What is Financial Accounting Software- Things you Need to know

It is only customary to say that financial accounting software is a computer program which takes up the accounting tasks in an automized manner. Namely, functions like accounts payable/account receivable, audits, bank reconciliation, etc. Moreover, the accounting business is turning towards software because accounting is a process which demands accuracy and effectiveness, which are well-achievable through software. Besides, using a financial accounting software system eliminates human error from your business and accelerates the whole process of accounting.

However, the software is not a one-time-done solution to your accounts department; one needs to update the software in order to keep up with the advances in the business and the compliance guidelines. Not doing so will again introduce challenges in the accounts management of your business, i.e., as good as not having an accounting software at all. Speaking about accounting software, there can be different needs of companies as far as accounting is concerned. That is, the approach towards the pricing and applicable rules is different from project to project. Besides, the scale of a business also determines the sophistication of software needed.

What are the different types of Accounting Software?

The variety in the business fields and variables, demands an evolving financial accounting system software for your business. Basically, the differentiation of accounting software is based on the tasks it serves. Below given are some types of accounting software.

1. Time & Expense management systems

This type of accounting system is designed to pinpoint the time utilization in the business. That means the software can find out the bottlenecks in your business practices, which are wasting more time. Also, they can be configured to manage and automate the billing cycles, helping to accelerate the revenue collection process of your business.

2. Payroll Management systems

This accounting system software is used to manage the tasks revolving around account payable/receivable. The duties include the execution of payments, deductions according to the policies, tax forms making, payslip generation, etc. So, this type of accounting software will help with making accurate and detailed reports for the cash-flow in and out of your business.

3. Billing and Invoicing Systems

Billing and invoicing type of accounting software help with the day-to-day tasks of the company like following up the due payments, sending an acknowledgment of payment to clients, etc. These activities help to keep the numbers accurate in the long run and maintaining a professional image in the market.

4. Enterprise Resource Planning

This is a large format of a financial accounting system software designed to manage all the areas of business which affect the financial state of the company. Apparently, the software handles all the critical regions like product planning, inventory management & control, material purchasing, accounting, distribution, marketing, finance, and HR.

Updated Features of an Accounting Software

Financial accounting system software market is an evolving one, but it is not a very creative one. Having said that, it is clear that there is not much frequency of updates introduced into the basic structure of the software. However, there is a standard set of features in the accounting software and some additions updated at the latest. These are listed below.

1. Accounting

For accounting software, the accounting features are apparent. These may include ledger, accounts payable and receivable, and bank reconciliation. There can be different additional accounting practices involved by different vendors.

2. Budgeting and Forecasting

This is an accounting practice which demands a certain level of precision. This is due to the need for analyzing the current year status and based on it, forecasting the budget for next year. This feature helps to maintain the accuracy in your business.

3. E-Billing & Invoicing

This is a common feature included in all the modules because e-billing(electronic billing) and invoicing are one of the basic accounting practices involved in every business.

4. Inventory management

Inventory management is another typical requirement in accounting software modules. This feature gives a birds-eye view of the inventory, allowing managers to have an overall idea of the status of the stock.

5. Fund accounting

This feature generally appears in modules which are typically in use for government organizations and non-profit organizations. This feature includes processes like grant management, fund expenditure, etc.

Recently Introduced Features Updates

1. Management of fixed asset

This feature has increased the accuracy of accounting practices. The processes managed by this feature are cost records, audit history, depreciation calculation, resource allocation, etc.

2. Project accounting

Project accounting is a feature for taking up different accounting processes for different types of project for companies. This is extensively famous in construction businesses where costs and rules applied are different for various projects.

How does Accounting Software help your business?

Accounting surrounds the sensitive areas in every business and having a flexible tool to control it is very helpful. There are a lot of other benefits of using accounting software; some of them are listed below.

Security

The most crucial aspect for the management of your accounts successfully is maintaining the privacy and security limited to trusted individuals. As mentioned earlier, accounts play around sensitive areas of your business, like budgets, expenditures, dues, etc. So, having safe and [secure software] for managing accounts takes a lot off your shoulders.

Compliance

Compliance with the existing guideline for businesses like GST is of the essence because non-compliance will get you into a mess of lawsuits. So, it is beneficial to have a software which is designed to have GST compliant software at your disposal.

Easy of Operation

Introducing accounting software will organize the workflow in your business. Also, this includes ease of operation in accounting as all the account related tasks are on the same dashboard.

Pricing

As far as the subject is software, the price will go up as more and more features start appearing in the package. Also, accounting software is a high priced category. However, there are free modules available in the market which provide all the necessary functionality for accounting practices.

There are some versions or premium functionalities still operating mainly in large-sized enterprises. Having said that, it does not mean a performing system for accounting cannot be found for lower sized businesses. Generally, this software category comes with a flexible monthly and yearly subscription. While some offer services with one-time payment facility, not to forget the free trails provided by almost all the vendors.

Conclusion

At the end of the discussion, it is safe to say that accounting software is a highly beneficial element for any business. Moreover, there are not much variety of things to consider before buying software, just a survey of essential features, security, and pricing will suffice. Owing to the versatility of financial accounting software, there are different pricing for different modules, and it is up to the buyer to check the appropriate software for business.