Accounting software refers to a kind of program software which processes and records accounting transactions in various functional modules like accounts payable, Accounts receivable, general ledger, billing, and monthly balance. It acts as an integrated accounting tool. Generally, there are four kinds of accounting software. These are desktop-based system, web-based system, personal accounting software and financial accounting software.
Desktop-based accounting software provides the user accounting roles and subfunctions to the desktop computer. The accounting user roles and subfunctions in this kind of software would include Accounts Payable, Accounts Receivable, General Ledger, Invoice, Sales Order, Stock Options, Balance Sheets, Sales and Marketing, International Processing, International Stock Transfer, Billing and Account Clearing, and Project Accounting. On the other hand, web-based accounting software enables an accounting user to use the Internet as an interface to the program. The accounting software modules would include accounts payable, accounts receivables, general Ledger, Accounts Receivable, General Ledger, Accounts Payable, Inventory, General Ledger, Project Accounting, and Shipping and Logistics.
A lot of factors are considered when choosing accounting software for an organization. Many companies make a careful choice, based on factors like the number of users, data sources, and budgetary limits. However, the selection process is not without pitfalls. In addition to these, many companies get bogged down by the technical aspect of the software installation and fail to see its economic benefits. In addition, many companies may also purchase accounting software from third party vendors, in order to cut down on costs. The purchase of accounting software can be extremely costly, especially if it is developed and maintained in house.
On the other hand, there are certain businesses types which cannot do well with accounting software. These types of businesses are generally too large and complex to be effectively managed with the use of accounting software. For example, manufacturing businesses can do better with management of product information and sales orders. Also, services businesses cannot make efficient use of information generated with the use of accounting software. Therefore, services businesses are the most logical choice for accounting purposes among the service-oriented business types. These businesses, however, can use accounting software to maintain accounts for only a few functions.
Apart from accounting software, there are certain aspects of these types of businesses which can also be customized and managed with the help of accounting software. For example, manufacturing enterprises can use certain analytics tools, which can help them analyze their production processes and determine the scope of improvement. While services oriented businesses can also use these same analytics tools, but for other specialized functions.
Besides these typical business types, there exist also specializations. For example, there exists a specialized category of accounting services, called forensic accounting services. In this category, accounting professionals who specialize in finding, examining, identifying and preventing frauds and other financial crimes are available. Forensic accountants conduct these examinations using a combination of accountants, auditors, statisticians and other professionals who have acquired a special knowledge about accounting methods. Therefore, accounting software is an important and essential part of any business process.