Manual accounting has been tried and trusted for hundreds of years but in this day and age, with better technology, it is simply more efficient for businesses to switch to computerized accounting.
What is Computerized Accounting?
The only difference is that it is all of your accounting done digitally as opposed to with pen and paper. With this system, you only need to provide minimal information and the program will automatically work out all of your finances and place them into neat categories for you to review and print out if you need to. Computerized accounting provides a simple, quick method for laying out updated information on your business in a way that anyone can understand.
What Could Go Wrong With Manual Accounting?
As it uses the same process and methods as computerized accounting programs and there are many trained professional accountants out there that you could hire for your business, nothing can go majorly wrong. There are, of course, a few things to consider before making the choice between manual and computerized accounting systems for your long term business plan.
Manual accounting processes take up to 10 times longer to complete than when done on a computerized system.
Even with a trained accountant, human errors may occur during manual account processing.
With manual accounting, none of your books or logs can be backed up unless it is physically written more than once.
Financial statements are generally only prepared and given at the end of the quarter when manually done by an accountant but with a computerized program, you can print out a financial statement at any point of the day, month or year.
Manual accounting systems can only be done by proper, educated accountants as it requires specific training to do the calculations whereas digital systems are programmed to automatically do all of your calculations for you.
If you choose to have your accounting done manually, it can cost much more than paying once off for a computerized program and being able to use it forever.
Manual accounting requires its own set of specific books, also costing unnecessary money where you could store everything on one database that you can customize to your unique system.
With manual accounting, there is a lot less privacy as there is constantly a third party involved and to be consulted.
Many people will end up doing their own accounting to avoid their privacy being compromised with another person involved – this is one of the biggest problems with manual accounting and why many people will end up doing their books incorrectly.
Some may not be able to afford accountants for their businesses as it may be a small or independent business.
Sticking with manual accounting could not only slow your business down but dramatically reduce its efficiency, this could eventually be detrimental to the financial well being of you, your business and the workforce that you made part of your team.
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- The Capex Team