Computerised Accounting Systems: Types, Features & Benefits

Businesses, regardless of size, are inclined more towards computerized accounting tools. These systems use technology to manage financial transactions and reporting. They significantly enhance the efficiency and accuracy of accounting processes. 

SoftwareDekho's team put together a detailed piece to help understand them better. Read on to find out the key features, benefits, and challenges coming up with computerised accounting systems. 

What are Computerised Accounting Systems?

Computerised accounting uses software tools to manage financial transactions. Instead of bookkeeping and manual data entry, you can use computers to manage your company accounts. This reduces errors and redundancies, providing built-in controls for your accounts. These tools:  

• Automate important tasks like billing & invoicing, bookkeeping, payroll processing, etc. 

• Records purchases, sales values, and all financial transactions. 

• Store, manage, and access data using computerised accounting. 

• Integrates with other business tools for a seamless workflow. 

It comes with various benefits like improved accuracy, faster processing, and significant cost savings. 

💡 Did you know that Accounting varies based on the scope & purpose of financial information? Here’s how. 

Types of Computerised Accounting Systems

Computerised accounting tools come in various types, catering to different business needs. Here are a few important ones: 

General Accounting 

These work best for small and medium businesses. They help with payable and receivable accounts, basic financial reporting, and general ledgers. General accounting software is the best choice for managing regular financial tasks.  

Non-Profit Accounting 

Non-profit organisations have different requirements like assets management, grants, donations, and expenditures, available funds, etc. Non-profit accounting tools cater to these specific needs, helping stay compliant with regulations. 

Small Business Accounting 

These tools are specially designed to cater small businesses. With basic accounting features, it is generally cloud-based and user-friendly. Accounting tools for small businesses are ideal for budding entrepreneurs who may not have much accounting knowledge. 

Industry-Specific Accounting 

Every industry has unique accounting needs. So, every industry looks for tools tailored to their business requirements. Industry-specific accounting tools are customised solutions to address unique requirements and problems of different sectors. 

🧐 Curious to know more? Check out Why Real-Estate needs Special Accounting Software.  

ERP Systems

These are comprehensive tools that handle various business functions like accounting, human resources, inventory, etc. ERP tools are ideal for large enterprises. These systems provide a holistic approach for smooth operations. 

Computerized Accounting Software Features 

The exact features of any computerised accounting system depends on its type. But, the following are general for them all: 

📘 General Ledgers: General ledgers are the central repositories for any transaction. Computerised tools for accounting provides and maintains detailed ledgers, helpful for accurate financial records. 

📊 Financial Reports: Computerised accounting tools generate a wide range of financial reports for your company. Income and cash flow statements, balance sheets, tax reports, etc., are available at your fingertips. 

🧾 Tax Calculation: It calculates taxes, prepares IT returns, and helps stay compliant with tax laws. This feature reduces the risks of penalties, late filings, and missed tax payments. 

🏦 Bank Reconciliations: Most computerised tools for accounting reconcile your company’s bank statements with financial records. This ensures every transaction is recorded and avoids missed entries. 

💸 Payable & Receivable Accounts: These tools also manage the money owed to your firm (accounts receivable) and the money owed by your firm (accounts payable). You can check payment statuses, outstanding invoices, and due dates for every payment. 

🌍 Multi-Currency Transactions: Modern tools for computerised accounting support multi-currency transactions. They can convert currencies and handle international transactions. 

Advantages of Computerized Accounting Tools

Computerised accounting solutions provide various advantages for businesses. Here are a few: 

⚡ Speed & Accuracy: Data is entered into a computer in its formats and in-built customer databases. Supplier details, stock records, etc., are quickly available within the system. The room for errors is quite low, as you mostly have to make one entry for each transaction.  

🔄 Up-to-date Information: Every record within the computerised systems is automatically updated. So, account balances and customer accounts are always up-to-date. You always get the most recent information whenever you access any account. 

💰 Costs: Of course, you need to invest in the right tool. But labor costs, bookkeeping costs etc., are greatly reduced. Also, fewer errors help with significant financial gains over time.   

🔗 Integrations: Present-day computerised accounting software integrates with several business software like CRM systems, payroll systems, inventory management systems, etc. 

📈 Scalability: You need better systems as your business grows. These tools can easily scale and handle increased transactional volumes. They can also handle additional financial requirements, without compromising overall performance.  

🔒 Data Security: These tools offer robust security features. They can protect sensitive financial information with encryptions, access controls, etc. 

Challenges with Computerized Accounting Systems

While computerised accounting systems offer various benefits, they also come with baggage. These are the potential challenges companies can face: 

🖥️ Technical Failures: Regular power outages, virus attacks can disrupt operations. The software can also have bugs or can crash. It needs regular updates and maintenance for smooth operations. 

💵 Initial Costs: Buying the software and the initial setup can be costly, especially for start-ups and small businesses. 

🧠 Complexity: People can find the tools difficult to use, especially if they have limited accounting knowledge. 

🛡️ Potential Fraud: Since most data is stored on the cloud, hackers can have access to financial records. 

💾 Worried about online frauds? Here’s a detailed guide on backing up your accounting database. 

Closing Thoughts: 

Computerised accounting changed the way companies handle their financial transactions. Though there are some limitations, these tools provide various advantages over traditional bookkeeping techniques. 

Looking for a vendor to implement Accounting software for your business? Get in touch with us and our experts will help you find the best match!