How to Cut Down on Costs Using Accounting Software

While the bookkeeping service offered by an accountant can help you do with many things, such as get your paperwork and finances in order to make your business run at its most efficient, you will still have to do a lot of the work yourself.

Accounting software is a type of program that every accountant, bookkeeper, and business owner uses in order to not just collect information on the state of their businesses, but also make a report on their financial viability and progress.

The right accounting software for your business is one that’s specifically tailored to suit your needs, and can give you an insight as to how your business is doing not just financially, but whether any decisions you make can in fact be a boon or a bane to your business.

Different Types of Accounting Software

Accounting software is generally classified into the following categories: spreadsheets, commercially available, enterprise-resource planning (ERP), and custom accounting.

• Spreadsheets – Many businesses often rely on programs such as Microsoft Excel and Google Spreadsheets in order to keep track of the crucial details in their business.
  
  
• Enterprise-resource planning (ERP) – ERP software adds everything into a single large database, which gets rid of the problems of having different types of accounting software that may be specific to a certain department.
  
  
• Customized – This type of software is specifically designed for organizations whose demands can’t simply be met by other software. They also tend to be the buggiest, a choice not recommended by many accounting services for small businesses.

It’s important to note that business owners and accountants alike use two or more of these types of accounting software in order to keep track of their business. This is because each type of software has its own strengths and weaknesses.

For instance, basic spreadsheet programs such as Microsoft Excel may lack the added features that would make it easier to keep track of expenses, and instead focus almost strictly on the spreadsheet files.

Meanwhile, commercial ERP software (and even customized, company-specific programs) would incorporate these features and file names into a database that can be compiled and sorted for greater convenience.

How to Use Accounting Software to Cut Down Costs

Large businesses often spend between two and five percent of their total revenue in the proper training and staffing of internal accounting departments, which drives up costs in things such as employee benefits, training, accounting software, or even hardware and office supplies.

However, in the case of small businesses, keeping track of expenses and income, as well as payments, can easily be done with the help of a reliable accountant and the right software that caters to all your bookkeeping needs. Some of the basic tasks accounting software can help you with include the following:

• Invoice processing – Commercial accounting software often allows you to create a database of contacts, which makes invoicing a more convenient experience.
  
  To create an invoice, entering information such as the customer’s name, invoice number, dates, and product/s and account/s is vital. This is because this will serve as a record for the money that you are owed, and the same could be said vice versa.  
  
  
• Tracking income and expenses – Accurate financial records need regular and updated inputs, and these will show you exactly where your money is coming and going. Vendor invoices are perhaps one of the best ways that you can track these, as they can serve as a form of online receipt.
  
  
• Sending online payments to vendors – Certain commercial software can even let you pay your vendors online. This software simplifies, compiles, and organizes the different types of input in your database, which is then presented to you in a way that will let you know how much you owe your vendors and when their payments are due.
  
  
• Organizing financial statements – Having a digital back-up for your accounting records and financial statements, as well as income statements and balance sheets, is needed if you plan on filing any forms with minimal hassle.

You can not only view your income statements and balance sheets from within your software, but your financial report can even be automated as long as the software is keeping an accurate track of your cash flow.

Security is also not an issue for most commercial ERP software, as your data will often be encrypted by the software when you do decide to upload it to an online database.

The Difference between Low- and High-End Software

For instance, low-end to medium-end accounting software that most business owners use (especially beginners) tend to not have the features of more specific and tailored software used by other, more established business owners.

High-end accounting software can also not only be expensive to purchase, but for some companies who need specific features incorporated into said accounting software, they tend to make their own that suits their needs, which makes it buggy most of the time. 

Conclusion

Saving time from the administrative duties of a bookkeeper means that you and your employees are now more able to focus on your core mission, which allows for easier transactions in your business as well as a much easier management.

This is also one of the reasons why aside from using accounting software, many businesses also tend to outsource accounting services to a third-party accounting firm.

Timely, accurate records that are made possible by outsourcing accounting services to a third-party accounting firm will give you more than just complete visibility and insight into the overall financial health of your business.