What are the advantages and disadvantages of pre-packaged accounting software?

Using cloud-based accounting software business owners themselves can be in control of their professional finances. Even without accounting knowledge, you can register invoices and track expenses with ease. At any point in time, you have an accurate view of how your business is performing. You can access your data and reports from anywhere and from any device.

Almost every article or report you read today talks about the advantages and sometimes the necessity of business owners to incorporate technology into every aspect of their business. But an accounting software package is not necessarily the best idea for every small business. If you are self-employed or own a small business, you should consider the downside to utilizing accounting software as well as advantages gained.

Although some small business accounting packages are reasonably priced, the cost of the software is not the only cost of using the software. Accounting software requires minimum standards for computer use in regards to RAM, processor speed and hard drive memory. Making a backup of your accounting data may also require more storage space than an Excel spreadsheet, which is easily copied to a flash drive. Technical support for the software may cost extra, and you can incur annual licensing fees in order to receive upgrades. If you are not skilled in software installation or accounting setup, you may also incur the cost of hiring a consultant to perform those tasks for you.

Some accounting software packages are designed specifically for non-accountants, but you will still experience a learning curve when converting to any software package. If you have never used accounting software before, learning the accounting terms, layouts and determining a proper setup may be more difficult than the benefits received from utilizing the software. Running your own business already comes with enough stress and aggravation. You should not add the stress of learning accounting software to the mix unless it is absolutely necessary or the gains from utilizing the software outweigh the losses.

Related Reading: Advantages & Disadvantages of Computerized Accounting

Processing expenses and invoices in accounting software will usually take more time than simply logging the expense on a ledger pad or spreadsheet software and creating handwritten invoices or spreadsheet-based invoices. If using the computer is not a large part of your daily routine, the time required to process basic daily financial data may outweigh any benefit gained from the software.

Maintaining accounting software not only includes performing upgrades to the accounting software package, but also maintaining and upgrading all the necessary equipment to utilize the accounting software as new versions can require upgraded equipment. That equipment often includes your PC or laptop, monitor, printer, Internet connection and modem, backup drive and operating system. If you do not wish to spend the time and money to keep your equipment in compliance with the accounting software, it is best to stick to spreadsheet or ledger accounting.