The term “accounting software” is a catch-all term for a range of software that allows people to record accounting transactions, automate calculations, and even manage budgets. Accounting software is made up of different components, and each has its own features. The two most common accounting software components are the desktop and the online version. The online version is typically used for larger organizations and businesses, while the desktop version is used for smaller organizations and businesses.
The two most widely used accounting software packages are QuickBooks and Xero. The basic functionality of both these packages is extremely similar to each other, but different companies have adopted various features into their programs. For example, QuickBooks and Xero allow users to record their accounting transactions, calculate their figures, and manage their budgets. They also differ on features such as integration with third-party accounting services like Intuit Payroll.
For many small to medium businesses, an accounting package is just one of several entry points into the world of online business accounting.
With a basic understanding of your software and what its features are, you’ll know whether or not it is suitable for your needs.
The most common type of accounting software is desktop software. The advantages of this are the strength of its security and the ease of its use. Desktop software also does not require access to the internet.
Online software is often more suitable for larger businesses. One of the advantages of online software is that it can be accessed from anywhere as long as an internet connection is available. In addition, online software is easier to use than desktop software and not as restrictive on the user’s computer skills.
Some organizations maintain both desktop and online software for their employees. This allows users to log into the online software from many different devices such as computers, tablets, or mobile phones. Online software also allows for greater security and control over the data stored in the system.
Now that you know what accounting software is let’s talk about what the features are.
Features, Functions & Benefits of Accounting Software
Integrate billing and invoicing with inventory management
Most accounting software does this in some manner. For example, QuickBooks integrates its inventory software with its invoicing software through third-party apps. Likewise, Xero’s inventory management is integrated directly into the accounting software.
Integrate banking and finance
Some accounting software handles these functions in a variety of ways. In the case of QuickBooks, there is the option to import bank transactions directly into QuickBooks. Xero also integrates with banking and finance in various ways.
Quote and invoice price-lists
Quote and invoice price lists as a function are also integrated into accounting software. In the case of QuickBooks, you can import purchase orders and items you want to sell into QuickBooks. Xero integrates with other price lists as well as the money manager.
Record sales
The ability to record sales is a common feature of most accounting software. If you don’t have this feature, it would be necessary to record every transaction manually with an attached invoice later. This is time-consuming and can be inaccurate.
Create budgets
Budgets are usually tied to the accounting software package. If you don’t have a budget feature, it would be necessary to create a separate budget program using Excel or another spreadsheet application.
Create financial statements
Many accounting software packages include various financial statements that can be generated with a few clicks of the mouse. These are good for generating reports and budgets as well as for internal reporting.
Record all of your financial transactions
Some software programs are just one of many entries points to financial data. If you’re using other programs like Xero, QuickBooks, or Sage, you can import your transactions into whichever office program you are using.
Track stock and purchase orders
A common feature of accounting software is the ability to track and inventory. This allows you to track inventory as well as create purchase orders. Most packages will enable you to track in real-time as well as produce reports.
Track inventory
Tracking inventory is helpful if you have a physical location. If you’re a wholesaler or retailer, keeping track of when and what you’ve sold allows you to determine inventory levels.
Track supplier invoices
If you use the software for purchasing and inventory tracking, you may have a range of suppliers. Track your clients’ invoices to determine how you’re doing financially with each one of them.
As you can see, what can be done with accounting software is almost limitless
What you’re doing here isn’t merely using software to account for a small fraction of your business but for almost every financial aspect of what your business does. These are the features you must look for in an accounting software package. If your business is larger, you will find that there is more to choose from. But, as a small business owner, you do have a lot to try out and use.
Here are a few more features to look for in accounting software packages:
Real-time data
As your business grows, so will the amount of data you have. The last thing you want to do is have to wait for data updates. Instead, look for features that allow for real-time data updates.
Cloud storage
You’ll have to deal with the issue of online security, and that means looking at cloud-based accounting software. The advantage of cloud computing is that you can access data from anywhere you have an internet connection.
Mobile features
If your business is mobile, look for a program that makes the whole process easier. Being able to let someone on a tablet or phone has many advantages for your business.
Integration
It’s essential that all the apps you use work together in harmony and without headaches. Check with your software provider to find out how easy integration is for their product.
Every business needs accounting software, so don’t hesitate when choosing. Choose wisely, and you’ll be able to keep track of your business on the go, whenever you want. But, again, you should not select a software vendor or their products without thorough research and testing. Otherwise, you may find that the solution you selected cannot serve your business needs or is overpriced.