Bookkeeping and accounting software are essential cogs in the modern business machine. For business owners, financial accuracy is vital to survival in an every-penny-counts market––this makes choosing the right (and relevant) bookkeeping and accounting software of the utmost importance.
Before scrolling through pages of potential accounting software, it’s helpful to know where to start. Understanding the difference between accounting and bookkeeping is as good a place as any.
What Bookkeepers Did, And What They Do
Bookkeepers are primarily responsible for recording financial transactions in chronological order, typically in some form of ledger, on a daily basis. In fact, not that long ago that was the only function of a bookkeeper. As long as the numbers matched up at the end of the year, they could hold a steady job. However, as the technology wave continues to crest, bookkeeper’s roles are changing.
Due to increased automation capabilities in accounting software, businesses are now placing a stronger reliance on bookkeepers to classify, summarize and analyze financial data. Simply recording information won’t cut it anymore. And, with the introduction of artificial intelligence software (AI) and accounting chatbots, an even higher level of financial insight is required from bookkeepers and accountants to make them worth the salary hit (especially for small businesses).
As a result, bookkeepers are beginning to deal with data holistically, looking for financial trends that can help businesses become more efficient and plan for the future.
Accountants Past, Present and Future
Broadly speaking, the process of accounting involves recording, interpreting, classifying, analyzing, reporting and summarizing financial information, among many other basic accounting functions. While the standard practice of bookkeeping can be thought of as the foundation of accounting, accounting itself typically delves deeper into a company’s financial data––although software advancements are certainly bridging the gap between accounting and bookkeeping, accountants still deal with a higher level of complexity as they navigate through the entire accounting process.
Accountants have always been responsible for maintaining accurate financial records while adhering to industry principles, standards and requirements. Some light analysis of financial data was involved, but their primary concern was to maintain accurate records and avoid holes in a company’s financial history.
In recent years, the role of the accountant has morphed into something resembling that of a financial analyst––businesses place a greater onus on an accountant’s ability to interpret financial data and provide company leaders with insight into financial conditions, projections and planning ideas.
Similar to bookkeeping, this shift is largely due to significant advancements in accounting software’s automation features––including report generation, transaction memorization and tax calculations. As AI and other smart bots continue to emerge and integrate with accounting software, accountants will need to find new ways to remain a necessary piece of the financial puzzle.
As you search for the right accounting software for you, it’s important to understand the distinction between bookkeeping and accounting functionality. Search for the features relevant to your business and you can (ac)count on keeping your books solid.