A comparison between manual and computerized accounting systems
Most small to medium-sized companies use either a manual or a computerized accounting system to track income and expenses. Assets, liabilities, revenue, expenses and equity must be documented and transferred to a general ledger containing the company’s financial details. This information can then be analysed to help business owners make future financial decisions. This article compares the differences between the two. We look at it from a time and efficiency, accuracy, reliability, creativity in analysis, reporting, staffing and cost point of view.
Time and efficiency
Computerized accounting has the advantage of increased efficiency and time management when compared to manual accounting. Computers may more rapidly perform accounting functions or assessments than manual accounting systems, once data has been entered into the system.
Computerized accounting has the advantage of higher accuracy when compared to manual accounting, according to the College Accounting Coach. The potential for human error is greater when employees are manually completing accounting procedures. This may be particularly true when dealing with multiple currencies, since computerized programs can instantly convert exchange rates, according to “Guide to Computerizing Your Accounting System” from The Manager’s Electronic Resource Centre.
The advantages of manual or computerized accounting systems may be equal when it comes to reliability. Manual accounting can function independently of machines so work can continue when “the system” is off.
But with modern backup systems and increased functionality, the disadvantage of reliability in computerized accounting may be lessened.