In every industry, accounting work is an indispensable part of a business process. Regardless of whether you’re using automated or non-automated methods, the act of recording and calculating transactions flawlessly is crucial.
Financial transactions and record-keeping for a company are closely monitored and managed by specially qualified accountants who collaborate with AIS to ensure the highest level of accuracy in financial transactions and record-keeping, as well as to make financial data easily accessible to those who legitimately require it—all while maintaining data integrity and security.
But suppose you’re one of those entrepreneurs who have long been used to traditional accounting and are experiencing the challenges that come with it. In that case, you must be wondering about switching to automated accounting systems. Still haven’t grasped the benefits of the accounting system for your business? Please stick around and find out the advantages as we go along.
What Is Accounting Information System
If you found yourself skimming through this post, I suppose you already have a general idea of what an accounting information system is.
An accounting information system is a digital method of tracking accounting transactions. Businesses can collect, store, manage, process, retrieve, and generate reports through the system. These are then used by the parties involved to help them make business decisions.
A typical accounting information system comprises several modules, each of which is designed to handle a specific type of transaction. Accounts payable, receivable, inventory, payroll, general ledger, and reporting are examples of these modules.
Since this is a modern way of accounting, companies are given the edge to analyze expense behavior, drivers, and fluctuations.
The Difference Between Manual and Computerized Accounting
Manual or traditional accounting is when you record and update financial records using account books by hand. Although this method is cheaper, the manual system has a higher error rate and is slower.
One of the benefits of the manual accounting system is its ease of use, and it is also distinguished by confidentiality, making sensitive information hacking impossible. On the other hand, one can only prepare manual accounts correctly if the accountant is well-versed in bookkeeping and accounting.
With computerized accounting, the electronic recording of financial transactions makes processing and reporting much faster. Automating bookkeeping processes and complex accounting transactions can save business owners many hours and improve accuracy, leading to more business.
Benefits of Accounting Information System
Businesses have made significant investments in computerized accounting information systems to address the complexities and time-consuming procedures involved in processing business transactions in this day and age. Although this technology has some costs, why are most businesses interested in AIS? The Accounting Information System provides the following significant advantages.
1. Save on time and labor costs.
Bookkeeping is the recording of daily business transactions. So if you’re a growing business, you could just imagine how time-consuming this activity is.
Bookkeeping gives you control over your business finances, which is why timely and proper maintenance of records is critical. By having an automated system, you can avoid additional labor costs and ensure prompt recording.
2. Clearer financial view.
Perhaps the most critical role and purpose of accounting information systems lie in creating and analyzing reports and knowing the company’s financial position more efficiently.
The tracking of expenses and revenues is quickly done using an accounting system. What used to be a complicated and laborious process can now be completed in just a few clicks.
3. Fewer errors.
Because even the most meticulous professional will always be prone to human error, relying on manual processes makes the accounting work riskier. When a miscalculation happens, reconciling and balancing accounts takes up more time on the accountant’s part.
But with an accounting system, you get a helping hand in reducing error tendencies as it is capable of detecting double entries, in addition to its automated calculation feature.
4. Proper asset and inventory management.
The core functions of an accounting information system are collecting, processing, and providing information for different business departments, including your assets and inventory. Through automated accounting, you can conveniently track your inventory costs and monitor stocks.
5. Immediate access to data.
Having real-time access to valuable financial information is essential to aid you in making the right business decisions. Need to generate reports for an important business deal? Having access instantaneously will give you the upper hand.
6. Guided business decisions.
The interpretation of figures from financial statements will help you expand current operations, use resources, or review business opportunities. The overview of your financial health will help determine your business’s right course of action.
7. Highly flexible, safe, and convenient.
Accounting software provides complete flexibility and ease of access without compromising data security. Most software is available online, making it easier for everyone in the business to gain entry on the data needed. It’s also mobile-friendly and encrypted, making it a safe tool for businesses.