When it comes to deciding which accounting system will best fit your needs, it’s important to consider both a traditional accounting system and a cloud-based accounting system. In recent years, the cloud platform has grown in popularity and it seems like most businesses are transferring their business practices to the cloud, including their accounting system.
With so many companies moving their business practices to the cloud, how can a traditional accounting system benefit your company and its needs? Let’s take a look at some advantages and disadvantages of a traditional costing system.
Is a traditional accounting system right for your business needs?
If you’re looking to implement a traditional accounting system to fit the needs of your company, it’s important to take a look at the advantages and disadvantages of this type of system before you do so.
Advantages of a Traditional Accounting System
1. System Errors
One major advantage of a traditional accounting information system is avoiding data system errors and file corruption. Most users don’t fully understand how computer systems store data which is why opening the wrong file or encountering errors can ruin current data accountants need to properly perform their job functions. With a traditional accounting system, a single file is used for each account eliminating any confusion users might have with a system that offers similar versions of the data.
2. Error Improvement
When it comes to a traditional accounting vs modern accounting system, a traditional accounting system offers the ability for double-entry, which provides a way for users to eliminate data entry errors. With a traditional accounting system, each transaction is entered as a debit, as well as a credit in two separate accounts. This not only helps users eliminate data entry errors but also helps companies save time and money against devastating business mistakes.
3. Always Available
Another huge benefit of a traditional accounting system is that when the power or internet goes out, this won’t prevent users from accessing and working on account data. For any company that needs to be able to access their account data, no matter what’s going on with the local power or internet, a traditional accounting system will fit their needs best.
Disadvantages of a Traditional Accounting System
1. Data Entry Errors
While a traditional accounting system seeks to improve data entry errors with its multiple entry process, data entry errors are still much more likely with a manual system. With a traditional accounting system, users are forced to enter data twice which is labor-intensive and time-consuming. With an automated accounting system, though, users do not need to spend so much time entering data and the system can help them find and eliminate errors before they become a major issue for the company.
2. Loss of Hard Copies
Every business knows that it’s important to keep a hard copy of all important data, in case a system error occurs and all data is deleted from the system. With a traditional accounting information system, companies must keep a physical copy of the data, which can easily be stolen or destroyed in a fire or flood. With an automated accounting system, though, users can store hard copies of their data in the cloud which cuts down on time and cost of having to store physical copies off-site in destruction-free facilities.
A major disadvantage of a traditional accounting system is how expensive it can be. Completing accounting tasks with a traditional accounting system takes lots of time and is labor-intensive. An automated accounting system not only saves users time that could be spent on making the business more successful but also saves the company money. While a traditional accounting system is less expensive as far as up-front cost is concerned, in the long run, an automated accounting system is much less expensive and time-consuming while at the same time being much safer to store critical business data.
Depending on the needs of your company and your available funds, a traditional accounting system may be exactly what you need to be successful. For many businesses, though, an automated accounting system that offers cloud storage is a better fit for the needs of their organization. Whatever your accounting needs may be, it’s important to conduct proper research before you decide to go with a traditional accounting information system or not.