Benefits of Accounting Software: Examples of Leading Solutions Explained

Accounting software has taken on a variety of functions through the years. These platforms have gone on to replace spreadsheets as the most ideal tools for recording financial data. Every type of financial statement has been simulated while providing visual reports that highlight financial trends. They also integrate with popular tools, with information automatically ported from one platform to another.

The evolution of accounting software has made it one of the most useful platforms in the time of COVID-19. Since many employees are working remotely, the platform has become their digital office where they perform most of their primary duties. They can also process payroll, cash flow, and more in one place if they are using an HR software suite that includes accounting functionalities. 

In this article, we will examine what accounting software can do and its benefits. We will also explore the types of accounting software in the market and show you some of the leading platforms available. After reading this piece, we hope to help you evaluate what kind of accounting application to consider for your business.

In the age of COVID-19, speed, accuracy, and seamless data migration are of utmost importance. This is why many businesses are choosing to automate arduous tasks that do not require extensive brainpower. As such, deliberate efforts are being made in various industries to adopt automation technology. In a 2020 survey by Accounting Today, it was revealed that 41% of small accounting firms are planning to spend more on tech in 2021. Large firms make up an even larger percentage at 60%.  

This points to the supreme relevance of accounting platforms through the pandemic given that a large chunk of the workforce is working from home. And the same goes for the clientele of accounting firms. According to a recent study, 41.8% of American employees work remotely. And the growing acceptance of this setup would likely lead to companies adopting the practice even after the pandemic.

In lieu of this, online accounting solutions let accountants and businesses perform all of their financial recording responsibilities. From organizing financial paperwork and computing payroll to tracking inventory and preparing income tax returns, advancements in cloud accounting technology have also proven useful in trimming down hours spent on these bookkeeping and accounting responsibilities, keeping ahead of their on-premise counterparts.

As for the exact benefits, we will discuss them in detail in the succeeding sections, along with some of the top accounting solutions available.

Benefits of Accounting Software

Without accounting software, you will have to rely on your ledger and a calculator. While this process is time-tested, it could take days before you can even start analyzing the data you’ve compiled. By automating these tasks, you can accomplish more detailed reports at a fraction of the usual time. To add to this, you can enjoy these other benefits of accounting software utilization:

1. Optimized business operations: Why waste your energy on bookkeeping when you can use it to run your business? With accounting programs, you can work smarter, not harder. Speed up your processing time by eliminating manual calculations from your daily to-do list. This helps you keep your books up-to-date without cluttering up your desk. Additionally, you can optimize your operations because you no longer have to run numbers on different applications—you can view everything on a single screen.
2. Improved accuracy: Having an accurate record of your finances is crucial to monitoring the progress of your business. Through the use of accounting programs, you can simplify aspects of accounting that may be prone to errors. Many programs can automatically make calculations as you enter data, transfer funds, and adjust assets. It can also generate analyses while reducing the chances of oversights, and if you want to check your record for miscalculations, you can easily find and correct it before finalizing reports. Some even have comment capabilities to allow you to make notes for future reference.
3. Reduced operation cost: A remarkably small number of companies outsource their bookkeeping. This means the majority of businesses manage their finances and all related paperwork in-house, diminishing the time they have to work on their actual operations. Now, cost reduction is but one of the many benefits that outsourcing has to offer. By installing a software that suits your business, you can save on outsourcing without compromising the creation of quality accounting reports.  As an additional perk, using cloud-based or on-premise applications can help you save on printing and paper costs, as well as lessen your carbon footprint. You can read more about how much does accounting software cost here.
4. Secured database: Most accounting software can be password-protected. This capability lets users protect confidential information from being accessed by unauthorized personnel. Also, by having your data stored in a software, you are facilitating its quick access, file search, and retrieval, not to mention safeguarding it from natural disasters. If your data is only accessible digitally, it is invulnerable to calamities like earthquakes, fires, and floods.
5. Synchronized Files: As your company grows, the quantity of paperwork you have to track and the amount of accounting you need to perform multiply and become complex. Through a software, you can access the information you need across multiple platforms and sift through computerized data without hassle. Furthermore, data migration is made easy because accounting software allows for the synchronization of online and offline databases.  For your convenience, there are also applications that provide real-time status updates, so you can see the changes as they are applied.
6. Simplified tax compliance: Tax-related responsibilities take around 175 hours per year for all companies in the United States. In other countries, they may even take up to over 400 hours. That’s a lot of wasted days that could have been used to secure new clients, create new products, or improve existing services. With the tax planning features offered by lots of accounting software, you can store receipts, invoices, and income statements in one convenient platform. Some programs even allow for integrations that let you compare ITRs and adjust calculations according to new policies.
7. Automated record-keeping:  An important facet of financial management, record-keeping can be confusing and labor-intensive. To lessen the effort you need to exert into it, various software solutions provide features that compile the data you input in different applications. Apart from merging them into one comprehensive operating system, it can also analyze business practices and identify trends in your company’s money flow. After which, it calculates your bottom line to show you where and when you are generating more revenue, which aspects of your operations you need to invest more in, and the like.

