What Is Accounting Software?
Accounting software facilitates the recording, management, analysis, and reporting of financial information by businesses. It also assists companies in operating more efficiently by automating accounting duties, including the recording of transactions, the creation of invoices, the tracking of incoming and outgoing payments, the creation of financial statements, and the collection and payment of taxes. Businesses can expedite critical financial processes, such as closing the accounts after each accounting period, by utilizing accounting software. Among other responsibilities, accounting software typically manages the general ledger, accounts payable, accounts receivable, asset management, tax management, and financial reporting.
Real-time analytics are also a feature of advanced accounting software products, which enable businesses to make more informed decisions and provide an accurate, up-to-date view of the company’s financial health.
Certain accounting software products are predominantly intended for small businesses with a limited number of users, while others can accommodate both small- to medium-sized businesses and larger enterprises. Cloud-based accounting software is becoming more prevalent. This typically implies that it is simpler to scale to accommodate the expanding requirements of a business and is easier to manage than on-premises software.
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Why Use Accounting Software?
- The process of manually entering and monitoring financial transactions becomes excessively time-consuming and cumbersome as companies expand. Additionally, manual accounting presents additional obstacles, including the inability to comply with regulatory and tax requirements, as well as data input errors and siloed data. Accounting software may mitigate numerous of these obstacles. The most prevalent justifications for the implementation of accounting software are as follows:
- Automate manual processes that are error-prone and time-consuming. Manual data entry is particularly labor-intensive as transaction volumes increase. It also increases the probability of errors, which could have severe repercussions for the business. The potential to automate and expedite numerous accounting processes, including the entry of transactions, the creation of invoices, the monitoring of payments, and the generation of reports, is available through the transition to accounting software.
- Encourage the expansion of the business. Businesses’ accounting requirements evolve as they expand. Manual accounting procedures that are cumbersome can impede the expansion of a business. The company may encounter difficulty in timely completing critical financial duties, including invoicing customers, collecting cash, paying bills, and closing the books. Companies can manage growth and reduce labor costs by utilizing accounting software, which enables them to accomplish more with fewer employees.
- Eliminate data silos. It is more difficult to communicate information throughout the organization when financial data is stored in a collection of spreadsheets or paper documents. The process of transferring data from one tool to another is labor-intensive, sluggish, and may result in errors. Accounting software streamlines financial data into a single system, ensuring that all users have access to a single, precise source of information.
- Make decisions that are informed by data. It is challenging for managers to obtain a precise understanding of the business’s operations and to generate precise budgets and forecasts when financial data is dispersed across numerous spreadsheets and other tools. Accounting software assists companies in making more informed decisions by centralizing financial information and offering reporting and analysis tools.
- Satisfy the increasing demand for compliance. The burden of adhering to tax requirements, regional accounting standards, and other regulations can increase as companies expand. For instance, organizations that conduct international operations are required to adhere to the accounting regulations and tax regimes of various nations. Accounting software can assist in surmounting these obstacles.
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Top 10 Accounting Automation Software Features
Cloud-based Accounting
The acceleration of digital transformation is further fueled by the desire for more sustainable software and the continuation of remote and hybrid work. Fortune Business Insights anticipates that the cloud accounting software market will expand to more than $416 million by 2024. Unlike on-premise solutions, which necessitate costly hardware, hosting, ongoing updates, and a dedicated IT team to maintain them, software-as-a-service (SaaS) has emerged as the optimal choice for expanding businesses.
SaaS providers incorporate these updates into their subscription costs, releasing them more frequently and automatically. This eliminates the necessity for substantial initial capital expenditures and enables you to make more manageable monthly payments. Cloud-based solutions facilitate collaboration among teams by enabling them to access them from any location with the assurance that the data will be updated in real-time. Provide users with role-based permissions to enable them to monitor the performance of their companies or investments, rather than waiting for you to compile separate reports, which can save significant time in industries that require frequent communication with stakeholders, such as family offices or private equity firms.
The adaptability of cloud accounting software facilitates the expansion of expanding enterprises. Upgrading your monthly subscription is as straightforward as incorporating new users or features. This is particularly appealing to organizations that have multiple entities, such as franchises that frequently require the addition of new locations or businesses that experience seasonal fluctuations that necessitate the rapid expansion or contraction of their workforce.
Innovation with Integrations
In addition to saving time and space, companies that utilize cloud accounting software are not required to wait for the next version of their solution to be released before they can capitalize on newly available technologies. Gravity Software, a cloud accounting software, updates autonomously and consistently introduces innovations. Additional opportunities for integration with other applications are also available through cloud software, whether through a vendor-provided platform or third-party providers. Gravity, for instance, can be integrated with Bill.com, Microsoft Dynamics 365 CRM, Jet Reports, and a variety of other applications that enhance visibility and collaboration on the Microsoft Power Platform.
Numerous additional system integrations are being implemented by software providers to facilitate the integration of accounting software with the remainder of your business systems. For instance, optimizing your sales process and increasing revenue can be achieved by linking your CRM system to your financial and consumer data.
