Question

What are some of the major advantages in using computerized accounting systems?

Answer 1

Hi there,

Here is my answer to the question asked.

Computerised Accounting System :

  The introduction of computerized accounting systems provide major advantages such as speed and accuracy of operation, and, perhaps most importantly, the ability to see the real-time state of the company’s financial position. In my experience I have never seen a business that has upgraded to a computerized accounting system return to paper based accounting systems. A typical computerized accounting package will offer a number of different facilities. These include:

- On-screen input and printout of sales invoices
- Automatic updating of customer accounts in the sales ledger
- Recording of suppliers’ invoices
- Automatic updating of suppliers' accounts in the purchases ledger Recording of bank receipts
- Making payments to suppliers and for expenses
- Automatic updating of the general ledger
- Automatic adjustment of stock records
- Integration of a business database with the accounting program
- Automatic calculation of payroll and associated entries

Computerized accounting programs can provide instant reports for management, for example:

- Aged debtors’ summary – a summary of customer accounts showing overdue amounts
- Trial balance, trading and profit and loss account and balance sheet
- Stock valuation
- Sales analysis
- Budget analysis and variance analysis
- GST/VAT returns
- Payroll analysis

When using a computerized accounting system the on computer, input screens have been designed for ease of use. The main advantage is that each transaction needs only to be inputed once, unlike a manual double entry system where two or three entries are required. The computerized ledger system is fully integrated. This means that when a business transaction is inputed on the computer it is recorded in a number of different accounting records at the same time.

Advantages are ;

1. Automation

To make sure that all calculations are correct and accurate it is important to use something other than pen and paper. The systems we provide also take care of all procedures automatically so that invoices are created and manual accounting is taken care of efficiently.

2. Data Access

Using the software becomes easier and gives you easier access to data files when you need them. You no longer have to search through endless piles of paper and files to find a certain date, data file or piece of information as they are all there for you at the click of a button.

3. Accuracy

An accounting system is designed to be completely accurate right down to the final detail. Although your maths skills may be 10/10 it is always safer to use a computerised system to do the calculations for you. It also automatically does additions, subtractions and calculations once you have submitted data making the whole process quicker.

4. Reliability

Of course they are reliable systems to use. They are smarter than any accountant can ever be and take care of tasks when you tell it to. You can count on your computerised system to take control of your accounts when you don’t have the time to.

5. Speed

A computer is always going to be faster than a human being and when it comes to accounts they are faster than ever before. Statements, reports, analysis and everything you need can be created at the push of a button so you can get access to your accounts in quick time.

6. Security

The latest technology can be saved and stored off site so there is no threat of intrusions and stealing of data. The systems can always be restored from old data files and backups are vital to make the most of clever accounting. With password protected areas and certain accounts for different parts of the business you can control who has access to the systems for extra safety.

7. Scalable

No matter how large your company grows you can always count on a computerised system to grow with you. Everything is straight forward and the data systems will always store your files efficiently unlike stacks of paper would.

8. Visuals

It is always easier to look at your accounts and customer’s accounts on a computer rather than trying to read handwriting that is impossible to read. You can arrange them in a way that suits you and quickly view reports and data sheets in quick time.

9. Cost Effective

Using a computerised system is a lot cheaper than other forms of data filing due to it being overall more efficient. As the work is automatically done and all reports are kept in one area, everything is completed quicker and will save time massively. You also save money on various accountant’s fees, report creations, paper filing and still make sure your accounts are in perfect order.