It wasn’t that long ago that anyone dealing with the accounting requirements of a small, or even a fairly large business, would have done so using paper ledgers. It wasn’t called “accounting” for nothing.
For many years I made a living selling accounting systems; They were paper-based at first and then very slowly moved to a computer-based system as the necessary software and hardware became more affordable for businesses.
Over time, the accounting function has become much more comprehensive. This is due to the ability, inherent in most accounting software these days, to integrate the various accounting functions to see the big picture right away, without having to wait days for reports to be compiled by hand.
It’s all very well for the sales manager to know that his team of high-performing salespeople have booked orders worth more than $ 100,000 this week, but unless he knows how much it has cost to run that sales team, how much the sale has cost. Merchandise and services that are provided have a cost of production and the other overheads involved, your sales figure taken in isolation does not mean much.
If, on the other hand, you can get a real-time impression of the overall situation, including a profit or loss calculation, you can make decisions and act much faster than in the days of paper accounting.
Information, of course, was always available, it was simply not easily accessible.
If we accept that it takes roughly the same amount of time to enter a supplier’s invoice details into the purchasing ledger module of a computerized accounting system as it does to write it into a paper ledger, then line by line , both methods are more or less the same. So why invest time, effort and money to install a computerized accounting system?
The answer, of course, lies in what happens to that information once it is entered into the system. If you write the details of a purchase invoice in a book, it stays there, in the book. Nobody else knows.
If, on the other hand, you take the same amount of time and enter those same details into an integrated computer-based accounting system, the information is distributed to all areas of the system where it is needed. Management can view the updated expense figure with a click of the mouse or the push of a button. I think most people would agree that it is more effective than asking a member of the accounting team to prepare a report by hand.
Not only does accounting software reduce the time it takes to keep company-wide account data up-to-date, it also gives employees and management at all levels the information they need in an instant.
The salesperson responding to a customer’s stock inquiry can see if a particular item is in stock without having to walk to the warehouse, the business accountant can see how much cash should be received at the end of the month and how much will be received . be available to pay providers.
Accounting software saves time and effort and puts people in control by giving them up-to-date information on which to make important business decisions.