The accounting process is an essential part of a business and it is important for a business owner to know the form of an accounting system that will be beneficial for his organization. Is it the paper-pencil accounting process where you will have to input the necessary data manually by yourself or by a team of accounting professionals or the speedy automated process with its many advantages?
The paper-pencil process has been in existence for a long period but technological advancement in business has ushered in a new way of keeping books accurately.
Many businesses are now using cloud accounting to manage their finances.
The question is, is online accounting beneficial to a business?
Online accounting software integrates your credit card and bank account thereby making it easy to make and receive payment. When your bank account is linked with your accounting software, it becomes easy to track the financial standing of your business at any given time and track your cash flow.
With the smooth and fast payment process comes the likelihood of paying a processing fee to the bank however compared to the number of manpower and staff needed to process payment, the use of accounting software is more beneficial and preferable.
Invoicing process is simplified with online accounting software. You can generate invoices automatically with a cloud accounting program, track paid and overdue invoice and send invoice reminders to clients. With manual accounting process, it is easy to forget that an invoice is due and lose your credibility with your customer or fail to remind customers about overdue invoice which might result in bad debt and put a dent on the financial standing of your business.
Managing your invoice becomes easy and simple, as you do not have to worry about the process with Online accounting software.
With the regular update in tax regulations, it becomes paramount for a business owner to keep track of any change in the policy.
Online accounting software automatically files a tax return, generates a tax report and keeps you updated of any change in tax law in order for your company to be tax compliance. Using the manual accounting method can make tax calculating cumbersome especially when you have to backfill month of entries.
When there is an issue with your tax filing, you can easily connect with tax professional using the integration feature of accounting software for guidance.
Reconciling your bank balance with your cashbook balance is a piece of cake with Online accounting software. Using a manual accounting system, you need to contact your accountant who will need to run to the bank to ensure your book is balanced. This cost money, time and manpower. However, bank reconciliation statement is automatically generated with online accounting software due to its automation feature.
You can easily generate reports to know your business financial standing yearly. Online accounting software makes it easy to create reports like account payable, and account receivable. With business accounting software, you have access to the cash flow statement, income statement and balance sheet with only a click of your mouse.
This allows you to compare how your business is fairing in a particular financial year against the past year.
Since the online accounting software is built with non-accounting professionals in mind, it becomes easy to interpret the reports. Using the manual process to generate report is not only tedious but also requires a sound knowledge of accounting lingo.
The inventory is at the heart of a business. Knowing the status of your inventory helps to eliminate the problem of out of stock and lets you make quotes anytime based on fact from available data.
When you adopt a manual accounting system, you need to continuously count and recount your inventory especially if there is no proper record of your sales and purchase. However, with automated entry, you will know what you need then place the order for it with just a few steps.
Business accounting software is cost effective. Using the paper-pencil accounting system is time-consuming, and costly.
The use of accounting software reduces the number of the workforce needed in the accounting department of a firm and this cut back on the overall payroll expenses.
Business accounting software is speedy and can be used anywhere and on any device.
Therefore, to answer the question of whether online accounting software is beneficial to a business requires a thorough look at the wide advantages it brings to the business.