Accounting Software Benefits in a nutshell

softwarebuck April 25, 2021 0 Comments

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Send professional-looking invoicesAccept online payments with easeKeep track of who’s paid youStart sending invoicesYour selection task is made simpler as accounting software packages aredesigned for particular industries, such as medical practice, construction,consulting practice, etc.The main advantage is you don’t need to be a financial expert to use thesesystems. Their interface is quite user-friendly and you can use the softwareeffectively with just a bit of knowledge and practice.If you are still on the fence, read on to learn about the main benefits ofusing accounting software.

14 Eases Tax Compliance

Accounting platforms can calculate the tax amount that needs to be paid oneach invoice.Plus, you can get detailed reports on the amount of tax your company has paidduring a given time period. Thus, you can get all the information you need toprepare and file tax forms stipulated by the government.Advanced systems even allow you to e-file tax returns from within the product.

Accounting Software Benefits in a nutshell

We hope this article on the numerous benefits of using accounting software hasconvinced you to get rid of manual bookkeeping and invest in a good qualitypackage.If you are already using an accounting software solution, feel free to sharewith us the advantages it offers for your individual practice or company.Chief editor of the review team at FinancesOnline, Alex Hillsberg is an expertin the area of B2B and SaaS related products. He has worked for several B2Bstartups in the past and gathered a lot of first hand knowledge about theindustry during that time.

What Is Fund Accounting Software?

Fund accounting software is designed to enable improved allocation managementof resources which have been designated for specific uses. A commonapplication found within nonprofit accounting software, funds are a specialtype of accounting entity which provides a self-balancing set of accountsallowing the reservation of cash and non-cash assets for specific purposes oractivities.Fund accounting is most commonly used by nonprofits and government entitiesbecause these organizations need to track expenditures and balances acrossmultiple funds and have them appropriated at certain times.

Features of Fund Accounting Software

* Fund class designations: Fund class designations allow the identification of different funds by type, such as restricted versus unrestricted, temporary versus permanent, or organizational versus custodial * Hierarchical fund management: The ability to divide funds into smaller tracking segments and assign parent-child relationships allowing for more granular control of spending * Encumbrance management: Encumbrance management allows for the reservation of funds for future spending commitmentsFund Accounting typically comes as a module in a complete accounting softwareand will have integrations with other complementary features to provide a fullsuite of accounting, such as: * Accounts payable: Accounts payable software provides the ledger and related functionality for managing money owed by an organization * Accounts receivable: Accounts receivable software provides the ledger and related functionality for managing money owed to an organization * General ledger: General ledger software functionality provides the ledger and related functionality for providing a complete record of the financial activity of an organization, including transactional records and account structures

Benefits of Fund Accounting Software

Below are just a few of the most common benefits you hear about when speakingto companies who use fund accounting software: * The ability to demonstrate responsible financial stewardship and application of funds to their intended purpose is often a prerequisite for accessing or continuing to access grants or endowments. * Using fund accounting to track restrictions on the usage of funds saves considerable time and labor costs compared to using for-profit oriented software which may require another layer of reporting to simulate these kinds of accounting controls. * Time reductions enabled by fund accounting software usage can be turned into either payroll cost reductions or labor resources can be reapplied to tasks related to raising funds or delivering services.

Industry-Specific Applications From Vendors Who Understand Your Mission

StatementJust as there are accounting packages designed with the manufacturer orretailer in mind, software developers have created fund accounting software tomeet the specific accounting requirements of nonprofit and governmentorganizations. Using software geared for commercial operations can lead to anumber of issues for nonprofits and government entities.For example, many organizations will attempt to use generic software throughdepartmentalization at the general ledger level to accommodate what could bemore easily set up as fund accounting. After investing time to set this up,this approach may prove useful in tracking income and expenses, but it rarelyprovides the necessary controls in tracking assets and liabilities necessaryfor accurate balance sheets.While the profit motive may not be behind it in the case of nonprofits andgovernment entities, every organization is looking to maximize theirefficiency. Fund accounting software provides an accounting approach designedto eliminate time-intensive workarounds necessary to make standard commercialpackages work.Organizations who provide funding often require clear reports detailing howfunds have been spent. Fund accounting software provides reports designed forthis purpose. By improving your ability to document the impact of previousexpenditures, you can help promote your ability to receive future funding.

Tighten Your Financial Management

Fund accounting software modules provide a number of inherent benefits.Donations, grants, and endowments are frequently provided to the non-profitorganization with specific instructions on the usage of the funding. Trackingthese financial assets in funds allows the non-profit organization to easilysee how each dollar was spent. The results of failing to meet specificspending restrictions can have negative consequences, including discontinuedfunding.The first step of meeting spending restrictions is knowing where every pennyis allocated. For the government entity, GASB standards actually require thataccounts are kept on a fund basis. Fund accounting software allows governmentsto track a variety of different funds including general/operations, specialrevenues, capital projects, debt services, permanent, fiduciary, andproprietary funds.

