Computerized Accounting Systems
If you are running an organisation you probably already know that you frequently have to provide financial statements to other third parties. If you’re tired of having to call an accountant every time you need something because you’re accounting is based on spreadsheets where there are so few controls; where it does not record accounting entries in the background; and, and where numbers can be changed easily thus damaging the integrity of your financial reports, you may have to rethink whether you want to stay manual or move on to accounts automation with the rest of the world.
We’re not saying you will never need an accountant, but you won’t need him or her quite as often. In our experience, we have never seen an organisation that has upgraded to a computerized accounting system return to paper-based accounting systems. The ability to access and see the real-time state of your organisation’s financial position is perhaps the most important reason.
Computerized accounting systems provide major advantages. Here are but a few:
- Management information. Reports can be produced which will help management monitor and control the business of their organisation. For example, aged debtors analysis will show which customer accounts are overdue, trial balance, trading and profit and loss account and balance sheet.
- Up-to-date information. Accounting records are automatically updated and account balances (e.g. customer accounts) will always be up-to-date.
- Availability of information. Data is instantly available and can be made available to different users in different locations at the same time.
- Automatic document production. Fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents are all done automatically.
- Efficiency. Better use is made of other resources and time. Cash flow should improve through better debt collection and inventory control.
- Accuracy. There is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) for a manual system.
- Speed. Data entry onto a computer with its formatted screens and built-in databases of customers and supplier details and stock records can be carried out far more quickly than any manual processing.
- Legibility. The onscreen and printed data are always legible. This avoids errors caused by poor figures.
- Cost savings. Reduces staff time doing accounts and reduces audit expenses as records are neat, up-to-date and accurate.
- Staff motivation. The system will require staff to be trained to use new skills, which can make them feel more motivated.
- Reduce frustration. Management can be on top of their accounts and thus reduce stress levels associated with what is not known.
- GST return. The automatic creation of figures can be generated for regular GST returns.
- The ability to deal in multiple currencies easily. Many computerized accounting systems allow a business to trade in multiple currencies with ease. Problems associated with exchange rate changes are minimized.
There’s one catch, though. In order for any computerized accounting system to properly record accounting transactions in the background, the system will have to be set up properly. Someone in the organisation still has to understand debits and credits, decide what account code to charge each transaction to, determine whether an error has been made and, if so, how to correct that error.
You’ll also need a chart of accounts that fits your organisation’s business and modules like accounts payable, accounts receivable, payroll, inventory, purchasing and sales order processing, etc. will need to be configured to post to the proper accounts.
If you have no accounting experience, you’ll need to find someone to help you with this, but it should take no more than a few hours of set-up at most, so that won’t be expensive either.
Once your computerized accounting system is set up and running, it will be easy for you to see what a huge difference it makes in helping you and staff manage your organisation’s finances with ease and more efficiency.