With time, the modes and methods of recording data have evolved. In the past, manual recordkeeping methods were popular, but today computerized systems have gained popularity. Despite the popularity of computerized systems, some firms and businesses still use manual methods of recordkeeping.
A business or a firm must not worry about the type of system used for recordkeeping purposes unless they are getting accurate data on time. But the chances of finding data accurate and complete are always higher with a computerized system if the recordkeeper has some skills. There is no benefit of using a computerized system; if the people handling it lack skills and knowledge, it is better to use a manual system instead.
Dig deeper into this article to explore some differences between manual and computerized bookkeeping systems.
Top 6 Differences Between Manual and Computerized Bookkeeping Systems
Before computerized systems were introduced, bookkeepers and accountants relied on manual methods of recording financial data. Computerized systems have replaced these methods, but still, some businesses use manual methods. Both these methods have pros and cons, but the benefits of computerized recordkeeping methods overrule the manual methods. It is because of some of the negligible benefits of computerized systems over manual methods.
Below are the key differences between computerized and manual bookkeeping systems.
1. Accuracy
The accuracy of financial documents is one of the most important things. Inaccurate data leads to wrong decisions for a business. In the past, manual methods were used for recordkeeping purposes, and the chances of inaccurate records were higher. But with computerized systems, the inaccuracy rates have been minimized to a great extent. But it is a fact that the accuracy of the records also depends upon the person recording it regardless of the system. Many businesses consult bookkeeping and accounting firms in Dubai to ensure their records are recorded accurately using effective and modern tools.
2. Calculation
With the data entered, there need to be certain calculations made at the end. For example, from daily invoices, one can calculate the total amount earned through sales on a given day. These calculations are difficult in the manual method and are always calculated at the end of the fiscal year. In contrast, in computerized systems, these calculations are easier and made by the end of the day. The system is fed with the data, and it gives the calculated results free of errors and inaccuracies.
3. Documentation
In the manual system, the documentation of records is done on papers and registers. Whereas in computerized-based systems, data is recorded on a database. There are benefits and drawbacks to storing financial records through both methods. With the manual methods, the accuracy of the data is affected; On the other hand, with a computerized system, your database might get attacked by hackers. Despite these problems, it is always better and safe to use computerized systems with an effective safety plan implemented.
4. Financial statements
With a manual system maintaining and preparing financial statements on time is impossible and is always prepared at the end of the fiscal year. But with a computerized system, you can prepare your financial statements regularly. Such statements are crucial for businesses to determine their business health and growth. These financial statements are a source to make decisions and attract investors, and you must have them prepared all the time.
5. Cost
The cost of implementing both recordkeeping methods varies to a great level. It is cost-effective to record data using manual methods. But the costs for computerized systems are a one-time cost; on the other hand, manual system costs are recurring. Recordkeeping with computerized systems is expensive as you have to invest in the latest tools and technologies along with their security. But with these systems, you do not have to bear the consequences of losing your important financial data.
6. Speed
The speed of storing and retrieving data is very important. With manual recordkeeping systems, the speed of storing and retrieving data is slow. It takes too long to reach your required data; on the other hand, computerized systems are much faster. The retrieval of required data is a click away without putting any extra effort and time. But for this fast retrieval, the bookkeeper must have the basic knowledge and skills of using technical tools. You can acquire the services of bookkeeping firms, where the recordkeepers have expertise in managing records using modern tools and methods.
Maximize the accuracies with the right system!
It is not important what system you use for recordkeeping purposes, but your records must be accurate and complete. You must always opt for the systems and methods that support the accuracy and completeness of your records. The completeness of your data also depends on who is maintaining them and recording them. So, make sure that your bookkeeper and the system are effective and efficient.
