Accounting is one of the most tedious, repetitive, and time-consuming tasks in any organization. It is also the most vital component of the business. However, a majority of accountants today feel that traditional accounting is no longer enough to stay competitive.
That’s where accounting tools come into the picture. They make the accounts department’s job easier, faster, and smoother while giving them more time to focus on the decision-making aspects of finance and accounting.
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This is probably why more than 64% of SMBs are using accounting tools in their organization. But, that’s not it. There are more ways an accounting tool can help your business. Let’s look at them.
How Can Accounting Tools Benefit Your Firm?
1- Save Time
The biggest benefit of accounting tools is that they save a lot of time. The accounting system makes most of the accounting processes much faster, including invoicing, statements, reporting, and budgeting.
Besides, most of the data you would manually check and enter can be automatically recorded by the accounting tool. For instance, when your employee makes an expense claim, it automatically gets synced with your accounting tool.
So, what normally takes days to manually enter everything (amount, documents, and other necessary information) can now be done in minutes.
2- Reduce Operational Costs
Though accounting tools themselves require investment, they help you save a lot of money in the long run. Accounting tools eliminate the need to hire a bookkeeper or bill for the additional time required to check your books’ accuracy.
As mentioned above, an accounting system reduces the time required for data entry, thereby allowing your finance team to spend more time evaluating business performance more.
Another way an accounting tool can reduce your operational costs is by streamlining your cash flow. It provides a birds-eye on your payables and receivables, so you know where your money is being spent.
3- Enhance Data Accuracy
We all make mistakes, don’t we? The same goes for accountants. And while errors are common, they can cost your organization a huge amount. Hertz, a car rental company, found $46.3 million worth of errors in its 2011 financials. In another case, Groupon lost over $22 million due to financial mistakes in 2012.
With an accounting automation system, you can significantly reduce these errors. Even if the calculations involved in your financing statement are complicated and lengthy, a good accounting tool will not let you down.
The only thing you should ensure is that the data entered in the tool are correct.
4- Provide Financial Statements Quickly
Financial statements, such as profit and loss reports, balance sheets, and cash flow statements, are an integral part of any business. They help you understand the current financial situation of your organization.
Without an accounting system, your finance management department would have to go through hundreds of files to retrieve (or review) a document. And, if they are outdated, you will have to wait for hours (if not days) to get the statement you need.
Accounting tools, on the other hand, allow you to create financial reports within minutes. All you need to do is select the date and hit on “create the report.”
The best part? Most accounting tools don’t require you to have extensive training to use them. So, you can generate financial reports without depending on any financial expert.
5- Make Tax Filing Convenient
Income tax filing is one of the most dreaded procedures for anyone in the accounting department. With so many laws and provisions to comply with, it could quickly get confusing.
However, that shouldn’t be an excuse to make errors in tax filing. Even a minor mistake could invite a heavy penalty to your organization. With accounting software, tax filing just gets convenient.
It can help organize all your receipts and invoices for you so that tax compliance and tax filing become smoother. Some advanced accounting tools can format invoices automatically to further ease accountants’ job during tax seasons.
6- Can Be Integrated With Existing Business Applications
As you digitize your company processes, you will need solutions that work with each other. Think about having different tools to make your work easier that don’t integrate with each other. Well, that doesn’t sound easy.
However, most modern accounting tools integrate with your existing business applications. This means your accounting system receives information from your HR software, spend management software, and so on.
As a result, you will never have duplicate entries and have real-time data across all platforms.
7- Strengthen Data Security
Given the rise in cyberattacks, the need for data safety has become more important than ever. In 2020 itself, there have been more than 445 million cyberattacks, double than 2019.
Today’s online accounting software is protected by extra security layers, such as two-factor authentication, authorized access, and regular backup. Advanced companies even use additional security measures to protect your data, such as:
- Data storage in multiple data centers (to prevent data loss)
- Protection from phishing attacks via firewalls
- Extended Validation (EV) SSL
You can even set up role-based access to ensure only authorized persons access sensitive financial information.
8- Can Be Accessed From Anywhere Anytime
Choosing a cloud-based accounting tool gives you the flexibility to work from anywhere. You can access the necessary financial data from anywhere and at any time. All you will need is an internet-connected device.
This is great for decision-makers who often travel for business purposes. You will be able to quickly process a payment, check a document, create financial reports, and more without even being present in the office.
However, make sure that the accounting tool you choose has a mobile app so you can securely log in and view data as and when required.
9- Make Invoicing Easier
Invoicing is a tedious and time-consuming task. And, if done in a hurry, the chances of errors are high. However, with accounting tools, you can create digital invoices within minutes.
The accounting system will use the previously recorded data to create the invoice. All you need to do is enter the date and party involved. And the tool will do the rest automatically.
This is extremely beneficial as it allows you to quickly send reports to clients (without making them wait for the exact payment details), leading to higher customer satisfaction.
10- Support expansions with Scalability
As your business grows, so will your accounts. From adding new employees to onboarding clients, a lot goes into expanding operations. In the traditional bookkeeping system, you will have to hire more accountants to keep things running.
However, with an online accounting system, all you will need to do is upgrade your plan. You won’t have to go through the hassle of finding new software or hiring accountants, for that matter.
And not only that. You can even downgrade your plan as and when required. This freedom allows you to keep your business running smoothly.
Though an accounting tool itself is an investment, it can prove beneficial in the long run. It doesn’t matter if you are a startup (with 10-15 employees) or an enterprise with 500+ staff, an accounting tool can enhance your operations.
However, make sure to choose the right accounting tool for your business to get the most out of your investment.