Accounting has a notorious reputation of being a boring and difficult chore, yet no serious minded business owner can ignore maintaining proper financial records. Various packages are available that make accounting a simpler and more bearable task to undertake, especially for business people who have no prior formal accounting knowledge or experience.

Easy to use All-in-one accounting software packages for small and medium enterprises combine a set of features that simplify sales, bookkeeping, filing tax returns and the creation of financial reports. This tutorial addresses aspects of accounting software package that can help empower an organisation.

Setting up bookkeeping account codes

Bookkeeping accounts codes are numeric codes that are set up in the accounting package, usually at the beginning that will be used to record and group the monetary value of similar classes of transactions. For example, accounts receivable or debtors control account code, when they are set up in an accounting package, will be used to record the collectible value of goods or services sold to a customer on a credit basis. The monetary balances on the accounts receivable code will usually reduce when the organisation receives part of the outstanding cash and will increase when more credit sales are made to customer. Other account codes such as accounts payable, fixed assets, expenses, revenue/sales are also created at this point. More account codes can be created in the future as the need arises.

Creating customised quotes & invoices

An accounting package usually has the facility to create quotes for customers based on the organisation’s price-list. If the quote is accepted by the customer and a sale is made, well designed packages allow a seamless conversion of the quote into an invoice. The invoice creation of automatically makes a double entry accounting entry into the debtors account code and the sales account code. The invoice created comes with preset payment terms, e.g. seven days, 30 days, etc. Also, the software allows the user to customise and brand the invoice to reflect the organisation’s identity.

Manage cash flow regularly

Some very good packages enable the organisation keep an eye on cash needs, and possible shortages, before they occur by checking for cash needs. They also aid cash collection by triggering email reminders close to the due date of invoices raised as well as chasers for late payment. Therefore, the system makes the dunning process much easier or unnecessary because of the proactive payment reminder facility that it sends to customers.

Generate purchase orders & control costs

Good accounting software enable the creation of purchase orders for goods and services that the organisation wishes to buy, e.g. office stationery for issuance to suppliers based on a controlled price list. Purchase invoices produced by the supplier can be checked back to the PO to control cost and can be entered in the system as an external invoice. Often, an automatic accounting entry is made by the system to accounts payable or creditors and cost of sale/expenses account codes.

File VAT returns

In order to ensure that businesses comply with regulations, accounting software packages, particularly, the online packages are built to enable filing VAT returns online. VAT registration is a required.

Payroll system (available on request)

Accounting software packages often have the flexibility to integrate a payroll solution. Such a facility may not come as part of the standard software package. However, payroll facility can easily be included to generate salary payslips, personal tax computations and generate entries into accounts.

Insightful business reports

The reporting capabilities of accounting packages are quite impressive. Examples of weekly or monthly reports that can be produced include:

  • Sales and income reports
  • Financial statements
  • Cash flow reports

The insightful reports help the organisation to learn important facts about their business, e.g. in planning the sales, cash flow, etc. For a business seeking to expand the business, such reports can be invaluable in convincing the usually sceptical bank manager to authorise the much needed finance.