Accounting software is a computing application used to collect, store, manage, process, transact, retrieve, and report a business’s financial data. It should help to simplify and automate the wide range of activities involved in day-to-day business accounting.
Functions of an accounting software differ by service provider. However, all systems have similar core features required by all businesses. Some software will limit you to the basics (like recording financial transactions only), whereas others have advanced tools that automate more accounting tasks like bank reconciliations, and daily bank feeds.
The pricing of accounting software also varies by vendor, with many vendors providing two versions of their software:
Nowadays, most accounting software are provided via the internet (cloud accounting) to ease access to information.
Accounting software are usually differentiated by their individual core modules (functions they perform). There are two modules to the software - the basic features and ‘add on’ features.
These are the most important features of accounting software. They include:
Accounts receivable - issuing invoices and keeping track of what customers owe
Accounts payable - Keeps track of your expenses and how much money you owe suppliers. This function should include features like purchase orders, bills, vendor credits, and expenses
Banking - links to your bank easing importing bank statements to your accounting system and making payments. Some software will also have advanced tools that automate bank feeds, match transactions, and perform banking reconciliation.
Nominal ledger - the list of all the individual transactions within your business
Bookkeeping Interface – a view allowing you to post your business transactions to the system.
Reports – function to view and export your Profit and Loss, Balance Sheet and Cashflow Statement for your business.
Expense - allows for tracking employee business-related expenses, requiring reimbursement
Stocktaking and inventory management - tracking available stock, recoding the profit and loss on each item, while providing the required reporting functionality.
Payroll - calculates hours of work and processes wages. It also pays payroll taxes and makes deductions.
Purchase requisition - it purchases order requests, approvals, and tracking.
Time tracking – they let companies track their projects and hours spent, run work timers within the app, and convert hours directly into invoices.
Online payments - handles all the money the business receives. It supports payment gateway integrations, letting you collect payments online via card or direct debit.
Shipping – handles shipping processes for online retailers and businesses that frequently send goods by couriers.
It is not mandatory for your business to use all the mentioned features. Choose an accounting software package that meets your business requirements.
With internet connectivity, a web browser, and an internet-enabled device, you can access your financial data from anywhere at any time. Cloud accounting storage solutions have made it easy to get ahold of information on internet-based software.
Accounting software can connect directly with your bank accounts, pulling transactions and other data without the risk of typos or copy-and-paste errors. Good accounting software allows you to key in data once and automatically extract your data when you need to create a transaction.
Accounting software organise and store information accordingly. As a result, you can easily to retrieve the data you need. With cloud accounting systems, data is backed up frequently protecting it from damage and loss.
To bring together the accounting, sales, and business management departments, you can integrate your accounting software with online payment gateways, CRM solutions, reporting applications, and information management systems. These integrations allow you to access and work with your data using two or more different applications from a single place.
Accounting software store and organise your business records, ready for your tax filing obligations.
Accounting software will give you deep insight into your business by collecting data through integrations with your POS, CRM, and other business applications. They will also offer reporting functions, to help you analyse data and track performance. From the tracking reports, you can make important decisions regarding your business.
We have compiled a list of accounting software in the UK:
Some accounting software providers offer both desktop-based and cloud accounting software versions of their accounting systems.
Are you looking for accounting software for your business? Contact Spondoo Accountants for reliable accounting software advisory and support. You can also read our full guide on factors to consider when choosing accounting software for your business.
