Can Accounting Software Help Reduce Costs?
Organizations decide whether to purchase and implement depending on whether the accounting software can reduce costs, or not.
Finance Team Salary
There are obviously a number of factors involved in evaluating the accounting costs of a company, but the largest and most obvious is salary. Accounting salary expenses can quickly add up. According to Salary.com, this is an overview of the average salary for accountants across a number of levels.
- Tax Accountant I: Typically, responsible for the maintenance and preparation of tax returns, tax records, calendars and tax reports. The median salary is $68,467.
- Tax Accountant III: Median salary for this position is $95,041 for maintaining and preparing tax returns, local state and federal returns, and analysis of tax regulations.
- Financial Reporting Accountant IV: Responsible for preparing and maintaining returns, as well as collecting and analyzing changes in local, state and federal regulations to ensure work processes are in compliance. Financial reporting accountants in this role ensure that all reports comply with the reporting guidelines of the SEC and GAAP. This role normally takes 7+ experience.
- Cost Accountant III: Responsible for preparing and analyzing cost reports and cost audits, a Cost Accountant III reviews and correctly allocates unusual cost records and ensures cost data. Their average wage is $91,623 for an individual with 4-7 years of work experience.
Of course, accounting software will not completely eliminate the need for an accounting department, but the following benefits have been proven: allowing a company to avoid adding staff to the finance team despite double-digit growth; switching one employee from finance to a sales-generating revenue role; and reducing financial close time from nine days to two hours. These are just a few examples, but given the salaries currently required by the top accounting professionals listed above, the automation that accounting software offers begins to pay for itself quite quickly either by eliminating the need for existing positions in the financial team, or by eliminating the need to add more as a company becomes more complex. For example, if accounting software eliminates the need for only one tax accountant II, a company will have saved an average of $245,715 in just three years. That can go a long way in itself to pay for itself. Although the elimination of salaried financial positions is the most obvious and one of the most efficient ways to reduce costs for a company, it is by no means the only way.
Identifying Wasteful Spending
Accounting process automation preserves time lost to manually enter data and reconciles different numbers in multiple Excel spreadsheets and other tedious tasks, allowing the finance department to spend more time evaluating business performance. And because Finance and business side usually have more faith in the numbers once they have entered a central general ledger, they are more ready to make critical decisions about this data. Alternatively, accounting software can help identify the most profitable customers and make sure that the company does not spend most of the time and resources on the least profitable customers.
For many small and growing companies, customer invoicing can be a costly proposition. Billing includes maintaining master customer and product files, generating customer accounting data, transmitting customer accounting data, posting receivables and resolving billing requests. One survey of 896 organizations found that the worst performing organizations spend on average $9 to invoice a customer, the best performing spend $2 per invoice and the median is $3.94. Integrated accounting software with other departments can significantly reduce this cost by automatically generating and sending invoices to customers and recognizing payments.
A modern accounting software solution can quickly pay for itself by reducing costs as mentioned, but it can also create an “organizational” confidence that influences the kind of decisions that drive business growth. NetSuite’s cloud ERP platform offers comprehensive financials and reporting functionality for companies at every stage of growth, enabling them to reduce costs by better reporting, automating manual tasks, reducing errors and saving staff costs. The accounting capabilities of NetSuite include:
- A dynamic General Ledger that allows customers to add custom GL impact lines to transactions.
- Custom segments to ensure accuracy and save time.
- Multi-Book Accounting that eliminates data replication and reduces the need for manual adjustments to accounting processes.
- Accounts Receivable for automated, streamlined operations.
- Accounts Payable with simplified and automated exception processing for mismatched invoices, better controls and streamlined processes.
- Automated global tax compliance.
- Fixed Asset Management to control the complete lifecycle of depreciating and non-depreciating assets.
- Cash Management to provide a complete view of a company’s money flows and cash position.
- Payment management for centralized, streamlined payments that meet all customer preferences.