Benefits of Accounting Software for Small Businesses

Accounting software has become integral to the growth of small businesses, similar to its role in other industries. Business owners are always looking for new ways to increase productivity and save money. And that’s where accounting packages for small businesses come in handy. Accounting software is a tool that aids bookkeepers, business owners, or accountants in automating and managing accounting transactions for a business. Here are the top benefits of accounting software for startups.

accounting

Access Financial Information Any Time

One of the leading benefits of utilizing online accounting software is that it allows individuals to access their data from any device of their choice, and at any time they want. This has a lot of advantages for all businesses, especially startups. For instance, you can develop and send invoices directly from your device while on the go, or you could generate, download, and view crucial accounting reports and statements at any time.

Automates Processes

In today’s business landscape, automation is indispensable. Using accounting packages, you can easily automate loads of processes and avoid expending time on manual activities. Here are some processes you can simplify using an accounting software:

  • Invoicing
  • Payment reminders
  • Importing data
  • Payroll invoicing
  • Expense management

Aids in Tax Filing

Tax season can be quite stressful, especially when you have to compile financial data and reports. To aid in simplifying this entire process, you should utilize accounting software. With accounting software, you can safeguard income statements, invoices, and receipts all in one place, making it essential for filing taxes.

Organizes Your Accounting Records

As a small business owner, sloppy books will lead to several problems for your company. Using accounting software, you can ensure that your accounting records remain nice and well-organized. You can also easily organize your receipts, invoices, accounts, and other documents. This way, you won’t stress over inaccurate records or scramble to get valuable information when necessary.

Saves Time

Similar to any new software, there is always an investment of time at first to install your accounting software. However, afterwards, it can save you lots of time weekly by automatically taking care of time-consuming manual accounting and bookkeeping processes.

Increases Accounting Security

Cloud-based accounting software safely secures all your accounting information because they are stored in the cloud. Your accounting data is protected under various layers of high-class encryption algorithms, ensuring that your financial records are safer than just staying on the shelf. By saving your accounting records on the cloud, you eliminate every chance of them getting erased or corrupted.

Lowers Cost and Saves Money

A significantly small number of businesses outsource their accounting and bookkeeping processes. This means that the majority of companies manage their accounting and every related paperwork themselves, reducing the time employees have to handle their other operations. By installing accounting software that appeals to your business needs, you will save on outsourcing your accounting processes without having to compromise the development of quality accounting statements. Furthermore, as an added perk, you will also save on paper costs.

With these benefits listed above, you can see just how useful accounting software can be to your business’s growth. Accounting packages aid companies in keeping up with the demands of today’s digital landscape.

Why Should You Automate Invoice Processing?

Businesses and organizations process more than a billion invoices annually, and studies show that this number could increase four times by 2035. Fortunately, the growing adoption of procurement technology can help chief procurement officers, suppliers, and accounts payable teams handle this number. Currently, 89% of U.S businesses have adopted digital-first strategies, which include automated invoice processing.

https://unsplash.com/photos/sNwnjxm8eTY
https://unsplash.com/photos/sNwnjxm8eTY

Electronic invoicing is part of AP automation that has proved to be a viable solution to the many challenges associated with invoicing. Outlined below are a few reasons why businesses should take advantage of artificial intelligence in their invoicing processes.

1.  Time-saving

Before the inception of accounts payable automation, the typical invoicing procedure was as follows:

  • The supplier starts by generating the invoice
  • The supplier then sends the invoice to the buyer
  • The buyer prints the invoice
  • Buyer enters and reviews invoice data
  • The buyer approves the supplier’s invoice and writes a check
  • The buyer mails the check to the supplier

Along this process, expect some back and forth between the supplier and buyer if the invoice has discrepancies. That said, the entire accounts payable process may take between 30 and 90 days, including room for errors in the cycle.

Contrastingly, with automated invoicing solutions, approval takes minutes without human intervention. Automated invoices eliminate the lengthy process, reduce errors, and thus eliminate the possibility of late payments. A study by Atradius shows that 87.6% of Western European businesses and 90% of U.S businesses report regular late payments due to past-due invoices.

2.  Saves on cost

The Institute of Finance and Management estimates that businesses spend between $1 and $21 for invoice processing. These estimations were done by dividing the cost of maintaining accounts payable staff by the number of invoices processed within a given period.

