Why We All Need Accounting Software

There are many reasons why businesses decide not to install special accounting software. These include perceived costs, worries about complexity, and the gut feeling that piling receipts into a shoebox and handing them to an accountant at the end of each year should be sufficient.

The truth is that whilst all these reasons may have been valid in the past, times have changed and there are now some extremely persuasive arguments as to why accounting software is a must for all businesses. Let’s start with cost. While accounting software used to be pricy, with costs escalating for each additional user, it is now possible to get hold of a decent accounting package which won’t cost a penny.

There are quite a few free options available; online and desktop versions of the software. Also good accountants will provide their clients with the accounting system that they prefer most. This way accountants will be able to produce accounts for the client quicker saving them time and money.

The second reason why businesses may shy away from accounting software relates to worries over complexity. We must admit that over the years we have seen some extremely complex accounting systems, some of which seemed to require users to have a degree in lateral thinking. Whilst unfortunately there are still some complex dinosaur systems around they are gradually becoming extinct as software houses realise the need to be competitive on design as well as price. Now there are plenty accounting simple, easy to use and full of features that are actually requested by business owners.

The final reason why businesses may not consider using accounting software is the perception that preparation of 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. For a start, leaving accounts to the year end means that for 364 days of the year the business owner has no idea of the true position of their business. This can lead to a delay in collecting payments, missed opportunities in being able to negotiate for credit facilities and the potential for bounced cheques and high bank charges.

Using accounting software enables businesses to:

• Keep on top of the bank balance
• Monitor receipts and payments
• Quickly chase outstanding debts
• Plan cash flow and monitor actual against forecast positions
• Interpret business and trading conditions
• Provide business information to back up requests for finance

In short, the business with accounting software can be a proactive business. However, there is one further prime argument for maintaining regular accounts. That reason is HMRC. In the last year the Revenue and Customs have embarked on a mission to carry out interim reviews of businesses where they suspect them of failing to pay sufficient tax. The business review teams have given out strong signals that whereas in the past they only expected accounts to be up to date at year end, now they are looking to business to maintain good accounting records throughout the year. For HMRC, inadequate records equates to potential tax evasion so maintaining accounting software can help to avoid a costly and time consuming HMRC review.