What are the Benefits of General Ledger Software?

The function of the general ledger is to ensure that all transactions are accounted for, while tracking the flows of money through the company.

What is General Ledger Software?

General ledger software is an accounting solution which captures historical information about items such as financial transactions, customers, suppliers, employees and assets (money). It also helps you produce financial statements at various levels depending on your needs.

It provides you with a way to stay on top of your business’ finances and not let things go unnoticed. However, what you need to make sure is that software is chosen carefully. There are freeware options but they tend to have limited functionality compared to their commercial counterparts.

What information does General Ledger Software record?

Journal entries are one important part of the general ledger software system. These journal entries record the details of every transaction, otherwise known as source documents. Examples include invoices, receipts and checks; these records show every movement of your company’s assets (money) into or out of your bank account. You’ll be able to analyze that data later on.

Why Should you consider General Ledger Software

When requesting a general ledger software to help manage your business, you have two main functions in mind: accounting and reporting. And the general ledger software will not only take care of both tasks, but it will also help you with other areas such as budgetary control and payment processing. Here are some areas General Ledger Software can benefit your business.

Accounting

A good accounting package presents all entries at once for easy reconciliation. You can even compare month-to-month or year-over-year performance with this type of reporting functionality. Additionally, it should be able to track and apply multiple currencies and time periods (i.e., rolling 12 months). When selecting a general ledger software solution, make sure that it is truly customizable, meaning that no two customers need to report data in exactly the same way.

Reporting and Analysis

Good general ledger software should also provide the capability to create ad hoc reports and queries for business performance analysis. And, if your business becomes more complex over time, the reporting functionality should be flexible enough to accommodate these changes (e.g., VAT). The most powerful of such programs can even produce predictive analytics based on past data. For example, they might forecast how much you will owe in taxes next year given a certain revenue increase. While more advanced systems can cost significantly more than more basic options, they are typically worth it if your company has a continued need for more and better information technology.

Budgetary Control and Cash Flow Forecasting

Several companies still try to manage cash flow through spreadsheets or other manual methods. However, once your business hits a certain size, the risks of miscalculating cash flow can be too big to bear. Also, business owners should focus on managing their budget rather than on simply making good on it. If you are trying to keep spending in check (or to reduce costs), then general ledger software will definitely help you with this task as it will deliver accurate information about all transactions and can even visualize where your money is going by breaking down financial data into different cost centers.

Payment Processing

Another benefit of using automated solutions for accounting is that they often have integrations with payment processing services such as credit card gateways and direct debit processors. In other words, you can automate your bookkeeping, financial reporting, and cash flow management without having to manually move money between accounts.

Software Compatibility

Finally, when shopping for general ledger software solutions, make sure that they are compatible with the technology that you already have in place. For example, do not choose an accounting program that requires Windows 7 on every workstation just because it comes preloaded with that particular OS. You should also check that the system works with your existing ERP package, if you already have one in place. If you are on a budget, make sure to look for open source options as they are usually free of charge.

In Summary

Whether you are looking for general ledger software as a more sophisticated and automated alternative to spreadsheets or as a bridge between your accounting department and the transaction processing departments, be sure to take all these factors into account. At the end of the day, it is important to remember that the best accounting software is only as good as those who use it.