An accounting system that is constructed on a more extensive platform that inherently supports other applications and systems will always simplify the process of establishing these connections and ensuring the interoperability that businesses require to operate at their most efficient. Newer integrations, such as built-in business intelligence, automated workflows that can be created without a developer, and virtual agents who can manage customer service inquiries, are also available to those who utilize the Microsoft Power Platform.
Automation becomes Extensive
Automated accounting software enhances operational efficiency by eliminating manual tasks that impede operational efficiency. This also enables accounting professionals to concentrate more on the analysis of financial insights, rather than becoming entangled in the daily details. Accounting automation can manifest in a variety of ways; however, the objective is to reduce the necessity for manual data entry, restrict the number of stages in workflows, and render the entire accounting process more automated. It is anticipated that automated accounting software features will become more robust to assist accounting teams in working more efficiently, rather than harder, by automating revenue recognition, inputting sales data into your system, and facilitating invoice approval processes.
This also mitigates the business risks and errors associated with manual data input, such as the necessity of copying and pasting data from a single invoice into numerous spreadsheets for multiple entities. Additional examples of automation in business include the capacity to establish accounts payable workflows, automated currency conversion, revenue recognition, and subscription invoicing. Depending on your subscription model, you have the option to establish automated recurring payments every month and schedule rate increases or discounts for specific times.
AI Enhances Productivity
Although autonomous process automation technologies have been on the market for several years, they are currently undergoing an upgrade as a result of the increasing prevalence of AI in the accounting sector. Automation has been particularly beneficial for processes such as accounts payable, as evidenced by the data. Automation of accounts payable can result in a 366% ROI for companies, as indicated by data from Tech. Co, which indicates an 80% increase in operational efficiency.
This new feature employs Microsoft Cognitive Services’ Azure Form Recognizer to extract data from invoices, regardless of whether they deviate from a conventional document format. It has the potential to save accounts payable teams hours each week by eradicating manual data entry.
In the same way, automation of any kind has extensive advantages in accounting. Accounting software can automate a multitude of additional accounting duties. Within Gravity, the following are a few examples:
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Real-Time
The flexibility of reporting features is another accounting software trend that is gathering traction. Real-time reporting is even more critical for companies due to the complexity of global tax laws and the rise in international business. This necessitates that accounting software systems adapt to accommodate these integrations and generate automated, real-time reports. Accounting software systems are improving their business intelligence tools to meet the increasing demand as accounting departments increasingly employ analytics to make informed decisions.
Additionally, we are observing an increase in the number of organizations that wish to maintain the use of Excel in conjunction with more advanced financial reporting tools. Companies with numerous entities can achieve this seamlessly through the integration of Gravity with Jet Reports™. Users can export data with a single click, eliminating the necessity to copy and paste hundreds of data fields into a single spreadsheet.
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Transparency
This is a trend that will ultimately affect software systems, but it is more of an industry-wide accounting trend. Software providers will be required to develop innovative methods to facilitate the rapid and effortless generation of transparent, dependable reports by accountants, as accounting professionals and regulatory bodies prioritize transparency and accountability. That implies that “full audit trails” will become more prevalent.
CEO Nitin Seth stated in Forbes, “The advantages are readily apparent when data and analytics are employed in conjunction.” “Data can be utilized by companies to enhance cost savings, redefine processes, drive market strategy, establish competitive differentiators, and, most importantly, create an exceptional and truly personalized customer experience.”
Personalization
From consumer applications to sales and marketing solutions, personalized technology is becoming increasingly prevalent in various sectors. Many accounting software programs have been slow to embrace personalization; however, as accounting professionals assume more strategic roles, they require more specific functionality that surpasses “out of the box” offerings.
A few examples include the necessity of developing workflows for multi-step expense approvals or overseeing multi-entity reporting for numerous locations.
Accounting for Special Purpose Entities (SPE)
Special purpose entities (SPEs) or special purpose vehicles (SPVs) can mitigate financial risk while fostering innovation. These legal entities enable companies to provide funding for a particular project or category of financial assets, while simultaneously safeguarding the parent company if the project is unsuccessful. These are becoming more and more popular among companies in the renewable energy sector. Nevertheless, SPEs are accompanied by specific regulations that are intended to prevent fraud, similar to the Enron financial scandal of the early 2000s. This is why it is essential to maintain discrete accounting and financial reporting for special-purpose entities while also ensuring that they are connected to the parent company for auditing purposes.
Forecasting and Analytics
Insights into the financial health and performance of enterprises are provided by advanced analytics features. Predictive analytics can assist businesses in the strategic planning of future revenue and expenses. Real-time monitoring of financial metrics is facilitated by dashboards that include key performance indicators (KPIs).
ESG and Sustainability
Sustainability and environmental and social governance (ESG) principles are the primary focus of CFOs in 2024, as per the AICPA & CIMA. The accounting professional associations caution that the transparency of a company with respect to ESG can have an impact on its reputation among current and potential stakeholders. In addition, the organizations recommend that companies develop a comprehension of specific nonfinancial KPIs, such as carbon emissions, and devise strategies to integrate them into their reporting.
