Benefits of Accounting Software: 3 Compelling Reasons to Develop a Custom Solution
Accounting software is vital for any business. Its use brings a variety of benefits, such as improved efficiency, bookkeeping accuracy, immediate access to financial data, and cost savings.
Yet, over 60% of companies continue to rely on Excel as their primary tool. This method can certainly do the job, but it is far from ideal — as the company grows, it becomes impossible to navigate the vast sea of Excel files.
At that point, businesses begin automating their bookkeeping processes. There are two options: purchase a service from a vendor or develop a custom one.
Let’s discuss the perks of a custom accounting program and examine the features it needs to include.
Fundamental capabilities that accounting software must have
A powerful accounting software has many benefits:
- Reporting and analysis: generating custom reports will help to drive data-based decisions and track the state of your finances, which, in turn, will let you quickly respond to negative trends and recognize positive ones.
- Accounting:The nuts and bolts of any accounting system are invoicing, accounts receivable, and ledger management. Automated processes save time and avoid the chance of error.
- Budgeting and forecasting: your bookkeeping tool should enable you to create budgets and anticipate future financial performance based on past records. This functionality will allow businesses to be more precise with their budgeting.
- Tax management: This can include calculating and filing taxes, creating tax reports, and keeping track of payments, so you will never worry about falling behind on taxes ever again.
- Inventory management: A powerful inventory system can make your stock control easier and automate the related financial activities. This saves time and helps to avoid situations when goods cannot be supplied because they have gone out of stock.
- Collaboration: it can be incredibly helpful for accountants to be able to work on the same documents simultaneously, instead of sharing spreadsheets. This speeds up the process and prevents errors from occurring.
Advanced bookkeeping tools can automate some of your business processes in addition to performing record keeping and providing reports.
Creating a record keeping tool from scratch can be hugely beneficial. Although it does require a substantial amount of upfront work and investment, the advantages are worth it.
Benefits of developing a custom bookkeeping solution
Having tailor-made software for tracking finances provides improved interconnectivity with other systems, heightened security and more often than not, is cheaper over the course of the long-term.
1. Custom APIs and connectors provide deeper automations
You can create tailored APIs for your accounting software to link your record keeping to inventory management, customer success management, or advertising automation.
The majority of third-party tools are designed to work with popular services. But if you are using custom software to drive other parts of your business, then further development will be needed to connect these systems with your bookkeeping.
2. Custom development puts you in control of security
There were over 4000 data breaches in 2022, and the number is based only on the incidents that companies choose to disclose. In reality, it is likely much higher. And the average cost of a data-breach exceeded $4M, according to IBM.
With a third-party tool, you essentially have to rely on them to protect your data. Should they get breached, the confidential data you have entrusted to the vendor will be subject to exposure.
Creating a personalized solution puts you in control of security. You can then introduce strict data availability and integrity policies, implement anti-fraud systems and protect records with strong encryption.
3. A custom accounting solution is more cost-effective in the long run
The initial investment in a custom solution is higher, but it is more cost effective long term.
An accounting service might satisfy your needs at first, but the danger is that you will outgrow it quickly. Custom development will allow you to create a solution that will scale with your business.
When you require a product to be tailored to your specifications, many companies provide customization services, though they come at an extra cost.
If multiple modifications are needed, the price will soon climb. However, with these adapted products, the level of personalization and control will still be inferior to that of a product developed from scratch.
Future-oriented solutions: AI as an accounting assistant
Over the last year, AI has experienced a major uptick, and it’s now widely used in the field of record keeping.
Although it’s nowhere near the point of fully replacing an experienced accountant, the question of whether or not to incorporate AI-driven components into bookkeeping software is now a valid discussion point.
In the end, the decision between creating a custom product or using a third-party service is up to what your company needs and hopes to accomplish.
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