When we think of accounting, what we traditionally imagine is someone literally keeping the books—recording various financial transactions in a physical ledger. Over time, many practicing accountants have switched from making their records on pen and paper to using digital spreadsheet applications like MS Excel. While both of these bookkeeping approaches remain popular in the Philippines, they’re rapidly becoming obsolete in the face of an increasingly fast-paced and demanding economic landscape.
The world today continually encourages us to strive for progress and efficiency in all areas of life, particularly through the use of technology. In line with this, more and more businesses have recognized the need to adopt electronic accounting methods. The Bureau of Internal Revenue (BIR) has likewise made the implementation of computerized accounting systems (CAS) mandatory for all large taxpayers since January 2010, via Revenue Regulation (RR) No. 09-2009. This regulation is meant to ensure that corporations and other qualified enterprises will be able to submit the speediest and most accurate reports possible throughout the financial year.
You need not be required by law, however, to adopt a CAS—any business can do so provided it completes the documentary requirements stipulated by the BIR. And whether you’re part of a booming multinational or a small homegrown enterprise, there’s certainly no arguing with the fact that running a BIR CAS compliant system will enable your company to manage its finances much more easily and effectively.
Read on below to find out more about what computerized accounting systems are, how they work, and what they can do for your company.
Computerized Accounting Systems: The Basics
In the simplest possible terms, a computerized accounting system is a kind of software that can either be stored locally on a company’s computers or accessed remotely through the internet. Once installed, the CAS serves as the main tool for recording, organizing, and generating reports on the company’s various financial transactions. Though the software’s more specific capabilities will vary depending on the provider, some of its functions include, but are not limited to, the following:
• monitoring fulfilled and pending payments
• generating customer invoices
• inventory tracking
• managing payroll
• measuring sales and customer metrics
• consolidating a general ledger to summarize all transactions made by an organization over a set period of time
While many accounting software developers seek to implement their systems wholesale by offering users access to the full range of available features right out of the gate, some also offer a more modular approach. This means that interested organizations can avail themselves of only certain parts of the system that they need most urgently or find most useful, usually at a reduced price compared to the full software.
There’s a lot of variety out there, as well as many options for customization. So when choosing the right CAS for your organization, consider its particular needs. Think about whether you’re seeking to completely overhaul a prior system, for instance, or to supplement existing systems with contemporary technology. The best developers will work with you to tailor your chosen system more closely to your organization’s processes, and they can also teach staff to manage it effectively post-implementation.
Why Your Company Needs a CAS
To understand the benefits a CAS can bring to your company, it’s important first to understand the many pitfalls of depending primarily on an outdated accounting system. For one thing, manual and Excel-based bookkeeping methods are exceedingly vulnerable to human error, which makes maintaining accurate records more difficult. Incidents like duplicated entries and typographical errors become increasingly difficult to identify and correct the more information your accountant has to handle. Should such shoddy data make it into your final financial reports, your company may face hefty penalty fines from the BIR.
Another difficulty of traditional accounting is that manually encoding and processing financial data is a lengthy and time-consuming process. Manual encoding tends to slow the overall process of preparing reports, which could potentially hamper a company’s efficiency and hurt its competitiveness in the long run. Needless to say, these difficulties have especially severe repercussions for businesses seeking to optimize and grow their operations.
Given the above challenges, implementing a CAS offers a direct and effective solution to these problems of efficiency and accuracy. Computer-generated financial records are often fully ready within minutes once requested, and they also tend to be neater and less prone to error than manually prepared records.
In most cases, good accounting software will even be able to flag what errors happen to find their way into the document during the data-inputting process for correction later. Being assured of the quality of your data will then free you to focus on what really matters—assessing that data to make quicker and better-informed business decisions.
Lastly, computerized accounting systems offer greater security than traditional methods. Quality accounting software will always come with security features to protect your company’s sensitive information. Most programs also offer options to back up, restore, and/or sync your records across multiple secure devices and networks in case of emergency.
The next time you find yourself struggling to balance the company books, don’t be afraid to embrace modern solutions. Though it can feel like an overwhelming change, remember that implementing a computerized accounting system is meant to make your life easier, not harder. Once you find the right CAS for your company, you may just discover that your accounting headaches too have become a thing of the past.