A Guide to Computerised Accounting

Introduction

Computerised accounting is an efficient and cost-effective way to keep track of your business transactions. By entering data into an automated system, you can quickly analyse and report on financial information, helping you make better decisions about managing your own business finances.

This guide will provide an overview of what computerised accounting is, its benefits and the different types of software available. With this knowledge, you can decide which system is best for your business needs.

What is Computerised Accounting?

Computerised accounting (or computerized accounting) is a form of bookkeeping that uses computers and specialised software or spreadsheets to record financial transactions. Instead of manually writing out each entry in a ledger, computerised systems allow you to enter accounting information into an automated system and generate reports quickly and accurately.

Computerised accounting systems are designed to be user-friendly, making the whole process more efficient and cost-effective. Having all your financial information in one place, you can easily monitor your income and expenses, analyse trends over time, and make informed decisions about managing your finances.

The Evolution of Accounting

Computerised accounting has revolutionised the way businesses manage their finances. Before computers, bookkeepers manually recorded every transaction in a ledger or journal. With the advances in using computers, data can be entered quickly and accurately into an automated system, eliminating hours of tedious manual work.

This technology has improved the accuracy of financial reports and made it easier for businesses to identify areas of improvement. Data can be interpreted faster, enabling businesses to make better decisions about how they run their operations.

Read our introduction to accounting history.

Understanding Computerised Accounting

Accounting systems are designed to help businesses manage their finances more efficiently and accurately. Some of the key features they offer include:

• Automated Data Entry: This feature allows you to quickly and easily enter financial information into an automated system, eliminating the need for manual data entry and reducing the number of errors.
• Customisable Reports: You can generate customisable reports and analyses with just a few clicks. This helps you identify trends and areas of improvement quickly and easily.
• Security: Most computerised accounting systems have built-in security features to protect your data from unauthorised access.
• Cloud Accounting: Cloud-based accounting systems enable you to access financial data from anywhere, anytime. This makes it easy to stay on top of your finances no matter where you are.

Types of Computerised Accounting Software

Various software packages are available, each offering different features and benefits. The most popular types of software include:

Excel Bookkeeping

Some businesses prefer to use systems they know and use Excel. At Business Accounting Basics, we have created over 26 free Excel bookkeeping templates to assist with various accounting tasks.

General Ledger Software

Designed to help you track your financial transactions and generate financial statements quickly and accurately.

Payroll Software

Payroll software helps businesses manage their payroll process more efficiently. It can automate payroll calculations, generate paychecks and ensure compliance with tax regulations.

Budgeting Software:

This software helps you create and manage budgets for your business more effectively. You can track spending, analyse trends over time and identify areas where money is wasted.

Choosing the Right Computerised Accounting System

Choosing the right computerised accounting software for your business can be a challenge. When deciding, you should consider factors such as cost, features, security and ease of use. You may also want to consult an accountant or financial expert to get their advice on which system is best for you.

It’s also essential to make sure the software is compatible with other systems you may be using, such as payroll or budgeting software. This will ensure that all your financial data is stored in one place and can be easily accessed.

Benefits of Computerised Accounting

Computerised accounting offers a range of benefits for businesses, including:

• Reduced Costs: By automating the accounting process, you can save time and money by eliminating manual labour.
• Improved Accuracy: Automated systems help ensure accuracy in data entry and reporting.
• Enhanced Security: Computerised accounting systems have built-in security features to protect your data from unauthorized access.
• Increased Efficiency: With computerised accounting, you can generate reports quickly and accurately, enabling you to make better decisions about managing your finances.
• Scalability: Using a computerised accounting system, you can easily scale up or down as your business needs change. This ensures that you only pay for the features and services you need.

Key Features of Computerised Accounting

Key features of computerised accounting for a small business to look at include:

• Stock and inventory tracking – if a business holds stock, the stock must be accounted for.
• Invoice Management – This allows businesses to keep track of their invoices and payments.
• Tax Compliance – software can help with filing tax returns and ensure that businesses remain compliant with taxation rules.
• Multi-currency support – if you deal with foreign exchange.
• Automated data entry for accounting transactions – Includes importing bank transactions and purchase invoices.
• Automated invoice generation – invoice customers quickly and accurately.
• Customisable Financial Reports – Produce financial statements including balance sheet, profit and loss, cash flow statement, trial balance, sales and purchase ledger.
• Budgeting features – Create and manage budgets for your business more effectively.
• Data Security – Protect your financial records from unauthorised access. By setting different user access, you can restrict certain information.
• Easy access to financial information at any time – By using cloud accounting, data financial information is available at any time.
• Making Tax Digital (MTD) – Software can be used to ensure businesses remain compliant with Making Tax Digital legislation for VAT and Self-assessment.

