Running a business:
Computerised accounting systems
Most businesses will find it easier to maintain their accounting records by using a computerised rather than a manual system. Computer systems take a lot of the hard work out of maintaining accounting records, for example:- all your entries are automatically added up;
- entries are automatically posted using double entry, and if you have an integrated purchase ledger and sales ledger then, in most cases, your control accounts will automatically balance;
- accounting packages can help you with bank reconciliations; and
- the quality of management information is generally better with a computerised system.
Computerised packages can readily produce:
- sales invoices
- statements to send to customers listing any outstanding invoices
- ists of aged debtors
- lists of aged creditors
- account histories
- management accounts.
You do, however, need to ensure that the system is set up properly, and that the information has been entered correctly - you should not believe everything a computer tells you! Common errors include:
- not setting the chart of accounts up properly
- mis-analysing expenses
- posting an invoice into the creditors' ledger but then classing the payment of the invoice as an expense payment rather than as a payment against the purchase ledger
- posting capital items to the profit and loss account, and visa versa
You should review the information produced by the computer regularly. For example, when you receive creditor statements you should check the balance with that shown by your accounting system and investigate any differences.
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