Moving the accounting process of your company from manual to automation has its advantages and disadvantages. So, this leads us to the advantages and disadvantages of accounting software to the business. The purpose of accounting software is to enhance the ease, speed, and accuracy of the accounting process of the business. The use of accounting software has its challenges. So, this article explains the advantages and disadvantages of accounting software to the business.
Advantages and Disadvantages of Accounting Software
Advantages of Accounting Software
Automation of accounting process
The main benefit of accounting software is the automatic accounting process. With the use of software, you can enjoy automatic entry of employee payroll, automatic process of payments to your suppliers, producing payslips and reports such statement of profit or loss, statement of financial position (Balance sheet), cashflow statements, and others. However, automation of the accounting process helps the accountant to focus on effective ways of developing the business.
Security of information
Another benefit of accounting software is the provision of security to the information by restricting employees’ access to the company’s financial information. The use of software can allow permission of employees before accessing the financial data for control purposes
The use of accounting software also enhances the minimization of errors in the financial information of the business. Therefore, errors of transposition, omission of material figures, and others are minimized with the help of computerized applications.
Another benefit of accounting software is the easy integration with other systems. The use of software enhances integration with other systems such as online banking, e-filing, e-invoicing, and others.
Disadvantages of Accounting software
The challenges of accounting software to the business include the following:
Cost is the main challenge of accounting software for businesses, especially small businesses. The cost of using software is not only the cost of the packages, it includes installation or setup cost, licenses necessary for minimum standard for the computer to use in respect of required RAM, hard drive, processor speed, and others. Additionally, some software requires the purchase of upgrades to enjoy more features and you must ensure your computer can run the software. If not, you will have to also upgrade the system.
Maintenance of Software
Accounting software requires regular maintenance. Maintenance includes upgrading the package. It may also require upgrading related equipment like computer, printer, backup drive, internet, and others. So, if you want to switch to the use of online accounting, get ready for the time and money required to comply with the software.
The use of accounting software by a company requires training of its employees on how to use the software. Although some accounting software packages are mainly designed for non-accountants, accountants may also need to learn how to use some buttons, menu, or perform certain tasks. Training of your employees can also require payment and costly errors can occur during the learning curve.
Lack of data security
Another challenge of accounting software is the theft of data stored in the computer. Members of the company can steal the confidential information stored in the system and send it to another company. This is possible with help of a modern communication network. Also, outsiders can access and steal the company’s confidential data through hacking of the company’s computer.
No 24/7 Customer Services
Most software companies don’t have 24/7 customer service. Therefore, customers’ problems can only be attended to during business hours. Also, most consultants are only available to their clients during business hours. Only a few consultants attend to customers after business hours through phone conversations.
Lack of Physical customer services
Most software companies only provide customer services through phone calls or online, they lack face-to-face customer services. With the help of physical customer services, the companies will be able to understand and solve customers’ problems with ease than just through phone conversations.
Another disadvantage of accounting software is viruses. If a virus hits your computer, data stored in it may be corrupted. So, you may need to re-enter those data again unless there is a backup. Additionally, you can’t work on the corrupted computer and until the problem is solved.
Human errors can also occur when entering data into the accounting software. However, due to the automatic processing of data, it will be difficult to identify such errors.
Understanding the advantages and disadvantages of accounting software will guide your decision to migrate from manual accounting to automation. However, using software will help you to save time and money and provide valuable financial information about your business. When choosing accounting software, you have to consider the features of the software and its suitability to your business. You have a variety of software to select such as QuickBooks Online, Xero, Wave, Sage Business Cloud Accounting, and others depending on your financial capacity and nature of your business.
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Afeez is one of the founding partners of Marasas Consulting limited. He consults for both individuals and entities in the area of accounting, management, audit, tax, and investment. He has a wide range of experience both online and offline which allows him to provide relevant and timely professional advice and assistance to business owners with their accounting, tax, management, audit, and investment plans.
Afeez is a member of the Institute of Chartered Accountants of Nigeria (ICAN) and a member of the Nigerian Institute of Management (Chartered). He is a certified Google analyst and strategist. He earned his Bachelor degree in Management and Accounting from Obafemi Awolowo University, Ile-Ife, Nigeria, and earned an ordinary national diploma in Accountancy from The Polytechnic of Ibadan, Oyo State, Nigeria. He earned certification in “Excel Crash Course” and “Reading of Financial Statement” from Corporate Finance Institute, Canada.
Afeez is dedicated to helping clients achieve business success by helping them to establish solid and sound accounting, tax, and financial processes.