12 Biggest Accounting Software Benefits (Spoiler: You Save $$$)
Without the right tools to power your accounting workflow, finance could easily turn into an uncrackable black box within your organization, resulting in delays, errors, and unforeseen expenses that all could have all been avoided.
Wondering if it’s the right time to invest in accounting software? Here are the biggest accounting software benefits to help you decide.
Why Get Accounting Software?
There are many reasons why you should get accounting software. But if you had to pick just one, it boils down to this — transparency.
Without an audit trail of where your financial data is coming from, who’s responsible for changes, and how it all comes together to form the bigger picture, you never know which numbers to trust.
While you may think that your Excel sheets are saving you money, in reality they're:
- Prone to human errors that can lead to costly mistakes and inaccurate reporting
- Time-consuming to maintain as your business grows and transaction volume increases
- Lacking in collaboration features, making it difficult for finance teams to work together
- Not secure, as spreadsheets can easily be shared with anyone without access controls
- Missing features like automated reconciliation, expense tracking, and financial reporting
Instead of copying and pasting data from spreadsheet to spreadsheet, you have all your transaction information in one place. You can easily see what’s been spent or what’s come into the business, and, you always know where to find this information.
Okay, But Do You Need It?
Technically, no. Just like you don’t need a carpenter for that aging floorboard. All you really need is a sharp blade and some glue.
But then again, after fifteen minutes, a broken floorboard, and a few splinters, maybe it would’ve been easier to just call one?
Accounting software is a lot more than a hub for viewing financial data. It’s also an automation platform, a reporting tool, and a watchdog for ensuring tax compliance. Here are some of the most impactful benefits of accounting software, lifted from real-life use cases across different B2B and B2C tech startups:
1. Real-Time Financial Visibility
Instead of relying on siloed data across multiple spreadsheets, cloud accounting solutions integrate with banks, payment processors, and business apps to provide an always up-to-date view of a business’ cash flow, revenue, and expenses. This is one of the core features of modern accounting software.
During the UK lockdown, financial leaders across different companies needed help keeping pace with the country’s complex furlough scheme. Pamela Phillips explains how integrating with Xero helped her clients navigate cash flow issues during this period:
Every time the government introduced a new initiative we had to be straight off the mark, interpret what it meant for clients, and communicate what’s happening and ways we could help them access it.
With Xero, our clients’ numbers are always up-to-date. The minute the pandemic happened, we could look into our clients’ accounts and see whether they had a cash flow issue.
2. Automated Data Entry Operations
Manual data entry is time-consuming, error-prone, and hinders growth. Accounting platforms use tools like AI and Optical Character Recognition (OCR) to make sense of documents quickly and accurately.
Stack Overflow, the online community for developers, has been using Tipalti for financial automation since 2019.
Since implementation, Stack Overflow has used Tipalti’s multi-entity and multi-currency solutions to automate 90% of their financial processes, with detailed audit trails keeping track of every change without any manual effort.
Why is this important? According to Quickbooks, the average small business owner spends upwards of ten hours each week on manual accounting data entry tasks. All of this could be easily automated, saving a business at least $15,000/year.
3. Seamless Cross-Functional Integration
Gartner found that 39% of company leaders consider integrations with existing software as the most important factor when choosing a new software vendor.
That’s especially true for accounting tasks. By connecting financial data with operational data from your CRM, inventory management, ERP, payroll, and other tools, you can get a complete picture of your financial performance across verticals.
For example, Quickbooks has long been considered the gold standard of integration among accounting platforms. Right now, it features a library of more than 750 third-party integrations and an open API for multi-way data exchange.
Before we had TSheets, our scheduling was all done on a spreadsheet, which led to a lot of errors. Now, we can see how many hours each tech worked and on which job.
For context, the integration he's referring to, TSheets, is now called Quickbooks Time, and it enables operators to keep track of employee schedules and make adjustments in real-time.
4. Audit Trails and Compliance Management
Instead of relying on error-prone manual record keeping, audit trails effortlessly capture the who, what, when, and where of financial activities. By logging every transaction, user action, and system event, they provide a financial record that can be used to demonstrate compliance with laws like GAAP, SOX, and GDPR.
By creating detailed audit trails that ensure proper accountability both within and outside your organization, there are multiple ways that software solutions can help you comply with regulations like GAAP and SOX. Here are some examples:
- Proving revenue recognition was handled correctly per ASC 606.
- Validating that expenses were recorded in the proper period.
- Showing proper depreciation schedules were followed for fixed assets.
- Confirming accruals and estimates were calculated following GAAP rules.
