What Are the Differences Between Manual & Computerized Accounting?
By Todd Bowerman
The personal computer has forever changed the way people do business: for every important company task, there is a software solution to match. If you’re still doing your business’s accounting by hand, consider the big differences between that and using dedicated accounting software. There are big benefits to going digital, but these benefits do come with certain risks. It all depends on what works best for you and your business.
Accuracy and Consistency
Accounting software uses automated calculations to ensure your math is always right. Additionally, computerized accounting builds consistency into your reporting through standardized file formats and established workflows. Accounting software is only as smart as the user, however, and switching to digital accounting doesn’t necessarily guarantee the elimination of mistakes. However, computerized accounting, when executed correctly, is more accurate that manual accounting.
Speed of Entry
Once you've implemented a computerized solution for your business, the time you spend working on accounting tasks should decrease greatly. Entering data via a keyboard and letting the computer do the work is faster than writing things down and figuring the math out with a calculator, and accounting software comes with a variety of built-in templates designed to make the process simpler. In addition, data entered via computerized accounting is instantly accessible, meaning you’ll always have the most recent numbers available. The downside is that it will take some time to adjust to using the new software, which mitigates the initial time saved.
Security and Safety
While you can password-protect your accounting data and store it on your work computer, manual accounting is less secure in that the written documents pile up over time and require increasingly large storage solutions. Additionally, you can easily back up digital accounting data onto an external drive, whereas you must copy manual accounting data manually. Losing your digital accounting data is less dramatic than losing the original documents, as you can recover your backups with minimal fuss. However, computer hardware is more fragile than the actual documents, so you must take steps to protect your data in the event of a hardware issue.
Ease of Distribution
In manual accounting, you create and distribute invoices, bills and other records by hand. With digital accounting, you can create the same set of documents in much less time, and print as many copies as you need. You can then send digital documents via email, allowing you to limit the amount of physical media your company actually has to use. With computerized accounting software, it’s easy to print, copy and send any documents needed by your business. However, this also makes it easier for a nefarious party to intercept your data.