Similarly, an Ardent Partner study estimated the average cost of automated invoice processing to be $11.57. This includes overheads, labor costs, and technology. Switching to automated processes reduces printing costs, labor expenditures, mailing overhead, and possibly late fees.

3.  Improve efficiency

Human error in business processes cannot be avoided. Interestingly, more than 16% and 15% of late payments in the U.S and Western Europe respectively stem from inaccurate invoices. Fortunately, automating invoice processing can improve invoice accuracy, consistency, reporting, transparency, and general accountability.

Improving efficiencies of your finance department frees your accounts payable teams to focus on other important tasks. The business also grows safely, with surety that the digitized system can handle the increasing amount of invoices accurately.

4.  Improved compliance

Invoice is among the key documents used as evidence of tax compliance. It also helps validate tax audits, which may be conducted years after a business transaction. Initially, businesses relied on paper documentation, which is most likely to be misplaced. Businesses also had to hire storage facilities and warehouse boxes to store their paid invoices.

On the other hand, copies of invoices are submitted online with automated AP. Original documents can also be submitted to tax authorities with ease. Purchase orders are quickly converted into an invoice, eliminating the risks of manual discrepancies.

Endnote

Invoice management is an important part of financial planning. Members of the AP team can attest that invoice management can take a toll on people, time, and financial resources. Most businesses don’t achieve invoice efficiency for these reasons, affecting business cash flow and bottom line. Shifting to automated invoice processing, saves on cost, and boosts data visibility.

Financial Reporting – A sketch of a Firm’s status | Ways and Uses of Report

Financial reporting refers to the exposure of the company’s finance to the stakeholders. These stakeholders are creditors, investors, the public, etc. The company’s finance report shows taxes, costs, and profits after a definite period. For this reason, you come to know the health of a firm. It does not offer more insight, though, but it is vital for a company’s success.

The main parts of a financial report are:

  • The final statements
  • Notes to financial statements
  • Quarterly and Annual Reports (listed company)
  • Prospectus
  • Management Discussion and Analysis (Public Company)
Financial reporting refers to the exposure of the company's finance to the stakeholders. These stakeholders are creditors, investors, the public, etc.

Ways of Financial Reporting

There are three ways to make financial reports:

The GAAP: GAAP is the set of book-keeping rules, and in the USA, SEC follows it. This system makes sure that the report is clear.

The IFRS: More than 110 countries use this system. The countries include Canada, China, and many others.

This system gives a global voice to business matters. Therefore they become easy to read internationally.

The GDPR: This system has a new set of rules and started on May 25, 2018. The new rules give safety to a person’s private matters.

Also, it assures that financial reports must compliant when they got sensitive data.

Financial reporting refers to the exposure of the company's finance to the stakeholders. These stakeholders are creditors, investors, the public, etc.

Uses of Financial Reporting

Financial Reporting is the need for every firm, and the stakeholders want it for many reasons. Let us see the benefits of financial reports:

Decision Making: Financial reports are a great tool to make decisions. They show all the changes that can affect the cash flow. So, you get to know how the firm collects the cash. You can make better decisions by analyzing the condition by the report.

Credit: Every business needs to lend money at any stage. So, with the help of the report, the creditor knows how much money you owe already. In short, financial reporting shows an actual image of a firm.

For Customers: It keeps the clients updated about the firm’s growth. Hence, it helps to build the client’s trust level.

Track Weakness: You can track any financial activity with the report. Thus, it helps you to tackle all potential defects by just a look. As a result, you can upgrade the health of your firm.

For Management: Financial reporting is helpful for management, as well. It can analyze the report and make better decisions for the company.

For Investors: As a report depicts the performance of a firm, the investors can make rational investment, credit, etc.

Company’s status: It helps to find where the company stands after a certain period. Hence, you find details about an increase in sales, market share, and profit.

Legal Demands: A company has to file a report to agencies like ROC, state, etc. So, financial reporting is useful in this respect.

Use of Resources: By report, the company manages the use of resources in the best way.

Verdict

In short, financial Reporting has all the reliable data about the firm. As a result, stakeholders can use the data for many plans. Also, financial reporting aids capital inflows and brings good competition.

See also: Financial Risks