Accounting software is no longer limited to maintaining accounts, matching credit with debit, etc. Today, they have the capability to automate several financial tasks, including invoicing, expense tracking, reporting, etc. Not only are they saving you a significant amount of time, but you can now extract real-time insights from them to ensure your company maintains good financial health.
However, to get the best results, you must choose the right one from different types of accounting software. Learn about their types, benefits, and use cases in the following sections and make an informed decision.
Why is Accounting Software Essential for Businesses?
Instead of searching for an accounting solution, we recommend you look for relevant accounting software for your business. In other words, you should not buy and start using the first accounting software that pops up in the search results. Instead, get the one that fits your needs and requirements.
1. Better Financial Reporting
With accounting software, you can easily organise and manage financial data. As a result, repetitive tasks like data entry, invoicing, expense tracking, etc., are digitised. From here, it’s simpler to streamline your financial processes, effectively saving time and reducing the likelihood of errors.
2. Accounting Software Simplified Bookkeeping
While manual bookkeeping is time-consuming and prone to errors, which small businesses cannot afford, using accounting software can automate repetitive tasks. So, things like recording transactions, reconciling accounts, generating financial statements, etc., are easily managed.
3. Financial Analysis and Reporting is Simplified
Your company’s financial picture is clear when using accounting software. From understanding your business’s financial health through real-time statements that share details of profits, losses, and balance sheets, the software helps identify trends and pinpoint areas of improvement.
4. Forecasting and Budgeting
Since all financial data is ready, it’s easier for accountants and business owners to modify company budgets according to the current financial position. In addition to this, businesses can use a model to see their future position in different scenarios based on current and historical data.
5. Ensuring Compliance with Accounting Standards
Rules of accounting, bookkeeping, taxation, etc., change frequently and keeping track of everything manually is challenging. Using accounting software for this purpose is easier as the software gets updated from the backend, ensuring compliance with the norms and regulations.
5 Types of Accounting Software and Solutions
We cannot generalise accounting, and as a consequence, we cannot use one software for all purposes. Especially ever since accounting is being digitalised, it’s mission-critical that you use dedicated accounting software for the right purpose.
Here are the 5 types of accounting software;
1. General Accounting Software
It’s the most basic software and a good option to start maintaining your accounts. A general accounting software will cover standard business accounting needs and let you keep track of a small to medium-scale business account.
Key Features:
- Income and expense tracking;
- Receivables;
- Payables;
- Cash management;
- Basic reporting options;
- Cash management;
- Inventory management;
- Transaction management.
In essence, you can use this type of accounting software when you need to get the basic job done. A general accounting solution will fit into the one-size-fits-all solutions but with a limited scope.
2. Online/Cloud-Based Accounting Software
Online software is all abuzz today, making things easier for everyone, especially teams working together to manage company accounts. Usually purchased in a subscription form, online accounting software brings the required flexibility some businesses need as they prefer operating from anywhere, anytime.
Key Features:
- Multiple devices can be logged in to access the accounts.
- Seamless scalability ensures the software can be scaled up or down according to business requirements.
- New features are added by the vendors, benefitting businesses by giving them access to the latest features.
- In addition to these, online accounting software has all the general accounting features and advanced ones, which you can choose at the time of buying the subscription.
There’s no upfront cost associated with online/cloud accounting solutions. Instead, you pay for what you use. Given its flexibility to work, online accounting solutions can work for any sort of business, provided the software you choose can cater to your business’s growing needs.
3. Billing and Invoicing Solution
Billing and invoicing solutions are used by businesses to record transactions and payments going in and out of the organisation. Companies often use this type of software to record all transactions, and it’s connected with point-of-sale machines, online payments, and automated telephone devices (ATDs).
Key Features:
- Automates invoice creation, sending, and tracking.
- Helps streamline account receivables.
- Some software offers real-time invoice tracking and payment updates.
- Expense tracking is also built into the software.
A billing and invoicing software is often used by businesses in addition to general accounting software. While the billing and invoicing system takes care of specific functionality, it makes things easier for the accountants working on a general accounting solution to maintain company records.
4. Non-Profit Accounting Software
This one’s a particular solution, especially from an accounting perspective. Used by non-profits and government organisations, such types of accounting software have specific features meant for non-profits.
Key Features:
- Fund accounting;
- Donation tracking;
- Report generation;
- Budget management;
- Grant management
- Compliance with non-profit regulations.
You may also find some general accounting solutions offering a few key features native to a non-profit. These can work for a small organisation, but with non-profits spread across the country with multiple offices, they will need a dedicated solution to take care of everything.
5. Enterprise Accounting Software
A comprehensive solution meant for large-scale organisations; enterprise software is designed to handle all sorts of financial operations. There are two ways vendors provide access to an enterprise accounting solution. First, they provide a general accounting solution and ask you about the additional features.
Or they provide an on-premises large-scale solution in one go, and you can adjust the settings and use the features you want while the others sit idle until required.
Key Features:
- Integrates various business processes in a single solution. Centralised data storage and management catering to various departments.
- Tailored features to handle business needs.
- Can easily handle a large volume of transactions.
- Has inbuilt financial analysis and reporting capabilities.
As the name suggests, this accounting solution is best suited for large-scale businesses that have global operations and work in multiple locations.
How to Choose the Right Accounting Software for your Business?
Choosing the right solution from the 5 types of accounting software we have discussed above means taking control of your organisation’s financial health. Given the impact the right solution will have on your business, it’s essential to make an informed decision. Hence, here are the things to consider;
- What Do I Need? Yes, begin your search with an introspection. Evaluate your needs or sit with the team to understand what you need in terms of accounting features, functions, accessibility, security, etc. Answers to these questions will help you select software that aligns with your operations.
- Budget Assessment: Answers to the previous questions will help you select a few accounting software. Check the pricing of each while weighing your requirements. Consider the upfront costs, subscription fees, and any additional expenses.
- Essential Accounting Features: Check the features of the chosen software and ensure it can provide all the functions you need. This can range from invoicing, expense tracking, and bookkeeping to AI-driven automation features, GST compliance, etc.
- Is it Customizable and Scalable? Go for a solution that can grow with your business without adding to the existing operational costs. While some increase in the subscription fee or the add new features is understandable. Prioritise solutions that can also be customised, which means you can add or remove features as per your requirements.
Is Mocha the Right Choice for All your Accounting Needs?
Mocha Accounting is one such versatile solution that will take care of all your accounting needs. From helping you maintain efficient financial management to GST compliance and much more, Mocha Accounting is one of the best investments you can make for your business growth.
With Mocha Accounting working for your business 24/7, it’s a cloud-based solution, which you can also use for free. So, as you are preparing to improve your accounting game, consider Mocha Accounting for a business-centric and customisable setup.
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