Every business maintains accounts in some form or the other. Most businesses start out with maintaining accounts manually and gradually move to accounting software as the business’s transactions grow. However, most businesses don’t realise the amount of time and effort that gets wasted when they maintain accounts manually.
Efficiency in these areas could very well have given them the space to focus on the main activities of their business while leaving the mundane accounting tasks to accounting software. In this article, let us understand the disadvantages of not using an accounting software in your business.
1. Time-consuming accounting processes
When you maintain your accounts manually, each step in the accounting process is long drawn. To prepare important financial reports like Profit & Loss Account and Balance Sheet, delays running up to a couple of days are common.
This becomes even more evident as the volume of your transactions increases. To keep your accounting processes running, additional resources will be needed, because the amount of work to be done becomes huge.
2. High chance of accounting errors
There are high chances of errors when you maintain your accounts manually. Without a system to detect the errors made, finding the error and rectifying it also becomes a time-consuming process. As the probability of making errors is high, you would not be able to fully trust the data on which you make your decisions. This might result in inaccurate revenue figures and financial projections.
3. Low business efficiency
Manual account keeping leads to a situation where you may miss out on key opportunities and insights about the business. Performing the routine and mundane accounting processes over a long period of time results in employees feeling stressed, overwhelmed and inefficient. It is advisable to allow the software to perform the routine tasks for you and let your employees add value to these tasks by arriving at analysis and actions for your business.
4. Difficulty in tracking transactions
Accounting involves reconciling your books with your bank statements regularly. Another important task is also to keep track of the money you owe your suppliers and the money owed by your customers. It is important to ensure that you pay your suppliers on time and your customers pay you on time. Keeping track of all these things becomes a herculean task when you are managing all of them manually.
5. Difficulty in syncing invoicing, accounting and inventory
An accounting transaction can impact your invoicing, inventory, banking, etc. When you maintain your accounts manually, you need to put it extra efforts to ensure that your invoices match your books, and your inventory is in sync with the transactions entered.
A great advantage of using accounting software is that all you need to do is to enter your transactions. Once the data is entered, accounting reports, inventory numbers and credit management are taken care of by the software.
Performing your accounting processes manually has many disadvantages. As a growing business, you must ensure that your processes don’t become a roadblock to your growth. Using software for accounting can go a long way in easing your accounting tasks and saving human resources.
