12 Accounting Software Benefits That Will Transform Your Business

Manual bookkeeping has been the standard for most of history, but it has some major downsides. Hours spent organizing receipts, worrying about making mistakes, and frustration from mountains of paperwork can exhaust you.

So what’s the solution? Spoiler alert: it’s accounting software.

In this article, we’ll show you 12 ways modern accounting software can transform your business. From saving time to gaining confidence in your numbers, let’s look at how the right software can do more than just manage your books—it can transform your financial operations and set your business on a path of growth and success.

Key takeaways

Save time and money: Accounting software automates tasks like data entry, reducing manual labor and administrative costs.

Minimize errors: Automatically track transactions, make calculations, and generate financial statements to reduce the risk of human error and improve data accuracy.

Gain real-time visibility: Dynamic dashboards based on live cloud-based data give you instant insights into your business’s financial health.

Simplify tax compliance: Accounting software automatically organizes transactions, making tax filing less stressful.

Scale with confidence: Software can grow with your business and handle increased complexity as you expand.

Table of contents

• 1. Automate tasks and save valuable time
• 2. Minimize errors and improve data accuracy
• 3. Save money
• 4. Master accounts payable and receivable
• 5. Get real-time visibility with dynamic dashboards
• 6. Make smarter, data-driven decisions
• 7. Simplify tax and regulatory compliance
• 8. Enhance data security
• 9. Streamline payroll management
• 10. Optimize inventory management
• 11. Collaborate with your team
• 12. Scale your company with confidence
• Frequently asked questions

1. Automate tasks and save valuable time

One of the useful benefits of accounting software is its ability to automate essential bookkeeping tasks. Depending on how you use the software, you could save as much as 15 hours per month by automating bank reconciliation, transaction categorization, data entry, and reporting.

By letting your accounting software handle these time-consuming tasks, you can free yourself up to focus on things that move the needle more, like strategic decisions, instead of spending hours each week on tedious bookkeeping work.

As enterprise analyst Oliver G. explains,

“Since I started using FreshBooks [accounting software], I’ve felt more streamlined with my processes. It helps me make the most of my time by entering the data and doing most of the work automatically.”

2. Minimize errors and improve data accuracy

You’re only human, but even a tiny error when inputting and calculating financial data can cause big drama for the overall accuracy of your accounting processes. According to research from Gartner, bad data and human errors cost organizations as much as $12.9 million per year on average. Ouch.

While your exact losses might not reach that level, it’s clear to see the real cost of even small mistakes. By using accounting software and its automatic calculations, you can breathe easier knowing that technology is keeping you safe and sound from human error and making sure your financials are accurate.

3. Save money

Wait, but doesn’t accounting software cost money? Yes, but when you use accounting software, you can reduce the need for extensive manual labor in your bookkeeping process. Not only are you saving on the operational and administrative costs of hiring multiple accountants, bookkeepers, and other pros, but you save on old-school things too, like paper, printing, and storage for your financial statements and physical records.

Plus, accounting software’s A+ accuracy means it’s easier to catch errors early on and prevent costly financial headaches.

4. Master accounts payable and receivable

A strong grasp of accounts receivable and accounts payable (aka money in and money out of your bank accounts) is key for any small business. Good accounting software streamlines these processes with useful features that actually help you save time and brain power. 

Accounts receivable: Accounting software lets you use professional invoice templates, online payment gateways (e.g., Stripe, PayPal), and automated payment reminders to your customers.

Accounts payable: Your software helps you track bills, manage payment schedules for healthy cash flow (no need to schedule bank payments manually),and avoid the burn of late fees from missed due dates.

5. Get real-time visibility with dynamic dashboards

When you use accounting software, you don’t need to wait around for monthly or quarterly reports from your accountant to get a snapshot of your organization’s financial health. Electronic bookkeeping platforms have financial management dashboards, which give you at-a-glance insights into your income statements, expense reports, and overall profitability at any time. 

Generating financial statements whenever you need them makes it far easier to make informed, strategic business decisions based on the facts of your organization’s financial performance.

6. Make smarter, data-driven decisions

Accounting software is great for giving you accurate insights, so it’s way easier to make decisions based on hard, real-time data from detailed financial statements—translation: better strategic planning and more accurate forecasting for your business.

