How Accounting Software Can Plug your Financial Leaks

How Accounting Software Can Plug your Financial Leaks

Financial Management

3 minutes Read | Published December 7, 2020 | Jahra Roxas

Accounting software is important to any business that wants to keep track of their financial data so they can optimize the resources at their disposal. More importantly, these solutions help automate many financial requirements that your company needs beyond its cash flow statements. In recent years, they have been helping automate invoicing, taxation, payroll, inventory management, and other features that make life easier for the company as a whole. 

Because of the functionality and the convenience that accounting software packages provide, more businesses are using them to help them with their day-to-day operations and resource planning. This is especially true for SMBs which need to be able to know the state of their finances at all times as the business environment has changed dramatically.

But accounting software does more than just automate your processes---it also helps in making sure that your finances are airtight. It also makes it easy for your finance team to see a better picture of what’s going on in the company’s finances and make sure to do something before problems arise.

There are four ways that you will be able to catch possible financial leaks and keep it from bursting your finances wide open. 

  1. Completion efficiency

One of the biggest problems of accounting done manually is that its process can fall behind in inputting the financial statements that go through the company every day, such as transactions, sales, and billings, among others. The accounting software, on the other hand, gives the managers an overview of profit and loss, while providing data about these figures on the granular level. At any given time, management will have a solid idea of the fiscal health of their company---and can take action or make decisions to do a course correction, if necessary.

  1. Reduction of costs

Speed and efficiency gained from technology can also help companies reduce costs and allocate resources on where they matter the most. This means that costs associated with manpower and administration can be reduced and that a smaller team will be able to do more. This is especially important given the current conditions that the COVID-19 has caused. 

  1. Reporting accuracy

Accuracy is another important factor that could solve many problems in the area of finance. Without an accurate assessment of their actual bottom line, the company managers can make unwise fiscal decisions or simply lose track of their expenses.  It can show the resources that are being wasted, the billings that are not being collected, and the units that are not hitting their sales targets. It can reveal the operational deficiencies that are siphoning needed monies from the organization.

  1. Streamlining of tax filing

The accounting software can double-check and verify the precision of the financial statements that your team has just made. It can prevent you from paying penalties later on, due to mistakes that you were not able to catch. It can also read the digital fine print and alert you to stipulations, conditions, and other requirements that you might have to pay additional money for. 

Accounting software is becoming more essential as, according to one Avidxchange survey,  financial experts are experiencing great stress in order to come up with analyses and evaluations that can help their companies blunt the impact of the coronavirus’ economic fallout.

As cited by Avidxchange, accounting software has saved even nonprofits like Harpeth Hall. The company was facing two major problems:  their financial process was taking an extraordinarily long time to complete; and the possibility that their data entry could be in error,  made possible by double entries that were inputted. These mistakes and the overlooking of approvals were proving costly and causing the organization to fall behind in their commitments.

Upon employing an accounting software solution, the organization was able to enter their data more efficiently. The tool has also made it easier for the organization to comply with and complete their requirements during audit season.

Business Wire has forecasted the growth of the accounting software market as more financial experts have come to rely on the solution. This year has seen a 5.63 percent growth in the market just for the first half of the year, and is predicted to accelerate growth by 6 percent. That’s an incremental increase of US$1.64bn.

The economic impact of the coronavirus has undoubtedly caused damage to a lot of businesses, with many eventually leading to closure. Accounting software can minimize the blow and even stop a downward slide by showing you where your organization currently stands financially---and revealing the processes that just might be causing you unnecessary loss, which no company can and should afford, especially this time. 

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