Does QuickBooks Handle Fund Accounting?

Given the low cost of entry for QuickBooks, it’s one of the most popularsolutions for organizations with tight budgets, which rings true for manynonprofits and government organizations.QuickBooks advertises itself as being a viable solution for both nonprofitsand government organizations who need accounting. They allow for automating offund and program accounting, and customization to create lists ofmembers/donors and track budget by programs or funds. QuickBooks does havenonprofit versions of their Desktop Enterprise solution, and a large communityof QuickBooks users take to the internet to help each other save money withthe software by giving tips and tricks on how to make the software work forthem.Some internet chatter feels QuickBooks falls short when it comes to “true”fund accounting, as what QuickBooks consists of is: 1. Preparing an income statement for each fund 2. Preparing a balance sheet for each fundThese are usually handled by using classes, which are a custom list you cancreate in the program. However, it seems to fall short in preparing a balancesheet for each fund. Although this problem can be remedied via a third-partyadd-on, or by tracking fund balances in a separate program such as Excel.QuickBooks does seem to have a smaller market share in fund accounting thanother verticals. Our Fund Accounting Software Buyer Trends report found thatonly 20% of software buyers are replacing QuickBooks. That number issignificantly lower than companies looking for general accounting software,where 35% of companies were found to be replacing QuickBooks.In a recent study conducted by our company, we found that companies who werelooking for QuickBooks alternatives such as a new nonprofit accountingsolution were most likely to review the options listed above than any othernonprofit accounting solution.

Common Pain Points Solved With Fund Accounting Software

* Managing Multiple Grants and Dealing With Diverse Reporting Requirements. Some finance teams will deal with revenue for programs and services via different public and private grantors, all who have their own stipulations on how the money needs to be spent and recorded. This can make for a very confusing accounting process. A finance team at Carolina Family Health Centers manages this via fund accounting software by creating a structure to allocate and track grant money across multiple programs and fiscal years. This can be accomplished by categorizing programs and funding sources via segments, which allows for easier tracking and reporting in the long run. * Providing transparency. Most millennial donors want complete transparency of where their funds are going. A nonprofit that can effectively market its ability to show that your donated funds have been allocated to the appropriate expenditures will surely attract more youthful contributions. * No established dashboards to help make decision making easier. An Aberdeen study found that 28% of business managers need data to make decisions in under an hour, and 42% of managers need data to make a decision within a day. In order to provide visibility among the vast amount of reports separate employees may be dealing with, dashboards become the way to shift ad hoc reporting to real-time reporting.

Trends in Fund Accounting Software

* Replacing outdated systems. Fund accounting software buyers are more likely to replace aged/dated systems. 37% of our sample in our recent buyer trends report reported “replace a dated” system as their search motivation. That’s 16 points higher than the average for all software categories. One could assume that companies using fund accounting systems (primarily nonprofits or government organizations) may often deal with tight budgets, and an attitude of “making do with what you have” can develop. * Difference between fund and grant management. Most businesses may use the terms interchangeably, but it may not be as simple as that. A grant is what a business would receive from the government, usually to complete a specific project they’ve received funding for. A fund is money that has been set aside for a specific expenditure. For example, your organization may be raising money to build a house. A donor may contribute money to your organization, but dictate that the money only is used to help build that house. That money would then be put into the appropriate fund, so the organization can only use that money for that purpose (and report it in the accounting as such).Benefits of Using an Accounting SoftwareAccounting is the process of summarizing, reporting and analyzing the businesstransactions to keep track of its expenses and income. Accounting softwarelets organizations to assess its assets, liabilities, cash flow, transactions,sales, purchase, balance sheet, cost management, reports and analysis.Accounting software helps managers to understand accounts in a better way anddevelop strategic plans for the benefit of the organization. Every personrelated to the business regardless of its type and size manage accounts to seeprofit and cost. Many business organizations are using accounting software tomanage their accounts. Now we will discuss advantages of most used accountingsoftware for small business.Large size business organizations often use customized accounting softwareprograms to manage accounts. The accounting software programs mange functionssuch as invoicing, dealing with payments, balance sheet and reports of sales,profit, loss, etc. Like old paper based accounting software you don’t need thenumber of employees, large space to store and manage data. The computerizedaccounting software is very helpful and provide major advantages to yourbusiness. Such as speed, accuracy in reports generating and real timefinancial position of the company.Read more Top 10 Ways to Buy Invoicing Software for Small Business atSolutionDot blog.

Benefits of Using an Accounting Software

There are so many advantages of using an accounting software for small tolarge sized business companies. Companies use accounting software to manageand enhance their productivity at desire level with better customersatisfaction. Accounting software can bring unbelievable advantages within itfor your organization read below* * *

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