What is a Computerized Accounting System and its Advantages and Disadvantages

Digitalization has left no stones unturned. We see digitalization as a very inseparable and irreplaceable part of businesses. The reason is very simple because they want to clear the clutter of physical data sets. When you hear of data sets, there is surely one industry that might have appeared on your mind? Banking and Accounting industry. Businesses have moved from the manual accounting system  to the computerized accounting system . Computerized Accounting system has come a long way over the years. These programs claim to make business owners’ lives easier when it comes to tracking expenses, preparing taxes, and analyzing revenue growth.

Accounting software programs have become common, and there are benefits and drawbacks to relying on a computer for all accounting. In this blog post, we will be discussing all the factors that are playing a significant role for small businesses to large organizations that want  to manage accounting applications digitally. For obvious reasons, there are applications with their pros and cons, which will be deeply discussed in this blog. So, let us see what digital accounting platform has in their bucket to offer customers. 

We have seen how going digital is becoming a norm for many businesses and most of them are making their ways towards it. In the same way, the computerized accounting business has always worked in favor.In this process of understanding the computerized accounting system which is one of the Fintech software, we will be starting off with the positive side of computerized accounting software.

1. What is a Computerized Accounting System?

Computerized accounting system are the software programs which are used to perform wide variety of accounting tasks. These software programs are once installed in the computers will manage accounting data, perform all the accounting activities, produce economic output for regular financial statements, generate year-end financial reports, record the accounting transactions. Along with these companies can also prepare trial balance sheet without preparing ledgers.

This system enables you to establish revenue and expenditure accounts, such as rent or transactions income, salaries, promotion costs, and material expenses. 

They also can be utilized  to maintain bank statements, settle charges, and make statements. That can be done as per the software program, a few financial accounting systems also enable you to provide tax documents, manage payroll, and maintain project necessitating.

You can usually customize the software to match the requirements of your business. It’s essential to ensure that your team is prepared and knows how to work the method perfectly so that your company can favourably apply your accounting program.

2. Advantages Of Accounting Software

2.1 Simple Accounting System

It is quite evident and we see most business owners do not have trained accountants or bookkeepers, making most accounting duties difficult to do. Accounting software applications benefit business owners in this situation. Accounting software packages are available in a number of formats that are user-friendly. Business owners may look for software that is simple to set up, understand, and utilize by doing some research.

Accounting software is meant to give numbers meaning and to conduct automatic computations, putting financial management in the hands of the user. Entrepreneurs can effectively perform accounting activities even if they have only a few minutes or no instruction in creative accounting.

The computerized accounting systems have multiple programs providing all types of complex financial information at their fingertips. All that the business owner needs is just to accumulate all the financial data in a unified business app that is simple to use and can easily integrate with bank accounts data, accounts debts, and third-party vendors.

2.2 Accurate Forecasting

One of the vital advantages of computerized accounting is accurate forecasting. Forecasting is a new term for conventional bookkeepers. Because traditional bookkeepers used assumptions and there was no specific logic behind any activities. It is not the same with computerized accounting. It adds a special advantage to the process.

It’s not easy to analyze the patterns and trends in your financial performance in depth. In fact, the Accounting app provides a sense of statistics, an accuracy that allows customers to see where they need to minimize costs. This will help them control their budget, gain profitability without any manual interference

2.3 Cost Savings

If you think going digital is a costly affair, then your thought needs reconsideration. No, it is actually not true. There are multiple transactions occurring in a day, and keeping a track of everything manually is not an easy job. It occupies larger than expected physical space. So, a typical physical place will have to store millions of records. The cost of renting is always awry.

Accounting and finance systems, which are at the heart of corporate growth, automate basic computations and administrative operations. It takes control of your revenue structure and transfers it to an external specialist, allowing you to eliminate outsourcing financial management. At the same time, they lower the expenses of publishing and disseminating material. It keeps all critical information in a separate location.

2.4 Time-Saving

As we saw in the previous section, leasing space isn’t a concern, but the cost and time investment it demands is a concern. More in the physical space, will demand more time to process, find, fetch and deliver the results. The overall delivery gets delayed. Thus, it wouldn’t be wrong to say it consumes a lot of time.

The first and most essential advantage of a computerized system or digital accounting program is that it saves a lot of time when compared to manual bookkeeping. Front-end business papers and back-end transaction records are performed concurrently using a computerized accounting package. For example, you may use the application to produce client invoices, make bank payments, and issue checks, with the added bonus that the system keeps track of everything.

2.5 Simpler Collaboration

Before the initialization of automated or computerized accounting system, the collaboration was quite challenging and time-consuming. But now times have changed. Many computerized software packages allow business owners to specify permissions that grant access to data to an independent bookkeeper or accountant. Within fingertips, business owners may sync information with bank and credit accounts and import data. This enables business owners to rapidly balance finances and import the right information for important advisers to examine.

2.6 Tax Compliance

Business owners specifically from the accounting, banking, and financial sector are diligently managing their records. Securing paper-based data may not provide as much security as a computerized accounting system, so reliability is always at stake. In addition, you have to perform everything manually which is at a slower speed than doing it automatically.

There is a plethora of feature-rich accounting software on the market that is specialized in payroll assistance, financial reports, and automatically adhering to tax rules. The program stores all the required data for the firm in order to maintain a transparent workflow.

3. Disadvantages of Accounting Software

3.1 Technical Vulnerabilities

When it comes to technology, you cannot ignore a few technical challenges that might occur and disrupt the process. One of the biggest disadvantages is not understanding the technicalities of the app developed and thus committing mistakes.

Additionally, there are accidents too with automated systems. Like data loss, virus attack of personnel or financial data of the company. For instance, you may be completing year-end statistics for your accountant when the power goes off. Computers might become infected with a virus and crash. Users may also conduct software tasks improperly if they are unfamiliar with them. If a user intends to do one thing but mistakenly performs something different, correcting the error may take some time.

3.2 Fulfill Specific Requirements

When you ask for third-party resources to create a comprehensive application, it may not be cost-effective. There is a records package that is designed to work for a wide range of businesses. It considers all the basic information and builds this software. In any event, if your firm has particular or unique requirements, you will not get it from this type of software. Such software comes with restrictions. For working with such software apps, you need to adapt or change your working style to fit the bundle or pay to have the bundle tailored to your needs.

Without any sort of bookkeeping structure, you won’t be able to run your firm efficiently. It’s up to you whether you want a manual or an automated setup.

3.3 Fear of Unemployment

Every field has this fear that automation will take over and unemployment will take over. Since automated apps also provide efficiency and speed, there are employees who feel that their tasks will get replaced by a bot. There is also a fear of being laid off so, they show comparatively less interest in developing applications or knowing about the technology.

4. Conclusion

Through this entire blog, we aimed to focus on the advantages and disadvantages of utilizing accounting software throughout. As you must have read, a computerized accounting system also has merit and demerits, just like any other software. The benefits demonstrate how we can manage these and effectively utilize them in our business. Within a short amount of time, it keeps track of everything that’s worthy and makes the process speedy and secure. The disadvantage is that you may not be able to solve many problems and might end up requiring a consultant. A significant advantage is that there are no errors in their job, and the computerized system is extremely fast and efficient. Feel free to reach out Financial Software development Service providers like us to gain more information about development process and implementation.

Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.


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    1. Matthew

      Different technologies are making our life easier and simple. Computerized systems provide quick solutions, costs saving, time-saving, tax compliance, and many more. But however far technology goes, the dependency on humans will always be there. Their work gets redefined with advent of computerized systems.