Having a solid handle on corporate finances — from payroll management to budgeting to tax compliance — is vital for all types of companies. Even though small-and-medium enterprises (SMEs) might not have vast sums to manage, good accounting still helps to:
- Make sure that businesses don’t overspend
- Understand expected revenue to manage investments in growth
- Keep vendors and employees satisfied with on-time, accurate payments
- Avoid costly tax penalties
- Identify missing revenue, e.g., uncollected invoices
These are just a few of the many benefits of quality accounting, all of which small business accounting software can help facilitate.
What is accounting software?
Accounting software can be any type of program that helps manage accounting practices, whether that’s basic bookkeeping activities like creating monthly transaction reports or more advanced functions like annual revenue forecasting. Different types of accounting software will offer varying features, some more complex than others. So, you can choose one that aligns with your business size and needs.
Most types of accounting software, especially for SMEs, now run in the cloud, making it easy to implement and manage from anywhere. Larger organisations might instead opt for enterprise resource planning (ERP) systems if they need software that can not only manage accounting but also other areas like inventory management within one tool. But for SMEs, accounting software often provides the functionality and ease — with more advanced features than Excel — to manage areas like:
- Payroll
- Taxes
- Invoices
- Budgets
- Revenue forecasts
- Expense forecasts
- Expense reports
- Profit & loss (P&L) statements
- Bank reconciliations
Accounting software is often customisable and scalable to an organisation’s needs, so whatever accounting/bookkeeping processes you need help with, odds are there’s software that can get the job done. And if nothing off the shelf meets your needs, developing custom accounting software in-house or with a third-party developer could help you improve your accounting.
Benefits of Accounting Software
Accounting software offers several benefits over manual processes or Excel workflows. Some of the top benefits of accounting software include:
Accuracy
Accounting platforms tend to help organisations improve their financial accuracy. For example, accounting software can make automatic calculations, such as when adding up expenses for a P&L report. And while Excel can also automatically calculate numbers, that’s often dependent on inputting the right data into the worksheet and getting the right formulas in place. With many accounting tools, however, the calculations are drawn from data that automatically gets pulled into the system, so that can reduce the risk of human error.
Accounting software can also improve accuracies, such as by automatically flagging mismatches or inconsistencies. You might not realise just by looking at bank statements that the numbers don’t align with what’s in your expense ledger, but accounting software might automatically notify you of this misalignment.
Efficiency
Accounting software can also make finance teams and companies overall much more efficient. Not only does automating calculations and flagging inconsistencies improve accuracy, but that can save time too. Plus, accounting software can speed up workflows. For example, the platform might automatically send out reminders as invoice due dates approach.
Accounting software can also be useful for creating efficiencies around file management. Instead of digging through a physical pile of receipts, for instance, a finance professional can quickly search for the one they need that’s digitally stored within the accounting system.
Flexibility
Using an accounting platform, especially a cloud one, can give SMEs valuable flexibility. For one, finance teams can do their work from anywhere, rather than needing to be at their desks in a corporate office to look at physical paperwork.
Going deeper, accounting software can also give SMEs flexibility in terms of financial analysis. Many accounting platforms can deliver customised reports, whether that’s filtering by certain dates, only looking at certain categories of expenses, assessing spend per department, etc. Instead of going through the time and effort to look through standard reports to find the insights they need, such as to determine a department’s budget for next year, companies can gain the flexibility to analyse the specific areas they want.
Selecting the best accounting software for your business
There are many types of accounting platforms out there with varying features and complexity. Selecting the best accounting software for your business depends on factors like your company size, the integrations you may want with other software platforms and the specific financial functions you want help with.
Many accounting systems can likely provide you with benefits, but certain ones will be easier to use, better aligned with your budget, able to scale to your needs, etc. For example, you may want a system that has flexible pricing tiers, where you can start with basic bookkeeping services but add forecasting and more complex financial analysis features as you grow.
If you’re ready to explore your options to buy an accounting system, YourShortlist can help. We’re a technology consultancy using procurement best practices and data insights to save companies time and money. Our goal is to make business technology procurement simple, transparent, and cost-effective. We won’t charge you anything, and we won’t share any of your project details without your explicit approval.