Nowadays, companies have access to a large array of digital tools and systems that can help them operate more efficiently. One of the most essential tools in their arsenal is the all-important accounting system. Effective accounting is crucial in running a business, and without it, company owners would have a difficult time assessing the finances of the company and developing plans that can help the business reach its goals. Hence, at one point or another, a company will end up investing in an accounting program that meets its parameters.
5 Signs That Your Company Needs to Upgrade Its Accounting System
However, a business changes over time, and inevitably, so do its needs. The number of clients and orders a business needs to process can increase over time, which comes along with additional concerns such as larger employee payroll, additional work hours, and higher taxes. Therefore, it’s important that all these changes and new data need to be accounted for. The question is: Is your accounting system up for these changes?
It can be difficult to switch out a system that has served your company for a long time. That said, like any other form of growth, your business may have to embrace newer, more advanced forms of technology to reach its full potential. If you are not sure whether it is time to retire your current accounting program, here are some clear signs that an upgrade is due.
It Does Not Comply with Current Regulations
Unknown to many small and medium-sized enterprises (SMEs), large businesses are required to register their accounting systems to the Philippines’ Bureau of Internal Revenue (BIR). More specifically, they need to use computerized accounting systems (CAS) that comply with BIR standards to ensure that all of their finances and taxes are properly processed. Your business is considered large if it has an asset size of at least 100 million pesos or has a workforce of more than 200 people.
For now, you may not be thinking of using BIR CAS compliant systems. However, if your company is quickly growing, an upgrade on accounting might already be due. After all, implementing a new system at the last minute can hamper daily operations and hold the company back from performing at its best. As such, installing a more functional accounting system earlier on can help future-proof the business for further developments.
The Numbers Do Not Match
When it comes to accounting, the numbers must always match. Whether it’s about stocks from the inventory or on-hand cash from the cashiers, the data has to match with each other across the entire financial roster. If they don’t, it is a sign that there is something amiss with the accounting process. The company may be under or overstocking, and it would become significantly more difficult for you to have a clear picture of your business’s financial standing.
Additionally, inaccurate data generates inaccurate reports, which can incur penalties from the BIR for submitting documents with wrong information. Thus, if the numbers are not adding up in your current program, it’s time to level up the system to help ensure that all the data remain coordinated.
Data and Reports Take Too Long to Process
When it comes to business, time is money. Accounting is considered a back-end process that helps you gauge the enterprise’s performance, but it does not actively produce a profit. Hence, any time that you’re spending on manual bookkeeping, entering data repeatedly in different documents, and rechecking the numbers is time spent away from developing the business. It is lost money–especially since there are available accounting tools that can automate the majority of these processes.
Data Is Not Easily Accessible
Business work models have shifted in the past couple of years. Nowadays, it has become more common for employees to work from home or on the go, like on a business trip. While having an on-site accounting system has its perks, it can limit your employees geographically. For example, you are meeting up with a potential investor, and they suddenly ask for financial reports about the company’s performance. With a semi- or full cloud-based accounting system, authorized employees will be able to access company data from anywhere, which allows them to work more efficiently even in a remote setting.
The Current System Has Limited Functions
Modern accounting systems today are significantly more advanced than their predecessors. They feature several functions including integration and automation that help sync data and ensure that you have access to the latest information. In today’s highly competitive market, it’s no longer enough to use a system that’s solely for accounting alone. After all, accounting is deeply interconnected with several parts of the company, so it’s logical to upgrade to a system that lets you manage that interconnectivity efficiently.
Some of the functions you should look for in an accounting system include:
- Automation of several manual processes
- Integration with other systems, such as inventory, human resources, and production
- E-commerce capabilities
- Data backups and security
- Multi-currency payment channels
Technology is evolving at a rapid pace, and the market is quickly changing as well. To keep up with that pace, companies must acquire the right tools that can help them perform efficiently and effectively. Considering that accounting is the cornerstone of any business, implementing a more functional accounting system should be one of the company’s priorities in future investments. By doing so, its cornerstone is fortified and sets the business up for long-term success.