An accounting software has become a basic need for every business. The alternative method of maintaining accounts manually takes you days of effort to record transactions, post them to ledgers, create a trial balance and finally, prepare financial statements.
Imagine the time and cost savings if you can automate all these tasks. An accounting software empowers your accounts team to minimize errors and focus on high impact actionables.
In this article, let us understand the accounting software modules that can help your business:
1. Chart of accounts
The chart of accounts is the complete list of your ledger accounts. These are arranged based on whether they are assets, liabilities, capital, incomes or expenses. The chart of accounts gives an overall view of your business accounts. An accounting software automatically creates the chart of accounts, based on the ledgers you use in your business.
2. Billing
Whenever you make a sale, you are required to issue a bill or invoice to the customer. These bills should be accurate and must contain all the necessary information. It should also be compliant with the laws of the country.
Issuing bills manually is not a feasible task for any business. An accounting software will automatically capture all the details of the transaction you have recorded and input it in the invoice. This will help you eliminate any manual effort required for billing.
3. Financial reports
The Balance Sheet and Profit & Loss account are the two major financial statements of every business. An accounting software can generate these financial statements for your business, based on the transactions you have recorded. You will also be able to analyze these reports; compare, group and expand the details with the help of features offered by the software.
4. Cash flow management
Monitoring the cash flow using a cash flow statement is an important activity for every business owner. Doing this manually is a time-consuming process and hinders your ability to take quick decisions. An accounting software automatically prepares a cash flow statement, based on the transactions you record. It also projects your cash flow for the coming months and quarters.
5. Credit management
Managing credit optimally is an important skill for every business. In our article ‘Importance of credit management’, we have explained the reason why effective credit management is important.
An accounting software helps you manage your account receivables and payables. It helps you define credit limits and credit period for every customer. It notifies you when you cross the credit limit. It also helps you analyze credit trends and arrive at ideal credit limits and credit period.
6. Banking
Managing banking tasks is an integral activity for every business. This can include managing your bank accounts, cheque books, and reconciling bank statements. Automating these tasks can provide great relief to your accounts team.
An accounting software automatically reconciles your bank statements with your books and captures those transactions that you have missed entering in your books of accounts. Another good feature to look for is the ability to print cheques for payments, minimizing your efforts to write the cheque and possible chances of errors.
Using an accounting software can be a great investment for your business today and for your future. It can help you vastly minimize manual efforts of accounting as well as give you extra analysis and insights which would be difficult to get otherwise. Look for the above modules when you evaluate and buy an accounting software, to get the maximum mileage from your investment.