Always get paid on time with your invoices all in one place.

Accounting Software Explained

To understand the purpose of accounting software in your day-to-day business operations, we must first understand its main functionalities and the problems it can solve. In a nutshell, it is a collection of applications designed to gather, record, summarize, and store financial data for interpretation. Programs such as these are meant to minimize the effort users exert on computing data. Moreover, they speed up the creation of comprehensive financial reports and allow for immediate analysis of cash flows.

Some of its key features include:

• Automatic Data Backup
• Budgeting and Forecasting
• Check Printing
• Comment Capabilities
• Cost Predictions
• Customizable Reports
• External Application Integration
• Fund Accounting
• Inventory Management
• Password Protection
• Payroll Management

Types of Accounting Software

There are many types of accounting software available on the market that you can choose from. Some of them are:

1. Enterprise Resource Planning (ERP) System: Commonly used by large corporations, this type of accounting software can bring your business functions together and merge them into a centralized platform for easier viewing. However, compared to other types of accounting software, this comes at a steep price and requires a long period of time to install.
2. Commercial Accounting Software: The most common type of software available, ready-to-use commercial accounting programs are easy to manage. Like other applications, they can be personalized to adapt to the requirements of your bookkeeping process. So far, it is generally the most affordable option available.
3. Custom Accounting Software: All businesses have unique needs. This is why companies sometimes opt to have accounting software created just for them. By going for this option, they can tailor the program according to the requirements of their operations. However, this can be more demanding to maintain compared to its commercially available counterparts.

Likewise, depending on the needs of your business, you may choose between an on-premise software or cloud-based application. If you intend to use an accounting program but want to make sure that all the data can only be accessed within your office, an on-premise installation may be ideal for you. On the other hand, cloud-based software may work best if you want to get hold of your files whenever and wherever.

With the fundamentals of accounting software explained, we can move on to the steps on why you should invest in one of these programs for your company.

Leading Examples of Accounting Software

The purpose of accounting software is to simplify back-office responsibilities. By finding the right program, you can store, access, and process all the data you need to run your business with just a few clicks and taps. Whether you want to combine several components of your accounting tasks into one program or find specialized applications for particular facets of your business, there are options for you. Here are some examples of accounting software that you can choose from:

1. NetSuite ERP

NetSuite ERP is a cloud-based ERP platform that comes with a fully-featured financial application that suits medium-sized and large enterprises. It includes accounts receivables and payables, fixed assets management, general ledger, and tax management. NetSuite ERP is a full-scale platform that includes other functionalities such as inventory management, order management, revenue management, fixed assets, and more.

The vendor offers a free trial to get you up to speed on its features before committing to a paid plan.

NetSuite ERP

Try out NetSuite ERP with their free trial

The accounting application makes it easy to enter all relevant data into the system. For example, in accounts payables and receivables, you can enter, store, and manage receipts, vendor invoices, and purchase orders. It also includes online payment functionalities so you can receive payments easily. Additionally, you can pay your company’s and vendors’ taxes using electronic funds transfer (EFT).

The financial management software can be expanded using NetSuite ERP’s other features and modules. It seamlessly integrates with CRM, inventory, ecommerce, and order management tools. This means you can easily scale your platform as your operations grow without having to pay for another application.

2. Gusto

Gusto is an HR-focused accounting solution built to help businesses streamline financial-related tasks, such as managing employee payroll, monitoring the company’s cash flow, and automating calculations for employee benefits and incentives. It also comes with a digital wallet app that enables employees to track, save, and access their hard-earned money.

Ideal for small accounting firms and professional accountants, Gusto provides all the essential payroll and accounting tools to ensure fast, reliable, and seamless processes. Coupled with automation features, the platform ensures smooth-flowing payroll and accounting workflows.