Popular Computerised Accounting Systems

There are many different computerised accounting systems available. The choice of accounting software depends on the business needs. please read our QuickBooks vs. Xero comparison for more information. Some of the best accounting software includes:

Xero – Xero is a popular cloud-based accounting system that lets you manage your finances from any device. It features automated data entry, customisable reports and secure access. Xero has additional apps to integrate, enabling a business to incorporate other features.

QuickBooks – QuickBooks is an accounting software package designed for small business owners. It comes with a range of features such as invoice management, CIS, budgeting tools and tax compliance.

Visit QuickBooks

Sage Software – An all-in-one system that offers a range of features to help businesses manage their finances more efficiently and accurately. It includes invoicing, reporting and budgeting tools.

FreshBooks – This cloud accounting system is designed to be easy to use and offer businesses greater visibility into their finances. Features include invoicing, bill payment reminders and expense tracking.

Pandle – Offers small businesses the option to a free version with reduced features, but suits the needs of basic accounting by recording its financial transactions.

FreeAgent – This cloud accounting system is designed to make complex accounting tasks easy. It comes with features such as invoicing, time tracking and project management tools.

Transitioning to a Computerised Accounting System

Step-by-step guide

Transitioning to a computerised accounting system can be daunting. To help make the process smoother, here is our step-by-step guide:

1. Decide whether cloud or desktop software is right for your business. Consider factors such as cost, security and ease of use before deciding.
2. Research different software systems and read user reviews to understand which is best for you.
3. Consult with a financial expert or accounting services for advice on the most suitable for your business.
4. Create a list of must-have features and ensure that any software you choose has them.
5. Ensure the software you select is compatible with other systems, such as payroll or budgeting.
6. Once the system is selected, take a free trial and arrange for training and a smooth transition from your old system to the new one if needed.
7. Ensure that any critical financial records are backed up before making the switch.
8. Carefully review all settings and configurations in the new system to ensure everything is set up correctly.
9. Test the system with transactions and ensure it functions appropriately before going live.
10. Monitor the system’s performance regularly and make updates or adjustments as needed.

By following these steps, you can be confident that you are successfully transitioning to a computerised account for your business. Some companies, including Move My Books, can easily convert the data to the new system for you.

Potential challenges and tips for overcoming them

Transitioning to a new computerised accounting system can be challenging, and potential issues may arise. Here are some of the common challenges businesses face and tips for overcoming them:

Learning curve

Accounting software can be complex, so it is essential to have proper training and ensure all accounting staff members understand how to use the system.

Security

Data security should be a top priority when selecting accounting software, so make sure that you choose one which meets your security needs.

Compatibility

Make sure that any software you choose is compatible with other systems you may already have in place, such as payroll or budgeting software.

Integration of historical data

If transitioning from one system to another, you must ensure that any important historical data is transferred correctly.

By taking the time to research and select an appropriate accounting software system for your business and familiarising yourself with it before going live, you can ensure a successful transition and make the most of your computerised accounting system.

The Future of Accounting

The future of accounting is exciting, with ever-evolving technology providing new opportunities and challenges for businesses.

Artificial Intelligence (AI) will play a vital role in the future of accounting by automating manual tasks such as data entry and preparing reports. This will enable accountants to focus on more strategic activities rather than day-to-day operations.

Cloud computing will continue to revolutionise the way businesses manage their finances. It will provide greater visibility and control over financial data, allowing businesses to access insights and make informed decisions quickly.

Conclusion on Computerized Accounting Software

A Computerized accounting system is a powerful tool that can help businesses make sense of their financial data and streamline processes. By selecting the right system and taking the time to transition successfully, companies can ensure they are making the most of their accounting software and reaping the benefits it offers.

The future of accounting looks promising, thanks to the game-changing combination of AI and cloud computing. These technologies are revolutionising how businesses handle their financial data, making it easier to access, use, and manage. The right accounting software system can provide the tools to help businesses stay up-to-date with the latest technology and make the most of these opportunities.