Five Pitfalls of Computerized Bookkeeping Systems and How to Avoid Them

Computerized bookkeeping systems offer ease of accessibility, time-saving processes, and greater organization. Few services in the business world lack drawbacks, however, and computerized accounting systems contain several pitfalls. Navigating internal business culture, external environments, and technological enhancements can be a perilous journey, but identifying problems before they appear can keep your business finances secure. The following pitfalls can threaten small business owners using computerized bookkeeping systems, but they’re also avoidable:

Pitfall One: The Power Outage

Even cloud-based accounting systems aren’t immune to power loss. While modern bookkeeping systems do auto-save input information, they’re still susceptible to the host system’s lost power. Crashed, corrupted, or otherwise damaged bookkeeping systems can severely hamper accounting processes, and create volatile information storage environments.

Avoiding the Pitfall:

External storage devices are your friend. External hard drives contain an immense amount of storage space, and they can be entered directly into a previously turned-off system. Additionally, battery-powered laptops offer excellent backup storage possibilities. If you’re using cloud storage technology, you can synchronize it with either backup system. Simply re-input the data once the primary system returns.

Pitfall Two: The Untrained User

Accounting software requires an in-depth understanding of business operations, regulations, and needs. While inexperienced accountants can navigate computerized bookkeeping software, negligence can still occur at the hands of an under-trained employee. Data loss, data misuse, and even security breaches may result.

Avoiding the Pitfall:

Here, extensive employee training is the answer. Employees should be knowledgeable of the processes behind the bookkeeping software being used. While the programs themselves conduct most calculations, storage routines, and recall functions, employees should be capable of understanding each process’s importance. They should similarly be familiarized with company culture, internal policies, and overall growth. Sometimes, a small business’s scaling disrupts internal processes. It may accidentally misalign the workplace’s needs with employee skills. Be sure to notify every user of changing policies, operational requirements, and needed competencies.

Pitfall Three: Insufficient Security

Computerized bookkeeping systems, while advantageous in physical protection, contain digital protection flaws. It’s a computerized storage system: Viruses are a threat. Even cohesive office networks risk data loss via hacking attacks, Internet spying, and external maliciousness. Invested labor, capital, and delicate information is always at risk, and a single attack can leave a small business vulnerable—even destroyed.

Avoiding the Pitfall:

Unfortunately, hacking threats plague most businesses. Anti-virus software is available—though the most up-to-date versions should be purchased. Small businesses are common targets, and a company’s adversaries will grow in number as success becomes more apparent. As a business expands, scales, and carries more information, so too do external threats increase.

Accounting software should be outfitted with the industry’s finest security safeguards. Even a partnered manual accounting system is useful, here, as hard copies are well-protected from cyber threats. Of course, bookkeeping software is the main focus, and fully relying upon hard financial copies is an exercise in self-defeat.

Remember: A business’s accounting department focuses on financial planning and analysis. Sometimes, safety is overlooked. Internal policies should similarly safeguard important information from users. Internal transparency, while important, should never be prioritized over safety.

Pitfall Four: The Expenses

Computerized bookkeeping systems, no matter how safe, no matter how efficient, still fail when businesses fail to fund them. Accounting systems are expensive, and their daily operations, maintenance needs, and use expenses can overburden a small business. Software updates, new versions, and increased hardware needs cost money, and a pitfall exists when the subsequent costs outweigh a business’s fiscal flexibility.

Avoiding the Pitfall:

Any small business maintaining a computerized bookkeeping system must be conscious of incurred expenses. More than other operations, computer-assisted finance requires a keen eye for time-induced costs. Lost labor, training needs, maintenance check-ups, and power losses all increase a business’s daily expenses. Accounting systems, while quick and inherently cost-effective, still incur expenses. Any delays, regardless of size, will eat into a small business’s allowed expense amounts.

Pitfall Five: The Over-Dependence

Likely a future pitfall for most small businesses, over-dependency exists when computerized bookkeeping systems are utilized for every process, regardless of size. As technological advancements occur, human skill diminishes. Modern accounting systems calculate equations once handled by human bookkeepers and accountants. They electronically store once-filed documents. If, for whatever reason, a computerized accounting system becomes unavailable, an incompetent workforce may experience expenses—even damages—from over-dependence.

Avoiding the Pitfall:

In most cases, a computerized accounting system will remedy its own mistakes. However, user input is a factor. Over time, it can be easy to increasingly rely upon the systems implemented to create an ineffective workplace.

Again, internal training is vital. Every employee responsible for the accounting system’s navigation should similarly be ready to conduct calculations themselves. Many systems have inter-dependent segments, making an intensive understanding of surrounding processes highly valuable.