Information technology is present in most accounting offices these days via computers, printers and other equipment. An intrinsic part of financial processes, technology is often taken for granted in accounting offices. For instance, you can go online and check your cash balance in the bank when you wish, or you can upload journal entries and not think twice about them.
Speed is the hallmark of information technology. The utilization of multiple technologies results in faster and more accurate results. However, keep in mind that each piece of technology purchased, be it hardware or software must be compatible to deliver the best performance. If one piece malfunctions or is not usable, the system is not effective. For example, if the network holding accounting application fails, then work gets bogged down and the system is not effective. In order to be effective as far as speed is concerned, the accounting system should work seamlessly with proper hardware and backup systems.
Accounting work is very detailed and accuracy in recording and reporting is greatly valued. Technology has had a positive effect in accounting applications because calculations done by a computer program experience very few errors. For example, an invoice may have several line items and sales taxes associated with it. If the invoice is to be developed manually, the likelihood for errors is high, but that is not the case if software is used with a proper setup.
An accounting department also needs flexible technology that can adapt as business practices change. To be effective, information technology associated with accounting must be flexible to accommodate the changes. Software, for instance, must be able to be updated to offer new processes, such as credit card processing, and the ability to send invoices online. Otherwise, the software will become obsolete. Accountants also use software for taxes and other accounting needs that change often. Technology must be nimble enough to catch up with the changes.
The latest trend with accounting applications is Web hosting off-site. Instead of installing a program onto your computer and saving data there, the program resides on a server in a different location; the saved information is accessed via the Internet. That’s also called “working in the cloud.” Businesses can save money in software and hardware purchases by signing up with a cloud provider and using its programs and space for saving data, meaning there is no need to get a bigger hard-drive or worry about program versions. The other advantage of the cloud is that you have access to your information anywhere you may be.
Information technology is not perfect. Many times, problems with connections, compatibility and other technical issues affect how accounting processes are performed or if they are performed at all. In order to make technology effective in accounting with minimum down-time, businesses should have a plan to deal with electrical problems, Internet connection malfunctions and computer viruses. Critical accounting functions, such as payroll, should have at least two options for processing. Thus, if data is generally transmitted via Internet, arrange for the information to be called or faxed in as well, just in case something happens to the computer or Internet connection.