In 2019, the SEC imposed a fine of $16 million on Hertz for inaccurate reporting that was not consistent with GAAP standards. Similarly, in 2016, Monsanto was fined $80 million for being unable to reflect the cost of rebates in accordance with GAAP rules. Non-compliance for companies can be expensive, and having an electronic record of your financial transactions can save your team from a lot of headache.
5. Multi-Entity Consolidation
Multi-entity consolidation is the process of combining the financial statements of multiple business units, subsidiaries, or legal entities into a single set of financial statements for the parent company.
This is crucial for presenting a comprehensive and accurate picture of an organization's overall financial health and performance to stakeholders like investors, lenders, and regulators.
However, consolidating financial data across entities with different charts of accounts, accounting systems, and reporting periods can be extremely complex and time-consuming. Multi-entity accounting software automates and streamlines this process in several key ways:
- Automatically collecting and standardizing financial data from disparate systems
- Handling currency conversions and eliminating intercompany transactions
- Providing pre-built consolidation templates aligned with accounting standards
- Offering audit trails and controls to ensure accuracy and compliance
- Enabling real-time consolidated reporting and drill-down analysis
NetSuite OneWorld, Sage Intacct, Microsoft Dynamics 365 Business Central, and Tipalti are all examples of good accounting solutions that can consolidate financial data across multiple business subsidiaries. They offer both advanced and basic features like shared charts of accounts, inter-entity transactions, automated multi-currency consolidation, and more.
6. Dimensional Reporting of Financial Data
Dimensional reporting allows startups to analyze financial data through multiple lenses, providing deeper insights to drive better decision-making. By tagging transactions with relevant dimensions like customer, product, location, or project, finance teams can easily slice and dice data to uncover trends and opportunities.
For example, a SaaS startup could use dimensional reporting to compare key metrics like customer acquisition cost (CAC) and customer lifetime value (LTV) across different customer segments, geographies, or product lines. This granular view helps identify which areas are most profitable to focus growth efforts.
The Irish Times Group began working with AccountsIQ to streamline their financial reporting shortly after the former acquired The Examiner Group in 2018. Trying to manage disparate systems across both media entities had become a challenge, but multi-entity accounting helped bring all financial transactions in one place.
One of the benefits of bringing a group together is to drive synergies in the cost base as we re-engineer how we operate day-to-day. Systems automation is the real prize and AccountsIQ is enabling us to realize these operational goals.
7. Streamlined Procure-to-Pay Process
Accounting platforms with procure-to-pay functionality automate the entire process from purchase requisition to vendor payment. Automated 3-way matching of POs, goods receipts, and invoices ensures orders are fulfilled correctly before payment is issued.
For example, Tipalti's AP solution helped digital media company, Tapjoy, reduce payment workloads by 50%.
8. Reduced IT Hardware Costs
Cloud-based accounting software eliminates the need for on-premise servers, reducing hardware infrastructure and maintenance costs by millions of dollars. With automatic software updates and backups handled by the vendor, finance teams can focus on core responsibilities instead of technology management.
9. Better Collaboration for Remote Teams
Cloud accounting enables real-time collaboration for distributed finance teams. Multi-entity businesses can also standardize processes across locations while retaining flexibility.
All of this is done without compromising organizational security, thanks to detailed audit trails that hold managers accountable for their actions.
10. Faster Month-End Close
With good accounting software, continuous financial consolidation and automated bank reconciliation accelerate the monthly close. For example, Ramp was able to reduce its month-end close time by a whole 5 days by transitioning to Netsuite, which allowed them to invest further into financial automation for their team.
11. Disaster Recovery for Sensitive Data
With automated backups, strict access controls, and 24/7 monitoring, cloud accounting software protects financial data from loss or theft. Platforms like Oracle NetSuite and Workday have robust disaster recovery measures to minimize downtime.
12. Accurate Cash Flow Forecasting
To finish off our featured benefits of accounting software, let's talk about advanced analytics. Accounting tools use real-time data, budgets, and schedules to project cash inflows and outflows, ensuring you're always prepared.
Visual dashboards, customizable reports, and real-time notifications provide visibility into cash positions to help identify potential shortfalls before they impact the business.
Ready to Choose Your System?
The CFO Club’s team of analysts has spent hundreds, nay, thousands of hours analyzing accounting software; these are the tools that came out on top:
If you need more help choosing the type of accounting software best suited for you, don't worry — I have something for that.
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As a shady tipster in a dark alley once said to a respectable journalist who found himself way over his head: “Just... follow the money.” Whether you’re exposing political corruption or just trying to maintain proper accountability within your own organization, making it easy to follow the money is in your best interest.
... weird parallel? Maybe I've been watching too many crime shows.
Aaaanyway.
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