The vendor offers a free demo to help you get to know the platform’s key features before committing to a paid plan.

Gusto

Try out Gusto with their free trial

Additionally, Gusto helps businesses calculate and file their payroll taxes automatically. Ideal for fully remote, in-house, or hybrid teams, the solution ensures the timely filing of state and federal taxes. With its tax compliance features, the platform helps businesses stay up-to-date and compliant with all tax laws and regulations.

Gusto also provides valuable financial and payroll metrics that allow businesses to discover insights about their company’s revenue, expenses, and profit per employee. Moreover, the solution’s financial reporting features serve as powerful tools that businesses use to keep track of their team growth, payroll costs, employee retention rates, and more.

3. Paychex

Paychex combines payroll and HR automation tools in a single platform. Equipped with the latest technologies, this fully integrated software simplifies payroll processing, payroll tax administration, and HR management for SMBs and large enterprises.

Paychex’s payroll automation is designed for busy business owners and accountants—not only because it is easy to use, but also because it enables them to complete their payroll and payroll tax requirements completely hands-free. Beyond payroll, Paychex also provides robust tools that help businesses effectively manage business insurance and employee benefits, as well as the entire employee lifecycle.

Paychex

Try out Paychex with their free trial

Paychex offers its services in customizable packages, ensuring that clients will be getting the services they need and only pay for the features they are using. If they would like to further extend Paychex’s functionality, they can seamlessly integrate it with their existing software systems.

4. QuickBooks Online

QuickBooks Online is a cost-effective solution designed for small businesses. This cloud-based application provides all essential accounting tools in a single platform to help small and growing businesses, firms, and freelancers simplify their accounting and finance management processes.

This application’s robust features are available for free trial.

QuickBooks Online

Try out QuickBooks Online with their free trial

With its selection of tools, you can automate time-consuming processes, such as data collection and tax calculations. QuickBooks Online also offers billing and invoice management features, sales monitoring, profit and loss reporting, online banking and banking data synchronization, among others. QuickBooks Online is also accessible on multiple devices and is equipped with auto-syncing options to ensure that your data is always up to date regardless of the device you are using.

5. Freshbooks

FreshBooks is a popular accounting and financial software that is perfect for small and medium-sized businesses. It is a flexible solution that makes complex financial processes simple and efficient. The platform’s robust features allow you to focus on growing your businesses instead of wasting time on repetitive accounting processes.

If you’re interested in trying out all its features, you can sign up for a free trial for a no-cost full experience.

The software includes various automated processes such as invoice to payment functionality. You can easily create invoices and send them to clients. Also, you can monitor when the client opens the invoice to ensure that it was successfully delivered. FreshBooks allows you to set due dates, offer online payment options, and even charge late fees.

It also allows you to track expenses easily. You can attach receipts to their corresponding transactions and organize them right on the platform. That means it is easy to track down all these documents and entries once you are ready to prepare your tax forms. Furthermore, you can generate financial reports with just a few clicks. Create profit and loss reports, expense reports, and balance sheets in no time. You can export these documents to a CSV file or other popular formats.

6. Tipalti Approve

Tipalti Approve is used by many C-level executives and over 250,000 payees worldwide, processing over $1 billion annually in international bank transfers. And there is a reason for this: Tipalti is simply secure, powerful, and simple. It automates all stages of payment processing that you wouldn’t even know it was there, from onboarding to tax compliance, and it does this by complying with the tax regulations of 190 countries, accepting payments in 120 currencies, and supporting six payment methods.

You can try all its premium features at no cost when you sign up for a Tipalti free trial.

Tipalti leads its category in terms of automation. It eliminates over half of all tedious, manual tasks related to accounting, and streamlines processes in AP/AR, payment reconciliation, and financial reporting. It can integrate as well with ERP systems to further reduce downstream and human errors by checking all tax data against 26,000 local and international standards.

Finally, Tipalti also has an advanced analytics and reporting engine. It creates automatic reports based on payments, taxes, and other transactions. Even better, it takes regional policies into account and collates them with the reports so you can get an accurate and actionable insight on your financials.

7. AvidXchange

AvidXchange is a web-based invoice management and payment automation software designed to help small and medium-sized businesses efficiently handle their accounts payable process. The product consists of four modules namely, invoice automation, purchase order automation, bill payment automation, and utility bill management. With these modules, clients can choose only the specific product they need or implement the entire suite to fully benefit from the features and tools of AvidXchange.

