While traditional accounting includes a collection of processes, procedures, and controls designed to collect, record, classify and summarize financial data, computerized accounting utilizes computers and accounting software to record, store and analyze financial data. A computerized accounting system brings with it many advantages that are unavailable to analog accounting systems. If your organization hasn’t implemented it, it’s time for the shift.
Accuracy
Computerized accounting increases accuracy by eliminating human errors in calculation. Manual bookkeeping processes are prone to making a lot of mathematical calculations inaccurately early in the process which would have a great impact on the end balance. When this whole tedious process shifts to the computerized accounting system, accountants will be able to process more information because of its efficiency and ease of use. Computerized accounting also allows you to improve inventory control and payment collection, efficiency in time, and improving cash flow.
Time and cost savings
Computerized accounting allows organizations to increase efficiency by its automation done by the software that would configure for each entry automatically, rather than having a staff member work on it.
Organization
A computerized accounting system helps businesses stay organized. Accounting is interlinked with other business processes, such as sales, purchases, banking, and taxation. In manual accounting, in case a transaction is bound to affect different processes, you need to record it at multiple places to ensure that all the relevant ledgers are affected. In computerized accounting, all it takes is one instance of data entry, and all the integrated processes are accordingly taken care of.
Storage
Data can be stored quickly in computerized accounting. Companies perform backups on the system regularly to avoid losing any information. All transactions can be saved and backed up, in case of fire or other mishaps. You cannot do this with paper records unless you make copies of all pages, which in itself is a long and inefficient process. Also in case of a mishap, computerized systems allow for quicker recovery from data loss.
Security & management
Accounting allows for a robust system for storing business data, such that it requires lesser efforts and costs to store data, and also allows for automated security levels to be set within the organization, which will give the business owner peace of mind.The latest data can be saved and stored in offsite locations so it is safe from natural and man-made disasters like earthquakes, fires, floods, arson, and terrorist attacks. In case of disasters, the system can be quickly restored on other computers.
In short, key business processes are taken care of much faster, saving up a lot of time for a typical business. But, most importantly, it allows the business to become more efficient and focus on business growth – all the while making sure that it stays compliant as well – which is the need of the hour in light of recent happenings.
Seamless reporting
With a manual system, it can take time to locate the information from each book and compile it into a report. Under a manual system of accounting, data needs to be collated, aggregated, and compiled to generate a particular report. In a manual system ‘What If?’ analysis will be tedious. Computerized accounting allows for quick data retrieval. With a computerized accounting system, information or reports for a particular period can be compiled quickly, as accounting software will automatically pull all relevant ledger entries for the periodic reports. Computerized systems can also provide instant reports on stock evaluation, profit and loss, receivable and payable reports, payroll and sales analysis, again, allowing faster adjustments in your business strategy.
Regulatory compliance
Reports are required regularly from various government agencies. a computer system can organize their data and reports to comply with these statutory requirements savings time. Compliance is one of the crucial activities for any business, more so now, because of the introduction of GST. Businesses ideally want to be compliant, but also want to spend the least possible time on it, because of its time–consuming nature. Be it direct taxes (income tax, 44AB audits) or indirect (GST), it is almost next to impossible in the current day to handle all of this in manual books. Computerized accounting is the way forward, which allows for quick checks for transaction-level compliance, matching of books, and ultimately filing accurate returns based on accurate business data.
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