Many businesses that do not own any accounting software tend to face problems in filing all the necessary documents that need to be filed, leaving them to more unorganised data filing. These problems however can be avoided simply by choosing the right accounting software. To begin with, one should consider on buying accounting software beforehand. Below are some of the of problems faced by companies that do not use any accounting software:
Outdated management accounts
A company that does not have accounting software will have problems in having updated management accounts. It is difficult for business owners to monitor the health of their businesses. Hence, they won’t be able to meet their business goals.
Unused business reports
Businesses that do not have accounting software tend to have sales forecast and cash flow predictions that are compiled in files gathering dust. All their efforts will come to waste if the business information is not regularly used. Businesses need to use this information regularly to compare it to what is actually happening. (Profit vs. loss)
Lack of information on profit origin
Having to know that a business is making profit is not enough. Business owners need to know which of their products or services that are making or not making any profit. Without accounting software, it is tough for a business to keep an eye on every cent it spends on.
Traditional method has lack of security as it is much easier for anyone to have access to a company’s accounting details. Accounting software on the other hand will require a login name and password. Furthermore, companies can assign roles to employees and define exactly where they can go and what they are allowed to do on the system.
Decision making challenges
Companies with no accounting software face tough times in making decision, especially before pursuing new projects. This is because they do not have enough information on their current finance position.
Uncertainty on business financial condition
Many business owners are unsure about the financial condition of their own businesses. As traditional method requires a lot of time to generate full reports of a business’s performance, it is difficult for business owners to have a better picture of their own financial situation, which will lead to tough decision making.
Poor time & cost management
Companies that do not have accounting software spend too much time on data entry and the bigger the business it, the more manpower is needed. Therefore, business owners may need to spend more in recruiting more accountants, which is pretty expensive compared to the amount of work they can deliver within a specific time given.
Lack of accuracy
As traditional accounting uses humans to perform tasks, errors tend to happen. When errors occur, more time and cost will be consumed. Companies lose money whenever problems like these happen.
Records tracking problems
Without accounting software, companies cannot have organized information on their invoices, bank and PayPal transactions, VAT and many more. Their records tend to be messy and this is when problems will occur. Also, it is hard for them to track down the lists of their debtors (who owe them money and who need refund, etc)
No back-up in case of emergency
With accounting software, companies get to easily back-up their information with just a few simple clicks. Companies that do not have one on the other hand will need to keep extra files in case of any missing documents.
Lack of space for filing matter
Keeping too much information on multiple files of different business years make working space rather crowded and less organized. It would be so much better if all of these information can be stored in just one organized system that has unlimited storage capacity. Business owners who have small offices and also fewer employees will find this matter rather annoying.
Lack of work flexibility
As accounting software requires internet connection, login name and password, users can always manage their accounts from whichever location that has an internet connection, as long as they have the access to use the service –no more staying late in office. Should there are works that need to be completed quick, accountants will have to stay back to get them done. (Not convenient especially when Malaysia has too many public holidays)
Whenever a vendor or customer calls, business employees will need to find the necessary documents that will not only take their time, but their customers’ time. Apart from that, employees also need to waste time on printing, labeling, stamping and mailing. With accounting software, they can simply email their documents –that way they get to save time and get paid faster.
No audit trail
Business owners face problem in identifying the persons who made changes on records and when they are made (due to the role of multiple employees). Accounting software offer audit trail, a lengthy list chronicling any additions and changes made to the system, and who made them. This is a critical security feature.
Information are secured in different offices
There are times when employees had to run back and forth to other offices to get the information that they need to have. If they had accounting software, they have all details stored in one system.
Past due updates and tasks
Accountants at times tend to forget about certain tasks that need to be sorted out by a certain date, causing them to have past due invoices and payroll taxes, low inventory and many more. This will cause to unwanted delays. However, accounting software has the capability to remind them of all their financial matters.