financial accounting software

financial accounting software

The Evolution and Impact of Financial Accounting Software in Modern Business

1. Introduction to Financial Accounting Software

A financial accounting system enables the state of financial affairs of an organization to be measured. The financial reports produced – for the purpose of communicating economic information about the organization to external stakeholders – summarize and record the many thousands of individual transactions and activities that occur. They also validate that these events conform to established accounting standards. Good quality financial reports are the outcome of a well-designed financial accounting system. But the quality of the reports is only one purpose of such a system. The need to control the state of financial affairs of an organization is another. The financial reports must also serve the information requirements of internal stakeholders – management and other staff – seeking answers to business questions such as: Where do we stand? What are the present conditions of the business? Are we meeting our performance goals? What progress have we made? How do we account for changes in our business?

We have come a long way from financial accounting textbooks that contained problems solved by hand. Today, computers play a significant role in solving accounting-related tasks. Financial accounting systems and software are widely used in businesses to help accountants and managers analyze financial transactions and prepare reports on those transactions. Financial accounting uses a collection of established accounting standards which measure the effectiveness of the financial operations of a business. The emphasis is on using generally accepted accounting principles to calculate income and to report profits and financial information.

2. Key Features and Functions of Financial Accounting Software

In turn, the forecasting, budgeting, analysis, reporting, and planning facilities are frequently offered by other software or built into the spreadsheet modules of other business software or software packages and similar analytical applications. Moreover, regardless of the source of the financial accounting package, the primary financial accounting functions are performed by specialized software that can prepare regular financial reports on a timely basis in keeping with various regulations and that can act as a central data, information, and analytical resource. Financial accounting systems often manage large and important data resources that should be efficiently maintained and protected.

In general, financial accounting software is designed to process, record, and report financial transactions of a business. The primary features of financial accounting software include a set of coordinated accounting functions, set up procedures, financial accounting analysis and reporting capabilities, and facilities to enhance financial control and support accounting functions. Financial accounting software is, in part, based upon automation of the accounting functions performed manually by clerks and accountants in bookkeeping and accounting cycles. Many of these functions are performed within subsystems, in which day-to-day business transactions are first recorded and then accumulated for transfer to the main accounting software.

3. Benefits and Challenges of Implementing Financial Accounting Software

No matter which size or in which industry the business is operating, financial accounting software is an essential tool for improving the operation of the business while reducing the business costs. Financial accounting creates a major contribution towards the accomplishment and development processes of the business, and its value is well recognized in business. The financial accounting group plays a key role in the development of the company. The group takes care of the responsibilities of conducting the accounting operations besides generating financial reports on the same. However, a challenge could be faced while discussing the decision of acquisition to get the best results from the financial accounting software.

Indeed, financial accounting software brings more efficiency to the business organization along with better and timely reporting and easier account management. However, there are some challenges in implementing the software as well. Hence, the management should understand various aspects of the financial accounting software before choosing it for the business. Then the company can create a better fit between the software and the business to implement it more effectively. The more informed decision can be obtained by conducting research based on this knowledge and then selecting the best financial accounting software for the business.

4. Best Practices for Selecting and Utilizing Financial Accounting Software

A well-defined process that incorporates two parallel but consolidated development activities is critical to the successful development and installation of the software. The proper accounting system/software selection process involves the customer and software supplier as partners who together undertake the necessary steps for the successful implementation of the accounting software package. While every customer’s needs are unique to their data processing environment, effective and efficient results can be achieved and realized by the careful treatment of the ten critical events outlined in this guide.

In selecting and implementing financial accounting software, these are the best practices for customers desiring to maximize benefits and overall satisfaction. One of the necessities involved in the decision-making process for any commercial accounting system is a complete, accurate, and mutually agreed-upon understanding of the major objectives the commercial accounting package is required to perform. In general, this requirement calls for the customer and accounting software supplier to recognize the necessity for reaching a mutual understanding of the requirements and responsibilities which each party is to satisfy. It is also necessary for the accounting software supplier, no different than any other customer service provider, to accurately identify and define what these requirements and responsibilities are as seen by the customer, and then to transform them into software planning and development operational requirements.

5. Future Trends and Innovations in Financial Accounting Software

Based on a careful examination of the debates occurring throughout these contemporary studies, a future research model is constructed and correspondingly assists in highlighting future avenues of research. It elucidates future research directions from which more advanced strategic possibilities for directing the development and design of financial accounting software towards producing desired enhanced outcomes are derived. It determines many avenues that contemporary research has not focused upon which, if addressed, are likely to constitute the future of research into financial accounting software. An intention of the chapter is to contribute value in extending the knowledge and understanding to both the academia and business wings, and ignite more research in expanding the significant field in which society depends, for the benefit of societies and economies in the long term. Possible future trends and innovations are discussed further in the next section.

The advancements in technology influencing the development of financial accounting software are multidimensional. Both independent and dependent technology, in their combined form, directly and indirectly facilitate modern financial accounting software. These are considered by scholars as they occur and evolve. As a continuing topic, researchers provide keen contributions in various directions. The present chapter reviews numerous contemporary studies to build an insightful understanding and knowledge in contemporary and prospective key dimensions and attributes influencing the development of financial accounting software. It assists in appreciating the gradual or sudden nature of these emerging attributes and their likely future impact, all of which can guide changes in the strategic directions for the development of financial accounting software.