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Manual Vs Computerized Accounting

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If you own a small business, most likely you’ve wondered more than once whether a computerized accounting system would be better for your business than a manual one. Well, truth be told, there are advantages and disadvantages for both the manual and the computerized accounting systems. And because keeping track of all financial transactions of a business is essential, the accounting system should be reliable and efficient.

Manual accounting systems employ several paper ledgers in order to record and keep track of all financial transactions. For each part of the accounting system a separate ledger is necessary, so generally businesses using manual systems have one ledger for accounts payable, one for accounts receivable and one for sales. From these separate ledgers, accountants consolidate all information into one general ledger, providing the end balance for each individual ledger. Keeping manual accounting is far more time consuming than using a computerized system, however manual accounting does have its own benefits. You can easily review all ledgers, make simple changes anytime, the information is ordered systematically and you can later create notes, clarifications or corrections on any customer account. Still, you can do this with a computerized system as well, and it may be easier.

Computerized accounting is based on an accounting software. Accountants must enter financial data into the accounting program, and the software will use mathematical algorithms to calculate and compute the information into ledgers and financial statements. You will have easier access to all financial information, and everything will be more organized. You can access transactions from any company division, create trending analysis or report variances.

Computerized accounting systems provide more benefits than manual ones, allowing for more accurate calculations, in less time. Compared to manual accounting, with a computerized system errors are far less common, eliminating human error. And with accounting programs that are industry-specific, you can benefit from various preset templates for your general ledger, saving more time. You can store virtually endless information, without any trouble at all. And if you later want to review financial information from several years ago, with a computerized accounting system you can do it easily, while with a manual one you would have to sort through stacks of paper ledgers.

Bottom line, both systems may be useful to some extent. But for more accurate bookkeeping and increased efficiency, a computerized accounting system seems to have more advantages. You can find several free versions online, as well as more proficient accounting software available for purchase. Search online for such accounting systems, read about their features and decide which one would be better for your particular business needs. Although they will not allow you to physically handle the ledgers, it will provide a better accounting solution.

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