Accounting is an integral function of business; it is one of the primary business functions and also a crucial ingredient in making the business successful. Accounting involves keeping of financial records. Over the years, technology has impacted on accounting increasing the efficiency of the accounting process through the use of the proper accounting systems. Accounting systems help automate the accounting process, increasing the efficiency, speed, security, and accuracy of the accountants. There are two major accounting systems which are one, cash accounting systems, these systems are primarily involved in managing transactions that involve actual cash flow, the second is accrual accounting system: details of transactions are recorded regardless of whether money was involved. There are hybrid systems which combine the two, but the end goal of any accounting system is effectiveness in financial management. The question many small business owners ask is whether these accounting systems are essential to their business and the advantages of having them: in this article we try to answer these two questions.
1. Accounting systems increase accuracy
Accounting systems help minimize the errors that accountants are prone to make, enabling accurate financial reports. Accuracy is a must in accounting, this is sensitive department of any business as it deals with cash and the reports from accounting department are used to make decisions and set goals and objectives, inaccurate financial reports may lead to the collapse of the business as they steer business in the wrong direction, small business can leverage this advantage by using small business accounting systems.
Accounting systems also help detect a problem in the early stages before it impacts other departments and the whole business.
2. Effective planning
Even as a small business starts to grow they will need effective planning that will be guided by the financial reports. Small business accounting systems help the small business approach accounting in the right way, they are simple and tend to provide a package of tools that will enforce the best accounting practices leading to the correct financial statement. The reports from these accounting systems tend to be accurate and hence enable the business to carry out effective planning.
3. Accounting systems enabling smooth auditing
When financial transactions are recorded in accounting systems, these systems are smart enough to generate different kinds of financial statements from specific data. When auditing the firm accountants may have to work for long hours answering the auditors’ questions but with accounting systems in place, the auditors will have all their questions answered by analyzing the data in these systems.
4. Data security
Accounting systems have the capability of doing regular backups on the cloud on their own. Businesses can’t afford to lose financial data, and small business accounting systems ensure this does not happen.