7 IMPORTANCE OF ACCOUNTING SOFTWARE IN SMALL AND MEDIUM SCALE BUSINESSES
The importance of accounting software in small and medium size businesses became one of my favourite topics after spending some time working with small business owners in Lagos, Nigeria. I was surprised to see that some still stumbled along using the complex and inefficient state of manual accounting. Out of curiosity, I carried out a mini survey in a popular commercial area in Lagos and found out that over 90% of small and medium scale businesses that managed to have a functional accounting system do not realise the importance of automating their accounting system – no wonder the idea of accounting information system still sound strange!
SEVEN IMPORTANT BENEFITS OF USING ACCOUNTING SOFTWARE IN TODAY’S BUSINESS WORLD
In this section are some of the benefits and importance of choosing the right accounting software. Be aware that this is not an exhaustive list, but just an indication of what you might be missing out by not having an automated system of accounting as part of a long term planning strategy and business model.
ERROR PROOF /SECURITY OF FINANCIAL DETAILS
The aim of buying accounting software is to significantly reduce the amount of error made in our financial transactions. We also find it easy to secure our financial details and that of our customers when we deploy reliable automated system that accurately captures our daily transactions.
By automating most of the recurring accounting functions like budgeting for instance, we can enhance the flow of activities in our business. Even the fasted human cannot compete with computer when it comes to doing routine jobs.
EFFICIENT AND TIME SAVING
Time, as we all know, is the new currency of the modern day. Therefore, any process which can save money should be highly encouraged. Efficiency in this context is achieved when fewer units of resources are used to produce more. This is where the benefit of accounting software is really felt.
COMPLIANT TO LEGAL AND REGULATORY REQUIREMENT
In some jurisdictions, it is a legal requirement for a company to meet a minimum level of automating its accounting system before being listed or quoted on the stock exchange. Would you as a manager allow your business miss out on one of the most importance source of finance just because you are reluctant to embrace change?
Over the years, through what ISACA called VAL ITTM, (VAL IT is a proprietary framework of the Information System Audit and Control Association which any company can customize to suit its need) it has been established that information technology infrastructure should only be deployed when it would add value to the business as a whole. One way of looking at this value adding stance of IT (which deploying accounting software is part of) is through its cost saving ability. When deployed and implemented rightly, accounting software should help to reduce the running cost of a company.
AIDS MANAGERIAL DECISION MAKING
Decision making is one functions of management which can only be achieved if managers are equipped with the right format of information at the right time. Most accounting software come with a decision support feature which allows business process owners to generate useful information that can aid quality decision making within a short time. The importance of accounting will be seriously undermined if the accounting information generated from the process of accounting does not satisfy the exact needs of the recipient, accounting software does just that. Capital budgeting, investment appraisal and what if analysis, for example can all be done in a twinkle of an eye using the right tools, thereby allowing managers to face the more important issues facing their entity.
POSITIVE PROJECTION OF COMPANY IMAGE
The survival of a company largely depends on how the public perceive it. No one will bother spending a dime on PR if its impact on corporations is not significant. Using the right technologies and IT infrastructures is one veritable ways of projecting a positive image of an organization. I would be more confident dealing with an organization that has the right working tools than one without. Gone are the days when purchasing technology is done just for the sake of owning them, they actually needs to be put to use; ensure that you actually use your accounting software.
I can go on writing about the importance of accounting software in business but I have to stop here as the point of writing this article; which is to get you thinking on how to improve the quality of your investment has been achieved. However, I would like to highlight one point before I leave. Buying the best accounting software is not the same and cannot be the same as hiring an accounting firm for your accounting needs. It is the management function to improve processes in any entity; be it commercial or non commercial. This explains why good managers of corporate bodies rely on tools that help promote the chances of achieving organizational goal of a business.