Manual Vs Computerized Accounting

If you have a small business, chances are you have wondered more than once if a computerized accounting system would be better for your business than a manual one. Well, truth be told, there are advantages and disadvantages to both manual and computerized accounting systems. And because it is essential to keep track of all of a company’s financial transactions, the accounting system must be reliable and efficient.

Manual bookkeeping systems employ various paper ledgers to record and keep track of all financial transactions. A separate general ledger is needed for each part of the accounting system, so companies using manual systems generally have one ledger for accounts payable, one for accounts receivable, and one for sales. From these separate ledgers, accountants consolidate all information into one general ledger, providing the ending balance for each individual ledger. Maintaining manual bookkeeping is much more time consuming than using a computerized system, however manual bookkeeping has its own benefits. You can easily review all the books, make simple changes at any time, the information is ordered systematically, and then you can create notes, clarifications or corrections in any client account. Still, you can do this with a computerized system as well, and it may be easier.

Computerized accounting is based on accounting software. Accountants must enter financial data into the accounting program, and the software will use mathematical algorithms to calculate and compute the information in ledgers and financial statements. You will have easier access to all financial information and everything will be more organized. You can access transactions from any division of the company, create trend analysis or report variances.

Computerized accounting systems provide more benefits than manual ones, allowing for more accurate calculations in less time. Compared to manual accounting, with a computerized system errors are much less common, which eliminates human error. And with accounting software that is industry specific, you can take advantage of several preset templates for your general ledger, saving even more time. You can store practically infinite information, without any problem. And if you later want to review financial information from several years ago, with a computerized accounting system you can do it easily, whereas with a manual one you would have to sort through piles of paper ledgers.

In a nutshell, both systems can be useful up to a point. But for more accurate accounting and greater efficiency, a computerized accounting system seems to have more advantages. You can find several free versions online, as well as more competent accounting software available to purchase. Search online for such accounting systems, read about their features, and decide which one would be best for your particular business needs. Although they will not allow you to physically handle the ledgers, it will provide a better accounting solution.