Accounting software is any computer program or digital platform designed to assist accountants, bookkeepers and business owners in their efforts to record and report financial transactions. Accounting software functionality can differ widely depending on the brand, use case, and type, and organizations with more complex accounting needs will sometimes work directly with the creators of this software to produce a custom solution suited to their exact needs. Meanwhile, smaller organizations will often simply use accounting software as it comes from the company that produces it.
Accounting software is generally used to make accounting more organized, easy, and efficient, while automatically handling tasks that would be cumbersome, difficult, or time-consuming if completed manually. These software solutions are also designed to make organization of accounting and financial documents easier and more searchable, ensuring documents from the past can be found easily.
Popular producers of accounting software include SAP, Oracle, Microsoft, and Intuit. Bill.com is designed to integrate with all of these software platforms, as well as offering various degrees of integration with a range of additional accounting software programs.
Accounting software is used by nearly all businesses to help make the process of accounting both easier and more accurate. Even the most basic accounting software allows users to engage in detailed tracking of all financial information, including transactions and analysis, while also providing the ability to instantly complete large calculations and generate reports that can be easily read and understood by the business.
Before accounting software, all accounting tasks had to be completed manually. Even with the use of digital calculators, figures had to be inputted manually and then summed manually, then transferred to be recorded either on paper or computer.
One of the other advantages of accounting software is that it allows for financial information to be stored digitally rather than in physical form. Not only does this dramatically reduce the amount of space required to store financial information, but it can also help keep the data secure thanks to automatic backups. It also means that, with the advent of cloud storage, financial information can be accessed from anywhere with proper authentication while still remaining fully secure and compliant.
While accounting software differs from one product to the next, a quality accounting platform should have some core modules that allow for the full management, analysis, storage, and reporting of a company’s or organizations financial information.
Important modules that should be included in business accounting software include:
Ledger, or company books
Inventory & Stock
Bookkeeping (for recording all payments and collections)
While the modules listed above should be considered essential for almost any business, there are also other modules that may be added as necessary for specific types of companies, industries, or accounting needs. These include:
Electronic payment processing
Not only should effective accounting software offer all of these features, but it should also be packaged in a simple-to-use, intuitive interface and platform. Accounting is an inherently complex and sometimes confusing process, so the best financial accounting solutions make the process as streamlined and straightforward as possible— all without sacrificing computing power or capabilities.
When it comes to choosing accounting software, businesses have many options available. Intuit produces software known as QuickBooks, which is generally best suited to small or medium sized businesses looking for the basic functions necessary to manage their accounts and financial information. Meanwhile, larger organizations will often opt for one of the offerings from Microsoft, Oracle, or SAP, and in many cases will customize the software based on their individual needs.
Features to look for in advanced accounting software offerings include abilities such as batch management, document management, multi-currency transaction recording, inventory reporting, and more.
Most accounting software options can either be deployed from a physical location or server, or from the cloud. Cloud storage offers added convenience, but some organizations prefer to store their accounting software and financial information onsite because it makes them feel as though it’s more secure.
Pricing for accounting software is often either a flat subscription on a monthly or annual basis, priced based on the number of users, or organized into different tiers based on the capabilities desired by the business or accounting firm.
For large implementations, representatives from the accounting software company will come in-person to help set up the software and show how it works for those involved.
One of the most important use cases for accounting software is in the case of audits, whether internal or external. Internal audits are conducted by companies that suspect there may be improper accounting practices, mistakes on the books, fraud, or simply when they feel it’s time to assess their accounting practices to ensure accuracy and efficiency.
Meanwhile, external audits from regulatory bodies or the IRS can occur at any time, and require businesses to offer up detailed and accurate financial records for review.
Quality accounting software can be essential for both internal and external audits, ensuring that necessary data and reporting is readily available and easy to access. This can help streamline the (sometimes unpleasant) auditing process to ensure it’s both as effective, accurate, and quick as possible.
The content found here is for informational purposes only, and not for the purpose of providing advice, including but not limited to, financial, legal, or tax advice. Any opinion found here does not necessarily represent those of Bill.com.