One of the common anxieties that keep people from switching to accounting software is the fear that the software will make their paper accounting methods completely obsolete. This is a valid concern, of course. Paper accounting files are not at risk of hard drive crashes and security threats (for the most part). Most businesses that have used paper accounting tools believe that the switch to electronic accounting systems would be too cumbersome to be cost-effective.
However, the choice that is presented is a false dichotomy. Paper-based accounting systems and financial software can be used in tandem very effectively.
One of the ways in which these two methods, seemingly diametrically opposed, can be used together in an effective manner is by using the two methods in the same manner and then “reconciling” them at the end of the month.
An example of this would be to record all transactions into both systems independently. If a sale is made, it is inputted into both the accounting software and the “Sales” ledger in the accounting books. At the end of each month (or quarter), these two can be reviewed and reconciled.
By reconciling the two systems with each other, errors of input and computation can be detected. For example, if the bookkeeper has a regular habit of forgetting to mark invoices as ‘paid’ in the accounting program, then comparing the two methods can detect this error quickly and efficiently.
When the paper-accounting and accounting software reviews are implemented for some time, the paper method of accounting can even be phased out. Once common errors of implementation of the accounting program is detected through these financial software reviews of paper-versus-electronic methods, then your business can confidently and surely switch to the electronic method Accounting Software Reviews.
When you use the paper and electronic accounting methods, you are deferring risk. By diversifying your accounting methods, you are employing a similar strategy used by hedge funds – hedging your bets.
Continuing both methods also shields you from the laser-focus of the IRS. If you have both electronic and paper records of your books, then the credibility of your books increases tenfold. If you have several independent records of your financial information, then in the unfortunate case of the audit, you are more than covered from penalties (assuming you have kept your books clean and are not in violation of tax law).
One final added benefit of continuing to utilize paper-based accounting systems is that, as mentioned before, they are not susceptible to hard drive failures and crashes. If the accounting data is lost and irretrievable on the computer systems, then this would spell disaster for most businesses. If paper-based accounting systems are continued, however then this risk is deferred.
Using both paper-based and electronic accounting systems is not for everyone. However, it can be extraordinarily useful for the cautious and for those who want to take as little risk as possible when moving to a new technology.