When you start a small business, you’ll probably find yourself doing most of the accounting work manually. This can be easy enough when you don’t have many transactions, but as your customer base grows and you find yourself accepting and receiving more and more payments, this becomes more difficult to manage. Handling large amounts of data like this is time consuming, and there’s a higher chance of making errors.
Accounting software offers a solution to this. By automating your processes, you can save both time and money, all while reducing the risk of potential errors. Keep reading to find out more advantages of accounting software for your business.
What is accounting software?
Before getting into the benefits of accounting software, it’s a good idea to establish what this means. Put simply, this refers to any application that assists you in processing or recording transactions, whether this refers to payroll, tax payments, accounts payable and much more. Some of the main uses of accounting software include:
Automation of invoicing and billing
Making tax calculations
Creating reports and analyses of transactions
Management of inventory
These are just some of the most common uses of accounting software, and there are many other possible functions.
Accounting software for invoicing and billing
A key benefit of accounting software is how it can assist you with invoicing and billing. These are hugely important functions as they provide your business with revenue, but managing these can be a tedious and time-consuming job when you have to do so manually.
Accounting software can address these issues by automating the process. This is especially useful when you have repeat customers, and you can set up software to automatically submit an invoice as soon as an order is placed. In addition, you can create reminders for your customers, meaning you can reduce late payments without having to chase up customers yourself.
Advantages of cloud-based accounting software
Services that work through the cloud offer an additional advantage. Accounting software with this capability can be accessed any time, anywhere, meaning you can view statements or even send invoices while you’re on the go.
What’s more, cloud-based software allows for much easier collaboration. All team members can work on the same real-time data, and this instantly updates for anyone else using the system. You can also change permissions so that different users have different levels of access to the data.
Perhaps a less obvious benefit of accounting software is the increased level of security it can offer your business. While computer files can be vulnerable to hacking, data that is stored on accounting software is protected by various layers of encryption algorithms, meaning it won’t easily get into the wrong hands.
The data is also synced regularly, so it is continuously backed up and there is a lower risk of losing it. By avoiding manually backing up data, you save yourself both time and money.
Traditional accounting methods are subject to human error, so using software offers an additional advantage. Accounting software is much more accurate than calculating accounts manually through spreadsheets.
For example, if you have created a number of new entries that do not balance, the software can automatically detect this error and even highlight potential causes for it. You can therefore detect the error before you even submit the accounts.
In addition, you can reduce errors that can occur when different accountants are collaborating with the same data. Since cloud-based software is always in sync, you avoid the risk of one employee working on a dataset that has not been updated since someone else changed it. In this way, accounting software allows you to effortlessly merge changes and work together on the same data.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.