need to verify if your records match your bank statements. A good accounting system will automate your bank reconciliation process by fetching and matching transactions from your bank accounts and highlighting any discrepancies. You can also use this feature to locate payment errors or forgery.
Business reports give you a consolidated overview of your business' health. Your accounting software should be able to generate your profit and loss statements, balance sheets, and cash flow statements any time you want them. As a small business owner, it can give you the information you need to make better short- and long-term decisions, so you can have more confidence that you're leading your business in the right direction.
Taxes. Nobody wants to deal with them, but filing them correctly is critical for your business' success. Any missteps in this process can land you in legal trouble and force you to pay hefty fines to the government. That's why you need software that can fully comply with Australian tax rules and simplify your tax processing. Your accounting software should enable you to generate GST invoices, add new taxes, and easily file your tax returns.
As a small business owner, your accounting activities may extend much beyond regular bookkeeping, especially if you're looking to expand. In time, this could require a lot more work than your team is capable of just to keep your business running. But what's the point of struggling with repetitive tasks that can be easily automated?
With accounting software by your side, you can manage your company's finances and simplify even the most time-consuming tasks. No matter your business' size, a good accounting system is never a bad investment.
If you're looking to switch to cloud-based accounting software, we encourage you to check out Zoho Books. It's easy to use and has a range of valuable features that can help your business grow without burdening your budget. The best part is that our app is mobile-friendly, and we have flexible pricing plans so you can choose the option with only the features that work best for you.