Business Digitisation: Choosing the Best Accounting Software in Singapore
Around 200 nations are now headed towards post-pandemic recovery and for economists, digitisation like the use of the best accounting software in Singapore is the new normal.
The Singapore Business Federation is encouraging SMEs to use digital technologies for business resiliency and improved business processes.
One of the most important aspects of small business operations aside from Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) is bookkeeping. Businesses should have a systematic and efficient way of recording, evaluating, interpreting, and analysing financial information. Business owners should implement modern accounting solutions to keep up with the rapidly changing business environment.
Although campaigns for the use of cloud accounting have been more intense during the pandemic, the use of Quickbooks, Xero, Freshbooks, and other tools seem impossible to many business owners. In Singapore last year, a survey revealed that around 74% of business owners do not have the know-how to implement digital changes.
Is it time to eliminate manual accounting procedures and use accounting software for small and medium businesses in Singapore? What should business owners look for when choosing the best cloud accounting software?
Why is Accounting an Important Business Process?
An organization’s finance department highly depends on the efficiency of accounting processes like invoicing, inventory management, bank reconciliation, and cash flow. If the accounting process results in errors, then the finance department may not achieve efficiency in performance.
Reliable financial information and bookkeeping for e-commerce are necessary to reflect the real condition of the company and to come up with an accurate financial report.
Accounting helps understand business performance
Whether business owners are gaining or losing money is reflected in the income statement prepared by the accounting department. The income statement shows your profits and losses. You should be able to see where your money is coming from and where it is going through tracking business expenses.
Provides a clear view of the company’s financial position
Your company’s assets, equity, and liabilities are reflected in the balance sheet. Through a view of these records supported by a clear invoicing entry, multi-currency bank statements, and bank reconciliation reports, you will know how much debt you’ve incurred for the year and how much payables are waiting to be settled.
You have a basis for financial planning
Once you’ve had a clear overview of your company’s finances through your accounting reports, then you can plan how the business can move forward. For instance, you tracked company spending against your business needs and you realized you’re spending over the limit on company office supplies. You can create a financial plan for the succeeding year with a certain pre-assigned budget for different departments like marketing, project management, and sales.
Helps you comply with tax laws and obligations
The accounting department of the company prepares all documentary requirements and reports to be filed for tax compliance. Efficient small business accounting software will help ensure proper settlement and management of liabilities including tax payments and employee benefits.
Business Accounting in Singapore
Business accounting is very important in Singapore. Companies are required to submit an annual financial statement in compliance with the Financial Reporting Standards of Singapore and the Singapore Financial Reporting Standard for Small Entities (SFRS for Small Entities).
The company’s financial statement or financial report is the basis for tax computations and consists of the following:
- Statement of Comprehensive Income (i.e. Profit and Loss Account)
- Statement of Financial Position (i.e. Balance Sheet)
- Cash Flow Statement
- Statement of Changes in Equity
The Inland Revenue Authority in Singapore (IRAS) also mandates companies to implement efficient bookkeeping processes because these records are the primary basis in fulfilling tax obligations. The IRAS makes it mandatory for companies to keep financial documents and records for the last five years.
What is Accounting Software and Why Do Businesses Need It?
Any accounting software serves as a tool for finance professionals to consolidate the financial information of small businesses or startups. The software, through an internet connection, should allow accounting staff to process and generate accounts payables, accounts receivables, balance sheets, cash flow records, income statements, expense reports, and payroll.
The IRAS also suggests that small business owners should have user-friendly accounting software that can help streamline the complexities of multi-currency bookkeeping and comply with IRAS policies. SMEs should file financial statements, credit card transaction receipts, bank account statements, accounting reports, and other documents related to the business. Financial information is not only relevant when fulfilling tax obligations but is also necessary for evaluating business efficiency.
Is Cloud Accounting Software Better than Manual Accounting?
Most SMEs in Singapore are used to manual accounting wherein documents, receipts, invoices, and other requirements for a financial report are generated and filed manually. This means that manual accounting would require huge physical paper storage, more time for fulfilling accounting tasks, and more staff to be designated in accomplishing accounting duties.
Companies often prefer manual accounting over small business accounting software because this is a traditional process they began the business with. However, due to the changing times, technology and digitization are now leveraged to improve business performance through ERP amid the challenges brought by the pandemic.
