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How choosing the right accounting software can potentially save your business

When you start a business in Malaysia, the odds are truly stacked against you. According to a 2018 study by HR MARS, 60% of small to medium-sized Malaysian businesses fail within the first five years of operations.

There are many reasons why so many businesses fail early on. One of the key challenges they face are the financial constraints caused by keeping non-systematic accounting records. That’s why as a small business, it’s so important to ensure your accounting and bookkeeping processes are up to scratch.

Without a proper accounting system, even profitable businesses risk failure. Poor financial reporting provides a false sense of security for business owners, which can lead to cash flow problems during emergencies or unforeseen events like COVID-19.

Posted 19/08/2021

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The importance of proper accounting systems

A system of basic accounting practices which tracks income and expenditure sheets, balance sheets, and cash flow statements can help reduce the chances of a business miscalculating their budget.

It can help them spot problem areas early to ensure suppliers are paid on time, reduce cash flow problems, and stay on top of business performance. It also allows businesses to keep track of their tax obligations and make required payments diligently to avoid late payment or fines.

However, even when businesses try to stay on top of their accounting tasks by adopting manual workflow processes, they risk running into other problems. This includes generating inaccurate reports, missing transactions, calculation errors, and accumulating filing backlogs. These improper practices may result in missed business opportunities, increased running expenses, and potential legal trouble due to compliance issues.

Automated vs manual accounting

Adopting reliable accounting software automates these time-consuming manual processes, increasing accuracy and freeing up time for employees to focus on helping the company grow.

A proper accounting system is one that’s robust, user-friendly, and eliminates the need for handwritten records or manual tracking with a spreadsheet. Moreover, the right accounting software can provide an in-house auditing function that protects the business against fraud and misappropriation of funds by ensuring monthly bank statements are carefully tracked. It also provides insights into business performance and aids management in decision making.

Therefore, it’s important for businesses to realise that choosing the right accounting software is just as important as the actual transition from manual to automated accounting.

A good accounting system is one that allows you to categorise your expenses clearly so you can gain a view of how much you’re spending on different business functions. This allows your business to cut down on unnecessary costs and maximise cash flow in sectors that generate the most revenue.

Some other factors to consider when choosing the right accounting software include:

1. Reliability and compliance

You want accounting software that has been trusted by businesses for many years and has withstood the test of time to prove its resilience. The software should also be fully compliant with LHDN, the Malaysian local government tax regulations.

2. Ease of use, module integration, and direct payment options

The software must provide customised module integration for payroll, building system management, as well as inventory and billing – amongst other features. It should also allow users to easily make and receive payments from suppliers and customers.

Simple-to-use accounting software that offers intuitive dashboards and navigation tools will help your employees avoid wasting time figuring out the system. It will also help them perform their tasks more efficiently, thereby increasing their productivity.

3. Double-entry functionality

Software that provides double-entry functionality improves efficiency as it ensures that debit and credit amounts are not entered multiple times.

4. Regular updates and local customer support

The software should provide regular updates for new features and system improvements, as well as offer dedicated local technical support via phone, instant messaging or e-mail.

How can Access accounting solutions help your small business?

Is your business interested in making the transition from manual accounting processes to automated software? Discover how you can choose the right accounting software with Access.

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