However, companies can begin to consider environmental principles before utilizing a software solution to report on sustainability or any other metric. They may commence the software selection process. Cloud accounting software may be more environmentally favorable than infrastructure-heavy, on-premise software, as the energy necessary to operate servers for numerous businesses is consolidated into a single location, rather than each business housing its own. However, that prospective environmental benefit may prove to be a failure if the vendor or cloud hosting provider fails to adhere to ESG principles. Companies that utilize accounting software that is constructed on the Microsoft Power Platform, such as Gravity Software, can be assured that they are collaborating with a vendor that is dedicated to sustainability.
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How to Choose the Right Accounting Software #Leapfin
Any business must select the appropriate accounting software to manage its fundamental financial operations. Begin by conducting a thorough assessment of the current and anticipated requirements of your business.
A system may be capable of accommodating the current number of employees; however, will it be able to expand in tandem with the expansion of your business?
Will it be effortless to integrate into ERP suites as your organization expands? Does the supplier provide fundamental capabilities, including advanced forecasting, project accounting, and fixed asset management?
Is the software user-friendly and intuitive for your employees?
Consider the extent to which the software automates your accounting duties and the extent to which you can modify workflows to accommodate your requirements. Evaluate whether the software is capable of accommodating all regional and international tax regulations for your business operations, both currently and in the future. It is crucial to determine whether the software is compatible with the IFRS accounting standards and supports multiple international subsidiaries if you are currently or intend to operate internationally. Consider the software’s ability to accommodate multiple locations and mobile devices if your staff requires access from locations other than a single central office.
To enable informed decision-making, ascertain whether the software provides real-time data analytics and reporting capabilities that enable the monitoring of key performance indicators (KPIs), the exploration of trends and issues, and the development of a strategy.
Leapfin is designed to provide Accounting and Finance teams with a unified source of truth for all revenue reporting. It effortlessly consolidates disparate data sources, managing thousands to millions of transactions per month. This is the reason why high-growth brands rely on Leapfin to confidently close their accounts every month, without the hassle of manually reconciling data across countless spreadsheets.
- Raw data collection
- Data standardization
- Dynamic linking
- Data Enrichment
- Compliance rules
- Clean journal entries
FAQs
What should I know about how Leapfin connects to NetSuite? And does Leapfin integrate with other ERP systems?
Many Leapfin customers are NetSuite customers. Leapfin allows you to customize your export so it matches your NetSuite import fields, making integration and data upload seamless. Leapfin also connects to other ERP systems, as well as business intelligence tools, and data warehouses like Snowflake.
We can export your data to just about any system on a schedule that suits you.
How is Leapfin different from a Stripe to a NetSuite connector?
Leapfin is more than just a Stripe to NetSuite connector. A connector merely sends data from one place to another. Leapfin transforms the data to make it accounting-ready. It ingests messy, raw transaction data from multiple systems, and aggregates and standardizes it. It links related transactions and enriches the data. It applies accounting logic based on your policies to generate journal entries for your GL system and journal entry summaries perfectly formatted for your ERP.
The enrichment that Leapfin performs with your data cannot be overstated. As most accountants are painfully aware, PSPs like Stripe aren’t doing accountants any favors. Raw data is not accounting data, and even specific reports from these providers are problematic because of gaps and inconsistencies.
Why use accounting software?
Companies use accounting software for many reasons. They include increasing accuracy and efficiency, supporting business growth, obtaining real-time views into financial information, monitoring cash flow, managing invoicing and payment processes, facilitating reporting, and complying with accounting standards and tax requirements.
What reporting options does accounting software offer?
Depending on the specific product, accounting software can generate reports upon request or automatically at the end of every financial period (weekly, monthly, quarterly, etc.). Accounting software can help businesses generate their financial statements, as well as more detailed reports that examine specific aspects of the business, such as lists of outstanding bills and invoices.
What are advanced accounting software features?
Advanced accounting software features include support for multiple currencies and international subsidiaries, advanced analytic capabilities, such as machine learning, project accounting, fixed asset management, and sophisticated customizable workflow automation.
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Conclusion
The implementation of accounting automation software has the potential to revolutionize the financial management of enterprises. Organizations can improve their strategic planning, efficiency, and accuracy by utilizing these top 10 features. The capabilities of accounting automation are expected to expand, providing businesses of all sizes with even more value as technology continues to develop.
Businesses can more effectively document, manage, analyze, and report their finances with the assistance of accounting software. Recording and categorizing transactions, administering the general ledger and the chart of accounts (COA), and generating financial statements and other financial reports are all core accounting features.
Real-time analytics, mobile support, billing and invoicing automation, budgeting and forecasting, asset monitoring, and project accounting are additional features to consider. It is crucial to take into account not only the features that your business requires today but also those that will be necessary to facilitate future growth. Software that is integrated into cloud-based ERP suites simplifies the process of scaling and incorporating new functions as businesses grow and their requirements become more intricate.
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