Disadvantages of Not Using an Accounting Software

|Updated on: August 23, 2021

Every business maintains accounts in some form or the other. Most businesses start out with maintaining accounts manually and gradually move to accounting software as the business’s transactions grow. However, most businesses don’t realise the amount of time and effort that gets wasted when they maintain accounts manually. Efficiency in these areas could very well have given them the space to focus on the main activities of their business while leaving the mundane accounting tasks to accounting software. In this article, let us understand the disadvantages of not using accounting software in your business.

Time-consuming accounting processes

When you maintain your accounts manually, each step in the accounting process is long-drawn. To prepare important financial reports like Profit & Loss Account and Balance Sheet, delays running up to a couple of days is common. This becomes even more evident as the volume of your transactions increases. In order to maintain and keep your accounting processes running, additional resources will also need to deploy, because the amount of work to be done becomes huge.

High chance of accounting errors

The chances of making errors when you maintain your accounts manually are high. Without a system to detect the errors made, finding the error and rectifying it also becomes a time-consuming process. As the probability of making errors is high, you would not be able to fully trust the data on which you make your decisions. Maintaining manual accounts means more stress and less efficiency for the business.

Low business efficiency

The accounting cycle is such that performing it manually requires time and significantly more effort, compared to software. This leads to a situation where you may miss out on key opportunities and insights about the business. Also, performing the routine and mundane accounting processes over a long period of time results in employees feeling stressed, overwhelmed and inefficient. It is advisable to allow the software to perform the routine tasks for you and let your employees add value to these tasks by arriving at analysis and actions for your business.

Difficulty in tracking transactions

Accounting involves reconciling your books with your bank statements on a regular basis. Another important task is also to keep a track of the money you owe your suppliers and the money owed by your customers. It is important to ensure that you pay your suppliers on time and your customers pay you on time. Keeping a track of all these things becomes a herculean task when you’re managing all of them manually.

Difficulty in syncing invoicing, accounting and inventory

An accounting transaction can impact your invoicing, inventory, banking, etc. When you maintain your accounts manually, you need to put it extra efforts to ensure that your invoices match your books and that your inventory is in sync with the transactions entered. A great advantage of using accounting software is that all you need to do is to enter your transactions. All your accounting reports, inventory numbers and credit management are then taken care of by the software.

Hence, performing your accounting processes manually brings with it many disadvantages. As a growing business, you must ensure that your processes don’t become a roadblock to your growth. Using an accounting software can go a long way in easing your accounting tasks and giving you more time for other value-adding tasks in your business.


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