Forget Spreadsheets: Here’s How Accounting Software Can Save Small Business

Forget Spreadsheets: Here’s How Accounting Software Can Save Small Business
|Updated on: October 17, 2022

Keeping track of financial transactions is essential for every business. For a small business, it may be initially easy to manage this manually. But as the business grows, it becomes increasingly cumbersome to maintain accounts manually. Manual maintenance of the accounting process may also slow down the process of generating invoices, bills and other paperwork slowing down operations. Using software to manage accounts is the obvious solution. Accounting software helps to record financial transactions, generate reports and perform other essential accounting functions in a business. However, not all accounting software is created equally. Some may be very simple recording systems while others offer end-to-end features. Let us examine the advantages of computerization of accounting regardless of the type of software used.

Why Small Business Needs an Accounting Software?

Best Practices to Evaluate, Purchase and Implement Accounting Software

What is accounting software?

Accounting software is an application that helps a company record its financial transactions. Traditionally, manual accounting systems used physical books called ledgers to maintain accounts. An accounting software replaces these ledgers and allows the company to record their transactions using the software. More advanced software will also allow the business to generate the reports that are required for audit and other statutory purposes. A complete software such as Tally may also help the company to analyze the data and create detailed reports. It will also help manage other aspects of the business such as payroll, inventory etc. Accounting software helps prevent repetitive tasks and helps easier auditing of the accounts.

How accounting software can save businesses

In a business environment that is highly competitive, a small business must grab every advantage that will reduce costs and improve efficiency. Computerization of repetitive tasks saves time, money, and labor. It also improves the speed and efficiency of operations. A small business can do more with less time and money invested in maintaining accounts.

Time is money - save time

When you start out, manual accounting may seem to be easy enough to implement. But as business volumes grow, a manual accounting system can become a bottleneck that slows down all the related tasks in the company. Volumes and the increasing complexity of the business may call for more manpower just to handle the extra accounting work. This is an added expense for a business. The company will need to create invoices for inventory, bills for customers and reports for internal and external purposes. This consumes a lot of time and will always be much slower than an automated system. When this process becomes slower than the competitor’s processes the business loses its competitive edge.

A small business that invests in a good accounting system will be easily able to grow and handle additional volumes in the business without any compromise on speed or efficiency and at no extra cost. TallyPrime, an accounting software can easily cope with the needs of a small business and grow with it over time. An accounting software makes the creation of accounting entries easy and effortless. Managing all this data and compiling reports manually is a cumbersome, time consuming and error prone process. Automation makes report generation instantaneous and real time. It helps the management monitor the business better without wasting any time on waiting for reports to be created. A nimble business that is quick to react will be able to respond to the competition better.

Automation of account keeping ensures that there is accuracy in the ledger entries as well as important reports such as accounts receivable, accounts payable and inventory reports. A business can pay its bills on time and also keep tabs on amounts that are due to them easily. Maintaining optimal inventory levels is easier when inventory management is automated and integrated with accounts.

Improved security

Manual bookkeeping is not very secure. The security that a computerized system offers is safer than a ledger locked into an office cabinet. An accounting system such as Tally may also allow you to set different access levels for different levels of personnel in the company. The security algorithms keep your data safe from unauthorized people. In a competitive business environment,. Keeping your business information out of the wrong hands is essential.

Some computerized accounting systems may also allow you to access the accounts data remotely. So, if you are on the rapid and have to pull up an important accounting report, you can do so easily and securely.

Stellar accuracy

Most accounting errors are a thing of the past with the use of accounting software for small business use. In manual accounting, despite utmost care, there is the possibility of human error creeping in. Automation ensures that every entry reflects accurately and completely in all the relevant books. While there may always be a data entry error, an error caused by not updating a certain ledger or writing incorrect numbers are avoided.

Automation also records the history of each transaction properly. An accounting software for small business such as Tally would even maintain an audit trail. This ensures that anyone auditing the accounts will be able to trace the history of any modified transactions easily. This also indirectly prevents any fraud or malpractice by tweaking the books of accounts.

