Why Do I Need Business Accounting Software?
Even the smallest business will benefit from a wide variety of small business accounting software products on the market today. Keeping track of your business’ finances is essential to profitability, so investing in a dependable business accounting software is a must.
There is a vast array of business accounting software solutions on the market today; many with specialized functionality for almost any industry or size of business. The specific type of accounting can differ between programs – project, fund, and fixed asset are examples. Then consider the constant change of standards, compliance requirements and technology platforms, and the evaluation process of selecting a business accounting software solution gets even more complex.
In order to select a business accounting software program, you will need to understand some business accounting basics, consider your business and its accounting needs, and evaluate the products available today.
What is Business Accounting Software?
Business accounting software keeps track of the financial transactions within a business or organization. A basic package includes general ledger, accounts receivable, accounts payable, payroll, and reporting capabilities. These systems sometimes come with specialized functionality for specific types of businesses or companies.
Core systems assist with the basic functions necessary to balance a business’ books, including general ledger functionality, the ability to track accounts payable and accounts receivable, fixed assets, and bank reconciliation. Every business requires these core functions to manage its finances and the array of business accounting software available for small and medium-sized businesses has been steadily growing.
This kind of system assists with project-oriented businesses management of job profitability by tracking project and job costs. Businesses can examine past job costs and estimate future costs to choose the jobs which will be most compatible and profitable. It tracks by factors such as labor, overhead, materials, and equipment to aid in the decision-making process.
This type of business accounting software helps companies keep the correct inventory levels to maximize profit, avoid overspending, and reduce the costs related to inventory depreciation. The right system keeps inventory information up-to-date by tracking product levels as well as orders, sales, and deliveries. The Generally Accepted Accounting Principles (GAAP) specifies ways to account for inventory to ensure accurate reporting of value for inventory that has depreciated. Software with inventory management capabilities ensures this is done properly.
This feature automates the collection of payments from customers to facilitate timely and consistent collection with the least opportunity for human error. There are many types of billing and invoice solutions designed to support the diverse range of industries, business models, payment methods, and scale of operations.
Users can utilize budgeting and forecasting solutions to project the financial outlook of the company from historical data and estimates of future conditions. These types of business accounting software are used when a business must consolidate multiple departmental forecasts and budgets. These systems are most helpful when multiple variables affect the forecast.
This type of business accounting software tracks fixed assets by utilizing a core database of essential asset information, including location, maintenance scheduling, audit history, cost and depreciation. Depreciation schedules are the core function of this system.
Payroll systems help businesses track and process employee payrolls. It also composes and prints paychecks, automatically withholds and pays government taxes, and generates the necessary legal and tax reports on a regular basis. Automated reminders to pay required fees help businesses avoid legal penalties.