Accounting software can be used to gather information about and report on the financial viability of a business. This software is critical to the proper management of an organization. Before settling upon which software package to use, it is crucial to comprehend the various kinds of accounting software, and under what circumstances each one should be utilized. The following list itemizes the overall types of bookkeeping software:
Quite a small company can be conducted only using a digital recorder for its bookkeeping software. The recorder program is affordable and the machine can be configured in any way at all. However, spreadsheets are prone to error, since data may be entered in the incorrect location, incorrectly, or not entered at all, resulting in inaccurate financial statements. Consequently, spreadsheets are usually only used by companies which have quite low transaction volumes.
Commercially-available software –
Industrial off-the-shelf (COTS) software is the predominant accounting applications used around the world. It is moderately configurable to the needs of a business, comprises multiple layers of error detection to keep the entry of incorrect info, and generates standard reports which can normally be configured to the needs of the consumer. You will find COTS packages that are specific to particular industries, with extra features to address the needs of the target markets. COTS applications may require the help of consultants to install, and may require a lengthy installation process, as well as onsite personnel to maintain the software. A variant on this idea is accounting software that’s available as an online service, which requires users to log into the vendor’s site to get the software.
Enterprise resource planning software (ERP) –
ERP software integrates information from all parts of a business into a single database. This approach removes the issues associated with having separate department-specific software that doesn’t share information. However, it is also painfully pricey and might require more than a year to install. This program is usually only needed by the greatest and most complex organizations.
Custom accounting software –
This software is custom developed for an organization. This approach is usually only taken when an entity’s requirements are so specific they cannot be fulfilled by a COTS or ERP package. However, this method is rarely accepted, since custom applications tends to be more buggy and requires much more maintenance than commercially-available packages.