What are the Advantages of Online Accounting?
Fast, convenient, and real-time data entry
Manual accounting can consume more than ten days in a month to finalize a bank account’s financial statement or to submit a financial report. It takes time to enter invoices from freelancers’ information with dates, price, location, and quantity of items purchased.
Employee expense claims usually take weeks to process through the traditional accounting method. However, through the best accounting software in Singapore, expense tracking or inventory management can be done in 2-3 days depending on the policies implemented by the company.
Fewer errors on financial information
Any accounting software can automatically enter information based on the documents uploaded on the system. Manual accounting is prone to hassles and inconsistencies as accounting staff can be greatly affected by their current condition when inputting data. Automation reduces the risk of incurring discrepancies in data entry of all financial transactions.
Saves time on approval and disbursements
Automated accounting shortens the approval process and improves the functionality of each accounting step. Information is accessible in a centralized dashboard that automatically notifies authorized signatories to approve or disapprove a transaction. This time tracking ability informs everyone where the process stopped. In some instances, expense claims or expense reimbursements are eliminated when companies use SaaS platforms like Quickbooks online or digital corporate cards to pre-assign budgets for business-related spending.
Cost-efficiency on accounting staff
Although manual accounting seems to be budget-friendly at first, accounting software allows business owners to reduce staff within the cloud accounting processes. Companies can automatically eliminate the need for additional employees who review bank feeds, add ons, and pricing because automation can do several tasks at a time.
A more secure storage system
With manual accounting, companies are required to have a wide space for the physical storage of documents and other papers related to business transactions. In Singapore, the IRAS requires SMEs to keep their business records for the last five years.
With automated accounting, documents are saved in the cloud which can be accessed remotely through a mobile app in real-time by any member of the organization.
What to Look for When Choosing Accounting Software?
Choosing the right automated management system depends on your business needs. Once entrepreneurs understood the importance of online accounting for business and you identified what your company needs, it is time to search for the best solution. Here are a few of the features you should look out for in any free accounting software in Singapore:
Ease of use
Accounting software is not just for the use of accounting professionals so choose the one that can be managed by any member of the team even those who are not tech-savvy or who are not trained to use complex software solutions.
The accounting software should be highly functional by allowing members of your company to generate different types of reports. The availability of different templates and instructions makes it flexible enough to be modified according to your business model.
One of the main reasons for availing of accounting software is to eliminate errors in financial reporting. Thus, the software solution should have the ability to download and enter data correctly.
Integrating data from one system to another can help save time for the company. Choose an accounting system that allows easy integration for invoicing and cash disbursements. Also, make sure that it meets IRA’s principles and technical requirements.
Secure data protection
Probably the biggest risk businesses may face with automation is data corruption. However, companies offering SaaS already implement data security measures on their systems to ensure that your files are protected against online challenges.
What are the Key Features of the Best Accounting Software in Singapore?
So you already know that an accounting system like QuickBooks online should be secure, easy to use, and highly functional. Now we get into checking out what features should the system offer to accomplish your accounting needs.
* Payments automation – The accounting system should help prevent late payments and penalties. It should be able to set schedules for payments due in a month or a week depending on your billing system.
* Invoicing – The system should handle the processing of invoices with the ability to record how much, from whom, and when payments should be made.
* Accounts payable automation – This should automatically record how much the company owes in a certain period. payments automation feature should recognize a lot of payment channels like PayPal,
* Accounts receivable – This feature should handle the billing against companies that owe the business and how much payment is expected.
* Expense reimbursements and deductions – Employees who spend their money for business-related goods and services expect reimbursements. Seamless expense claims process within automated accounting system should be tax compliant.
* Inventory management – The accounting system should track and manage the movement of supplies to ensure that stocks are within the desired inventory levels.
* Tax forms and tax calculation – The use of free accounting software like GnuCash, Sage, or Xero for small or medium businesses in Singapore should be coherent with the standards of the IRAS in terms of accuracy and timeliness of data.
Surviving the challenges of the pandemic requires the ability to leverage technology like online accounting. The new normal is not just calling out for innovations in the healthcare system but also in doing business. Digitisation is a strategy that promises not just the survival of your business but also its growth amid an ever-changing world.
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