What Is Accounting Software?

What is Accounting Software?

Accounting Systems Help You:

  • check_circle_outline Visualize expenses and transactions across a company
  • check_circle_outline Analyze asset depreciation and associated costs
  • check_circle_outline Automatically pay employees and contractors
  • check_circle_outline Develop budgets from historical data
  • check_circle_outline Manage tax payments

Visualize expenses and transactions across a company

Accounting software enables businesses of all sizes to look at how money moves throughout a company. This can be done using the general ledger, accounts payable and accounts receivable features, which are included in the most standard of accounting programs. Some vendors offer greater insight into money movement through visualization features or notifications of money movement within a business. Here are some of the specific tools and functionalities that give companies more control and oversight of the financial process:

  • Transaction processing
  • Custom sub-ledgers
  • Check writing
  • Payable analysis
  • Vendor master file
  • Drill down
  • Bank reconciliation
  • Cash receipts
  • Online invoicing
  • Customer master file
  • Debt collection

Analyze asset depreciation and associated costs

Fixed asset management tools are a key feature included in accounting solutions. This function enables users to look at items such as real estate, vehicles and machines to analyze how their value changes and what costs they have generated over time. For example, with an accounting program, you could estimate the cost of repairs needed for an owned building along with other ownership costs such as utilities.

These costs are often accounted for separately within accounting solutions because they don’t quickly turn a profit. Fixed assets typically include a high upfront investment with some ongoing costs to facilitate and improve the rate of sales. Purchasing a new building for your brick and mortar efforts itself doesn’t generate revenue, but establishing a new location where items can be sold and marketed to potential customers can eventually improve your company’s bottom line.

Automatically pay employees and contractors

Instead of calculating and dispersing payroll manually, accounting software can conduct payments automatically. It can be especially difficult to manage payments to contractors, which is why some solutions include the ability to assist in payments to these individuals as well. Vendors may also include the ability for payments to be issued on a project basis.

A key component to automatic payments is the approval of employee hours and expenses, which in turn allows money to be dispersed to employees quickly and efficiently. By containing approvals, time-off requests, and salary information in a central repository, the payment process can be expedited.

Develop budgets from historical data

Accounting systems often have budgeting features that assist users in creating effective and attainable budgets. This is done through the analysis of historical financial data, which is used to inform realistic future goals. This feature can also be used to estimate project costs and set realistic expectations of the amount of capital and the resources needed to complete a project. These systems enable users to look at past budgets, review planned budgets across a company and to forecast financial needs.

Manage tax payments

Taxes are a tedious but important reality when it comes to your company’s financial compliance. The bigger your company gets, the more complicated taxes can become, which is why accounting programs often include the ability to streamline the tax management process. Some vendors offer auto-tax calculators so that you know exactly how much revenue to allocate for tax purposes. Additionally, if your business operates in different tax zones, the program can help you calculate owed taxes for each relevant location.

How Do I Select an Accounting System?

The functionality that’s included in an accounting program differs depending on the vendor that you go with. This is why it’s important to keep factors such as your company’s specific needs, business size, and software budget in mind when selecting the system that’s right for you. Because finding the right vendor for your organization can be so difficult, we at SelectHub have created an easy-to-use interface to help you compare accounting vendors to find the one that aligns with your goals. Check out our accounting requirements checklist or our list of the best SME accounting software to learn more about the available systems and to see what you need out of your program.

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Enterprise accounting articles are written and edited by:

Lindsey Jenkins

Market Research Associate

Lindsey Jenkins is a Market Research Associate at SelectHub. When she’s not writing about ERP software, you will probably find her watching Game of Thrones, curating Spotify playlists or playing board games with friends. She is a proud alumna of the University of Missouri, where she studied journalism with an emphasis in magazine writing.

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Kim O’Shaughnessy

Lead Editor

Kim is the Lead Editor at SelectHub, where she edits and manages content for over 40 different software categories. She discovered her zeal for writing while earning her BA in Communications at the University of Michigan. Kim enjoys working on any project that offers a creative outlet, and you can often find her blogging about video games in her spare time. If someone manages to pry her away from the game controller, she also enjoys spending time with family and friends.

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Accounting Software Requirements Checklist

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Thanks to automation and AI, accounting software is one of the most transformative tools a business can adopt. ClientWhys CEO Lee Reams remarks, “Free from the tedious tasks, accountants will be able to focus their efforts on developing KPI’s, budgeting for growth and assisting in improving cash flow: more CFO like advice without the cost.”

But they’re also simple solutions that exist if you’re not amassing a team of mini-CFOs. It’s really up to you to decide what your business needs from your next system. To guide you through this process, we’ve created an accounting software requirements checklist. Use it to determine which accounting software features you need and which you don’t.

Kim O'ShaughnessyAccounting Software Requirements Checklist
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The Most Important Accounting Software Features

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Accounting definitely doesn’t have a reputation as the most exciting business function, but that doesn’t diminish its importance. Accounting is the process that keeps the world going, both in business and our everyday lives. That’s why it’s imperative users have access to all the accounting software features they need to get the job done. But what accounting features do they need from accounting software?

Kim O'ShaughnessyThe Most Important Accounting Software Features
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