There are many reasons why companies choose not to install dedicated accounting software. These include perceived costs, concerns about complexity, and a gut feeling that piling receipts in a shoebox and handing them to an accountant at the end of each year should be enough.
The truth is that while all of these reasons were valid in the past, times have changed and there are now some extremely compelling arguments as to why accounting software is a must for all businesses. Let’s start with the cost. While accounting software used to be expensive and costs escalated for each additional user, it’s now possible to get a decent accounting package that doesn’t cost a penny.
There are some free options; Online and desktop versions of the software. Even good accountants provide their clients with the accounting system they prefer the most. This allows accountants to create accounts for the client faster, saving them time and money.
The second reason companies may shy away from accounting software has to do with concerns about complexity. We have to admit that over the years we have seen some extremely complex accounting systems, some of which seemed to require a certain amount of lateral thinking from the users. Unfortunately, while some complex dinosaur systems still exist, they are gradually dying out as software houses recognize the need to be competitive in both design and price. Now there are many bookkeeping that are simple, easy to use and full of features that are actually requested by business owners.
The final reason businesses may not consider using accounting software is the perception that creating accounts is a once-a-year exercise best left to accountants. There are several reasons why this is no longer the case, if it ever was. First of all, leaving accounts until the end of the year means the business owner has no idea of the true position of his company 364 days a year. This can result in delays in collecting payments, missed opportunities when negotiating credit facilities, and potentially bad checks and high bank charges.
Using accounting software allows companies to:
- Keep an eye on the account balance
- Monitor earnings and payments
- Quickly track outstanding debt
- Plan cash flow and monitor actual versus forecast positions
- Interpret terms and conditions of trade
- Include business information to support funding requests
In short, the accounting software business can be a proactive business. However, there is another main argument for keeping regular accounts. That reason is HMRC. Over the past year, tax and customs officials have set out to conduct mid-term reviews of companies they suspect are not paying adequate taxes. The business review teams have sent strong signals that while in the past they only expected accounts to be up to date at the end of the year, they now need to keep good accounting records year-round. For HMRC, inadequate records represent potential tax evasion, so maintaining accounting software can help avoid a costly and time-consuming HMRC audit.