A More Efficient Back Office with Accounting software
Accounting is described as the system of documenting, verifying, and reporting the value of assets and liabilities including income and expenses into the ledger or books of account in which debit as well as credit entries are posted chronologically in order to register changes in value. This financial information is used within organizations, companies, and public agencies to make decisions in resource allocation. Accounting software or accounting information systems is an application software package with features that allow recording and processing of accounting transactions within its functional modules which includes accounts receivable, accounts payable, trial balance and payroll. It could be purchased from a third party vendor or developed in house by an organization or a company. It could even be a combination of third party application having local modifications that fit the use and requirements of a given organization. Hence, the solution may vary greatly in both its complexity as well as in its cost.
Accounting information system is usually a module of a larger financial management software package which streamlines accounting related processes and activities. It helps businesses improve the accuracy, accessibility and timeliness of reporting as well as distribution of critical financial information. In most cases, it is also designed to facilitate compliance to the Sarbanes-Oxley Act among other financial regulations through making available audit trails and financial controls which are rules-based.
The application package is in itself usually composed of different modules or different sections that deal with particular areas of accounting. The most common areas are:
• Accounts receivable – where one enters revenues generated as well as other income.
• Accounts payable –where payment for bills and other obligations are processed.
• General ledger –where the main accounting records of the business is kept.
• Billing – where one accomplishes the processing invoices to clients and customers.
• Inventory – where you keep track of company goods and materials, particularly assets.
• Purchasing – where you process purchases of company required goods and services.
• Sales/Job Order – module for receiving and recording customer orders
They are also otherwise known as core modules. There are also other modules such as those listed below which may form part of an optional module package. This are also known as non-core module and is typically purchased from a third party vendor included with the application package or designed in house for better integration and suitability to a particular company need or requirement.
Back office functions remain a challenge for most companies in terms of keeping it accurate, productive and efficient. With an accounting software in place, you take a step towards making this goal take reality while cutting down administrative costs and losses. Decision makers gain the most advantage as no longer would they have to wait for the reports to be collected, consolidated and sanitized by middle rank managers. The financial information get to the concerned parties in real time as they are entered and not only do the business benefit through this timely distribution of information, the reports received are also more accurate as the redundant tasks of data input is minimized if not totally eliminated. There is lesser chance of conflict in data between say sales and billing department. And since the tasks get automated, staffs are more productive and have more time to be engaged in other productive endeavors like analysis and planning.
The application is a tremendous advantage for businesses that are particularly handicapped with consolidation and validation of financial data. This is often the case with wide and spread out teams that wait for a team leader to consolidate reports submitted by his people, which is turn consolidated by a another mid level manager. Organizations which are particularly conscious about keeping and adhering to budgets and so are companies that need to constantly monitor cash flow as well as values and depreciation of fixed capital and non capitalized assets. The software streamlines back office functions and minimizes the need for voluminous paper work often associated with accounting record keeping.
As the technology continues to develop and improve, we can look forward to many added features that will enable our business to become more productive and lower its back office function costs. Even now, some companies are able to maintain accounting function without employing accountants as the accounting software has made it easy even for non-accountants to enter accounting reports. The best is yet to come.