Most accounting software packages offer the latest and greatest reporting tools to help with financial management. You can instantly generate tons of useful reports and accurate financial statements, including profit-and-loss (P&L) statements, income statements, balance sheets, and cash flow statements. 

These reports help you identify trends, get an overview of financial transactions, track key performance indicators, and create realistic budgets for your business. 

Take a look at this breakdown of manual reporting vs. software-generated reporting used in accounting software to see how useful these tools can be:

7. Simplify tax and regulatory compliance

Tax season doesn’t have to be stressful (for real). By using advanced, cloud-based accounting software, you can handle tax inquiries and audits with confidence, knowing that your reporting is backed up by a full picture of detailed and accurate data. 

Accounting software automatically categorizes and lists your expenses and financial transactions, and whips up key financial reports that make tax filing simple. Most platforms also allow you to track sales taxes, which makes it much easier to maintain a compliant audit trail and remain compliant with the IRS rules for small business bookkeeping. 

8. Enhance data security

Data security is an increasingly important part of the bookkeeping conversation. Traditional methods, like manually tracking finances in a spreadsheet, are becoming less trusted than cloud-based accounting software. The risk of losing a single spreadsheet with all your data is a legit reason to worry. 

Or, you can choose to sleep better at night with cloud-based accounting systems that offer industry-standard data protections while backing up your most important information to the cloud. Through encryptions, backups, and user permission systems, your accounting software becomes a single, secure source of truth for your financial information.

9. Streamline payroll management

Payroll can be a touchy subject because it’s a highly time-consuming task for many small business owners. Without piling on stress, the right accounting software solution can do wonders for the time and energy spent on this process. Many platforms offer payroll services as either a built-in or an add-on feature. These tools include:

• automatic withholding and payroll tax calculations
• direct deposit capabilities to your employees’ bank accounts
• automated payroll report generation

10. Optimize inventory management

If your company holds a product inventory, you know that tracking and managing your stock is a major part of your day-to-day operations. Accounting software can be a super useful tool for tracking stock levels, managing purchase orders, and even identifying your best-sellers.

This helps small businesses without a huge inventory supply chain prevent stockouts, reduce carrying costs, and directly link real-world sales data to your cost of goods sold (COGS) and other financial reports.

11. Collaborate with your team

Most modern cloud accounting software platforms support multi-user access for finance teams and other pros on your team. This means your accountant, bookkeeper, business partners, and everyone else on your team can all access the same data from anywhere. It also means you can avoid sending sensitive files by email (plus, fewer emails!) and everyone is working from the same accurate, real-time data.

12. Scale your company with confidence 

Scalability should be one of the top things you look at when choosing accounting software for your business.

Accounting software lets your systems grow along with your business. Manual bookkeeping may be manageable when you first start out, but as you grow, it can be impossible to keep up with. A good problem to have…but still a problem. 

Accounting software offers flexible tiers of service, ensuring your system can seamlessly adapt to your needs as your business evolves. From basic invoicing and balance sheets for an independent freelancer, all the way to multi-currency transactions, payroll, and inventory management for a big corporation, accounting software lets you grow without worrying about outgrowing your accounting systems.

Frequently asked questions

Still curious about the benefits of accounting software versus traditional bookkeeping methods? We’ve got you covered with the answers to your burning questions.

What’s the difference between bookkeeping and accounting software?

While both involve financial data, bookkeeping focuses on recording financial data. Accounting, on the other hand, also involves financial analysis, interpretation, and bigger-picture decision-making.

How much does accounting software cost?

Accounting software costs can vary greatly depending on your company’s size and needs. FreshBooks plans start as low as $2.10 USD per month. As your business grows, you can easily add more features and capabilities.

Is my financial data safe in the cloud?

Don’t stress—cloud storage is a reliable and safe way to store and access financial data, as long as a trusted cloud accounting software platform provides it. FreshBooks uses state-of-the-art encryption, authentication, and user management systems for our cloud-based accounting software to ensure your data is held to the highest security standards. 

Can I switch from spreadsheets to accounting software?

Switching from spreadsheets to accounting software is the best way to level up your internal bookkeeping and accounting processes. Initially, switching your system over to a software platform may take a little time, but the time you’ll save from there will more than make up for it.

Can accounting software help with taxes?

Yes, online accounting software is ultra-useful for tax prep, planning, and filing. Most platforms offer tools to help you manage, track, and calculate sales tax, payroll tax, income tax, and any other tax obligations your company may have.

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