A major benefit from using AvidXchange is that you can do away with paper invoices and time-consuming document work. Automation features can help eliminate manual data entry, make it easy to sort invoices, and improve the productivity of your team. No more paper chasing. You have more visibility across your AP process and you can check the status of an invoice in real-time.

AvidXchange also includes electronic payment that allows businesses to safely pay their suppliers and partners online. E-payment capabilities mean you can fight fraud and detect unauthorized payment requests and suspicious transactions.

Moreover, since the platform is web-based, your team can access it 24/7 from any location. It has modern security features such as secure SSAE 16 Facility, sophisticated disaster recovery procedures, and dedicated tech support specialists to provide reliable assistance to your IT team.

8. Rossum

Rossum may be an all-in-one document gateway but it landed a spot on this list because it can be configured to be used for accounts payable processes. The platform can automate transaction document collection from multiple sources and place them in one intelligent inbox. After which, it uses self-learning AI technology and cognitive data capture to accelerate data entry processes. It can even support custom workflows so you can easily manage approvals and document forwarding

You can use take a closer look at the features of Rossum for free for a period to see if the software matches your needs. Simply sign up for Rossum free trial.

What makes this platform even more unique is that it has an automated communication system. With this, you get instant notifications on transaction status. Document senders and recipients can also handle correspondence within the system. In this way, handling inquiries and approvals are more streamlined.  

In addition to the above-mentioned, Rossum also supports a slew of out-of-the-box integrations. You can connect the platform with your ERP system, RPA tools, or even other document management software. In this way, it meshes well with your existing business tools. Should you be interested in this platform, Rossum is only available by quote so be sure to get in touch with the vendor for more information.

9. A2X

The cloud-hosted ecommerce solution A2X controls transactional data from sales mediums, such as Shopify and Amazon, to your accounting tool. You no longer have to manually input sales transactions and prepare financial reports on a spreadsheet when using this software. It integrates with QuickBooks and Xero; hence your financial records are transferred smoothly to your books. It also optimizes eBay and Walmart Marketplace accounting.

A2X’s plans include a free trial and subscription plans starting from $19 to $179.

A2X appropriately classifies every transaction and sums up your sales and expenses. It accounts for all your fees and other expenses. You can quickly conform to the payouts as seen on your sales platform and make changes based on your business’ ledger.

A2X is also fully integrated with tax calculators, inventory apps, point-of-sale platforms, and PayPal. It manages various currencies as well.

10. Payment Rails

Payment Rails is an accounts payable platform perfect for medium- to huge-sized businesses. It champions AP processes such as payment management. Its user-oriented interface lets you pay anyone in more than 200 countries. You can also use it for cross-border payments.

Payment Rails has a free trial plan, subscription plans ranging from $49 to $199, and a customizable or negotiable plan.

Payment Rails enables the automation of payment gathering, mass payment disbursement, and banking information validation. It can manage various currencies and local payment options, as well as maintain your accounts’ liquidity.

Tax compliance is another feature of Payment Rails. You can gather tax forms and verify and figure out tax withholding.

Should You Consider an Accounting Software for Your Business?

Modern businesses are required to operate digitally with speed and accuracy in the time of COVID-19, given that most people are working remotely. And if a business is in operation, it will certainly need accounting. With this, accounting platforms don’t just offer simple conveniences, they have become a necessity in today’s business landscape.  

Even if your accountant cannot report to the office, he or she can still perform tasks using cloud-based accounting software. In addition, a platform does not only store your financial information but also allows you to automate tasks that would otherwise take much of your time. Its features afford you accuracy, speed, and connectivity that you won’t get from using spreadsheets. 

So, to answer the question, you should definitely consider purchasing accounting software for your business. This product can help your business keep up with the requirements called for by today’s digital age.

Of course, accounting is not the only part of your business that needs a robust platform. You can also explore other business process management software to take advantage of various solutions that you may apply to various aspects of your operation.

By Daniel Epstein

Daniel Epstein is a senior financial research analyst at FinancesOnline and the architect behind our Fintech and ERP content division. His main areas of expertise are blockchain technologies, cryptocurrencies, and the use of biometrics in fintech solutions. His work has been frequently quoted by such publications as Forbes, USA Today, Entrepreneur, and LA Times. With more than 1,800 solutions scrutinized in the last 5 years spent on our team he always prioritized offering readers an unbiased perspective on modern financial technologies.