Characteristics of an Effective Accounting System

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The more unorganized the accounting system, the more chance for error.
The more unorganized the accounting system, the more chance for error. (Image: Martin Poole/Photodisc/Getty Images)

An effective accounting system has quite a far-reaching effect on businesses, non-profits and individuals alike, since being effective goes beyond merely being organized. In addition, a good system will enable a company to make improvements that will in turn procure more profitability. Much depends on the size and nature of the company, but there are a few cornerstones that are applicable for any organization.

Organized

The more guesswork that is involved in a system of accounting, the more prone a company is to error. Minding the vague, broadly categorized generalities is not enough, as details need to be tended to. In short, no amount of categorization is too much. Incoming funds versus overhead expenses and time-sensitive trends are just a few examples of things to account for.

Software

Being organized is one thing, but the less effort it takes to be that way, the better. Thankfully, there are many accounting software programs on the market from which to choose. As mentioned, much depends on the size and nature of your business, so it is important to find the right one for you. For example, a top-of-the-line program can fall flat if it is designed for businesses larger than yours, not to mention that you'll be paying for amenities you don't need.

Information Retrieval

Easy retrieval of information makes for a smoother-running accounting system, since it is possible to have everything categorized but not as accessible as you'd like. When running your business, it is essential that you be able to quickly and efficiently access data to both troubleshoot and map out future plans for not only efficiency but also success.

Usability

Employees and managers need to be able to use the accounting system with minimal effort and a small learning curve. An otherwise good system that is counter-intuitive to your accounting needs can hinder productivity. For example, say you have system in place that has proven to be efficient with your competitors and comes highly recommended, but is not easy for your employees to use, for whatever reason. Communicate with your employees as to what would work best.

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