5 Types of Accounting softwares, their benefits & use cases

Accounting software is a computer program that assists bookkeepers and accountants in recording and reporting a firm’s financial transactions as well as non-financial transactions.

It is a highly in-demand solution that helps businesses save crucial time and money by automating manual functions. Accounting software  ensures speed and accuracy in financial calculations and enables detailed tracking of financial transactions as well as non-financial transactions and near-instantaneous reporting and analysis.

In an era where data is the lifeblood of the business world, accounting software empowers the executive leadership with real-time insights into their business finances that can help make better business decisions and gain the competitive edge in a volatile marketplace.

Why Do Businesses Need It?

Imagine, just for a moment, that accounting software did not exist…What would happen?

Well, multiple inefficiencies at different touchpoints would creep into the accounting system as mentioned below:

• Manual entries are laborious and tedious. Moreover, they are prone to error, leading to incorrect calculations
• Manual reconciliation is time-consuming and again prone to error
• Calculation of payroll, benefits, deductions, income and expenses, taxes, etc. by humans can lead to several errors, which means waste of precious time and effort invested on manual work, which can be done by the system and in a relatively shorter time
• With errors in financial statements, the possibility of fraud and security risks grows

 
Needless to say, it would be a scary scenario and the  accountant’s job would be a nightmare.

Thanks to modern accounting software, it is possible to carry out the right tasks at the right moment. In fact, accounting software  can be used to perform a multitude of financial tasks and activities that essentially include:

• Manage and Record Transactions
• Track Inventory
• Fixed Asset Management
• Expense Management
• Project Management,
• Accounts Receivable
• Accounts Payable
• Budgeting and Forecasting

Also Read – Top 5 Foreign Accounting Courses That Can Make You Rich and Respectable!

5 Types of Accounting Softwares

Every business has different accounting needs. Hence the demand for accounting software also varies from organization to organization. This section briefly describes the main types of accounting software in practical use today:

Billing and Invoicing System

• What is it?

In simple terms, it is a software solution used for generating bills and invoices. In practice, it is used for automating payment collection, issuing invoices automatically along with accounts receivables and payable aging for balance tracking,  and many other tasks that can streamline the invoicing and payment process.

• Where is it used?

Small businesses, professionals, and service providers.

• Why is it needed?

Timely collection of revenue from customers or clients depends on efficient and effective billing. Without a powerful billing system in place, businesses stand losing out on revenue and risk reducing their profits.

• Benefits

Accurate and timely billing, faster payments, easy and swift invoicing, etc.

• Examples

FreshBooks, QuickBooks, SimplyBill, Vero, Scoro are the prominent brands in the market in this category.

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Commercial Accounting Softwares

• What is it?

It is essentially accounting software that enables businesses of all sizes and sectors that sell to manage their accounting workflows on digital platforms.

• Where is it used?

Any type of business organization, irrespective of scale and size.

• Why is it needed?

To perform a wide range of accounting and financial tasks, right from basic bookkeeping to budgeting and forecasting.

• Benefits

Allows the business to manage all end-to-end processes on a single platform; drives growth and market success by increasing efficiency and profitability.

• Examples

QuickBooks Online, FreshBooks, Zoho Books, Wave, Xero, etc.

Enterprise Accounting Softwares

• What is it?

It is a software solution that integrates with other business modules, such as project management, data analytics, planning of resources, and workflow management, among others.

• Where is it used?

Large companies and corporate entities operating out of  multiple locations and characterized by multiple lines of business (LOB). It is available in several variants such as on-premise, hosted, cloud, or hybrid environments

• Why is it needed?

In addition to performing the routine accounting tasks, enterprise accounting software is also used for developing talent in the finance organization, assisting in creating enterprise strategy, and measuring/monitoring the overall business performance and variance analysis.

• Benefits

Automation, visibility, cross-departmental collaboration, and streamlined processes.

• Examples

Tally, SAP, Oracle Netsuite, Sage Intact, QuickBooks Enterprise, Zoho Books, etc.

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Online Accounting Softwares

• What is it?

It is a web or cloud-based solution stored on a remote server that receives customers’ data, processes it, and returns it.

• Where is it used?

Any type of business can deploy it.

• Why is it needed?

It can be used for billing, data analysis, customer relationship management, data backup, and disaster recovery.

• Benefits

Convenience to log in from anywhere, ability to share data securely, and access from any device are the key benefits of online accounting software.

• Examples

Tally Cloud, Wave, ZipBooks, Output Books, GnuCash, etc.

Custom Accounting Softwares

• What is it?

It is a bespoke solution that is tailored to fulfill the peculiar demands of a specific business.

• Where is it used?

Usually by firms looking to scale up.

• Why is it needed?

To meet specific needs and challenges of an organization that cannot be addressed by solutions available on the market. For instance, cash flow tracking, tax calculation, internal auditing, etc.

• Benefits

Identifies accounting gaps; saves valuable time and improves efficiency of the accounting function by adapting to the specific business needs and automating several routine tasks.

Importance of Accounting in Business; Significance of Tally in Accounting!

Big or small, local or global, every business must have a sound accounting system in place. It wouldn’t be an understatement to say that accounting is indispensable to running and growing a business organization.

Accounting helps business owners and executives track income and expenditures, ensure statutory compliance, and provide all stakeholders viz investors, management, and government with relevant quantitative financial information.

Manual accounting, which was in practice for several decades, has taken a backseat with the advent of accounting software. Though there are multiple players in the market in the accounting software space, Tally holds the trump card. Owing to its simplicity, versatility, and affordability, Tally has emerged as the clear frontrunner, preferred by all types of businesses for their accounting and financial management needs.

Also Read – What is Tally & how to learn it in just 4 months?

Tally – The Top Choice of Businesses Worldwide

Consider these facts about Tally in India:

• Over 2 million business  users
• 75% market share
• 90%+ penetration in the MSME segment

 
As can be clearly seen, Tally ranks up at the top when it comes to accounting software. The writing on the wall is clear: if you are aspiring to build a successful career in accounting, learning Tally becomes your top priority.

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Program Overview

The Accounts Associate Course from IMS Proschool is an industry-focused, job-oriented certification course. Students can learn entry level accounting techniques and can qualify for the Tally Essentials 1 and Tally Essentials 3 certification.

Course Highlights

• Course duration: 3-month weekday program
• External certifications: Tally Essentials 1 and 3
• Placements:  Curated job opportunities in CA firms and MSMEs
• Course fee:  30 k classroom / 24 k online
• Available: Mumbai, Delhi, Pune, Online

Syllabus Snapshot

Teaching Modes

• 3 weekday classes per week in classroom format
• 2 weekend classes in online format.
• Taught by qualified and practicing Financial Planners

Why Register for Tally Training at Proschool?

• Flexible and convenient batches
• Industry experts as tutors
• Comprehensive placement support
• Assistance in resume preparation
• Guidance on attending interviews

 
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FAQs

Q1: What are the three main types of accounting software?

• ERP System
• Billing and Invoicing System
• Payroll Management System

Q2: What is SAP accounting software?

A2:  SAP accounting software is a financial accounting and reporting software that records transactions, reports operating data at the end of every month or quarter, and analyzes financial data.

Q3: Which is better – SAP or Tally?

A3: Each solution has its own characteristics and primary user segments. While Tally is ideally suited for startups and MSMEs, SAP is popular among huge corporates and MNCs.

Q4: What is Tally used for?

A4: Tally simplifies and streamlines accounting tasks such as records keeping, accounts receivables and payables management, and bank reconciliation, among others. It can also be used for financial management in organizations, big and small.