In the era of manual accounting systems, auditing annual accounts and balancing the balance sheet could sometimes be an arduous task. In computerized accounts, any incongruence is highlighted immediately and your balance sheet is straightforward to generate.

If you are a small business that is operating out of multiple locations, the synchronization of manual data can be challenging. Software solutions that are designed to synchronize all the company’s data ensure accuracy and efficiency.

The best reports are the ones with fresh real-time data. Manual reports will always have a time lag due to the time spent generating them. They will not reflect the latest data which may make a big difference to the report. A software-generated report is almost instantaneous and reflects the data in real time. It is quick and easy to generate exactly when you need it. There are no synchronization or time lag errors. When you present an important report in a meeting, you can be sure that it is fresh and accurate. Accurate real time reports help management make better decisions based on good data.

More actionable reports

Cash flow is one of the most important aspects of a business. When you are able to see exactly how cash is making its way in and out of your business, you can strategize better. Business decisions impact the bottomline of the business. You can also study the cash flows to see if a decision has had the desired effect on the business. Reports on cash flow are essential for good informed decision making.

One of the greatest advantages of accounting software for small business needs is the ability to generate reports. A basic accounting software will be able to give you standard reports. A more advanced accounting software for small business will also analyze the data and give you insightful reports. You can view the financials of your business from different viewpoints and make better decisions. Reports that give you the bigger picture and then drill down to the smaller details are very useful for decision making.

When brainstorming or planning your business strategy, you can view historical data and spot trends. Being able to spot positive trends will reinforce good decisions in the company. Being able to quickly spot issues or negative trends enable the business to course correct before it gets worse. A report is most useful when it helps you take action based on the actual facts and figures.

In most countries, taxes and other statutory reports and returns are to be filed online. An accounting software for small business such as Tally will generate the reports for you in the required format for quick and easy filing.

Advantage of mobility

Accounting software designed  for small business allows easy remote access makes doing business so much easier. Business people have a great advantage when they can carry all the information that they need with them. Accounting software that allows you to access your books when you are on the go are invaluable when you are traveling or away from your desk. You can pull up all the information that you need when you have an important business call. If you have a great idea out of the blue, you can analyze your business records to see how the new idea could impact the business.

Accounting software also allows you to create digitized reports as required. Instead of having an auditor physically visit your office to check on something, you can send reports across or enable remote access. Stakeholders and investors can be quickly informed of important  information through emailed reports.

Salespeople and other personnel can generate invoices, bills and other documents when they are on the move. Approvals and other important decisions are easier to request and obtain. The increased efficiency and speed enhances the productivity of the company. It removes the bottlenecks that are usually caused by slow moving paperwork and red tape.

Why should you make the move to an accounting software?

Spreadsheets are a digital version of the traditional accounting ledgers. They merely store the transactions in a digital format. This means that the entry of the transactions is similar but that the spreadsheet is not capable of posting the right amount to the right place as intelligently as an accounting software would. Spread sheets are mathematically accurate but do not posses any specific accounting capabilities on par with an accounting software. If you need to calculate something that goes beyond the spread sheet formula capabilities, you will still have manual work.

An accounting software as we have explained above can keep track of all the financial transactions of a company. Basic accounting systems perform simple accounting functions. Tally Prime, a complete accounting software has the capabilities to generate all the financial reports that you need at the click of a button. So, the manual work stopped at the entry of each transaction as it happens. Tally does all the accounting work for you.

In modern times, work expands beyond the confines of the office. Many business functions are now performed digitally. Reports that are submitted to authorities are also digital. Tally Prime generates all the reports that would be required by authorities, investors and other stakeholders with no manual work involved. It is also useful for doing business by eliminating the need for paper work and generating digital invoices, e-Way bills etc. Tally Prime lets you take advantage of the digital revolution to make your business accounting responsive, agile, efficient and accurate.

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