What Is Accounting Software?

Accounting software is a computer program that assists bookkeepers and accountants in recording and reporting a firm's financial transactions. The functionality of accounting software differs from product to product. Larger firms may choose to implement a customized solution that integrates a vast amount of data from many different departments. Small firms often choose an off-the-shelf product.

Understanding Accounting Software

Accounting software is an invaluable resource for modern businesses. Software allows detailed tracking of financial transactions and near-instantaneous reporting and analysis. Before accounting software, these tasks had to be performed by hand, using large transaction journals.

Accounting software also allows for the storing of numerous amounts of data without having to take up physical space. This results in companies needing less office space because they no longer need large file rooms to store binders of data. Less office space allows for cost savings.

The ability to easily access accounting information through accounting software makes it easier to complete audits, particularly those that require evaluating information from years prior. This not only assists with internal audits but also assists external groups, such as the Internal Revenue Service (IRS), in case they need to investigate financials for tax purposes.

Also important is where or how the accounting software is deployed: on-premises, hosted as software-as-a-service (SaaS), or in the cloud. There are generic accounting software packages that can be used right away for all types of companies, while other packages require customization for the specific needs of an industry or business. As with other types of software packages, pricing for accounting software can take the form of a flat-rate (e.g., a monthly subscription), time-based, per user-based, and tiered-rates depending on the level of service.

Features

• User-friendliness
• Integrate billing and invoicing features with inventory management
• Identify and prevent errors
• Easily connect with stakeholders
• Secure sensitive data