Technology has become a major player in our day-to-day professional life. We use Information Technology (IT) in almost every area of professional and personal life. As like other profession, accounting has also changed dramatically by using IT software, tools and techniques.
Computerised accounting has become more popular in recent days, and a number of small to medium size enterprises use commonly available computerised accounting software. However, the big companies and corporate organisations use bespoke accounting software. There are a number of computerised accounting software commonly available in the market for small and medium size enterprises (SMEs). To name a few – Sage, Xero, QuickBooks, FreshBooks, Zoho, KashFlow and Paychecx Online are the most popular accounting software.
The main purpose of using accounting software is to speed-up the process of recording accounting transactions. It automatically updates all the relevant records, generates reports instantly and most importantly, the skills which are required at workplaces and SMEs.
Advantage of using computerised accounting software
There are a number of advantages of computerised accounting. A few of them are as follows:
- Quick process: the computerised accounting helps process all transactions quicker.
- Less mathematical error: the chances of error is less; however, if there is any mathematical error, it can be found and corrected easily with a few steps.
- Reports and documents: a majority of reports and documents can be produced with just a few clicks. Can be saved in CSV or PDF file or emailed directly from the software.
- Automatic processing of data: entered data – double entry, customers, suppliers, invoices and credit notes are processed automatically.
- Easy data transfer: data can be transferred easily into computerised accounting software, it can be uploaded from word processing documents such as Excel and downloaded in Excel o pdf.
Risks of using computerised accounting software
As mentioned above, computerised accounting software is very useful to enhance efficiency and effectiveness in accounting and bookkeeping. However, there are risks in using it if the areas are not addressed carefully.
- Physical risks: data and information can be at risk if the computer is damaged, stolen, corrupted drive or system failed. It can be hard to recover data and protect from unauthorised access to information.
- Virus: virus from computer network or internet can be potential threat to the data in software.
- Legal: under the Data Protection Act (1998), it can be serious breach if data about clients are lost and misused.
- Software updates: computerised accounting software needs to be updated on a regular basis or else it may not function correctly and security may be compromised.
Solutions to the risks
A number of potential risks are mentioned above; however, they can be resolved by having an up-to-date IT policy, appropriate malware and anti-virus installed on the computer and its network.
The computerised accounting software are mainly in two forms – offline and online or cloud-based.
- Offline: the offline-based software needs installing into a computer or laptop and the computer need not to be connected to the Internet. It needs one time installation; however, the software needs updating on a regular basis to perform efficiently. It is recommended to back-up the data on a regular basis to secure any potential loss.
- Online: the most recent development in the accounting software is going online and cloud-based. Such online software can be accessed from anywhere and any devise provided there is an Internet connection. There is no requirement for data backup as it is taken care by the software provider.
It can be said that computerised accounting software is very important tool for SMEs to manage customers, suppliers and financial transactions. As mentioned above, there are two main types of software – offline and online; it depends on the business needs to choose the type of software.
The software is easy to use; however, there are trainings available by which effective operations can be learnt to use the software.