| One of the common anxieties that keep people | | | | time, the paper method of accounting can even |
| from switching to accounting software is the fear | | | | be phased out. Once common errors of |
| that the software will make their paper | | | | implementation of the accounting program is |
| accounting methods completely obsolete. This is a | | | | detected through these financial software reviews |
| valid concern, of course. Paper accounting files are | | | | of paper-versus-electronic methods, then your |
| not at risk of hard drive crashes and security | | | | business can confidently and surely switch to the |
| threats (for the most part). Most businesses that | | | | electronic method. |
| have used paper accounting tools believe that the | | | | When you use the paper and electronic |
| switch to electronic accounting systems would be | | | | accounting methods, you are deferring risk. By |
| too cumbersome to be cost-effective. | | | | diversifying your accounting methods, you are |
| However, the choice that is presented is a false | | | | employing a similar strategy used by hedge funds |
| dichotomy. Paper-based accounting systems and | | | | - hedging your bets. |
| financial software can be used in tandem very | | | | Continuing both methods also shields you from |
| effectively. | | | | the laser-focus of the IRS. If you have both |
| One of the ways in which these two methods, | | | | electronic and paper records of your books, then |
| seemingly diametrically opposed, can be used | | | | the credibility of your books increases tenfold. If |
| together in an effective manner is by using the | | | | you have several independent records of your |
| two methods in the same manner and then | | | | financial information, then in the unfortunate case |
| "reconciling" them at the end of the month. | | | | of the audit, you are more than covered from |
| An example of this would be to record all | | | | penalties (assuming you have kept your books |
| transactions into both systems independently. If a | | | | clean and are not in violation of tax law). |
| sale is made, it is inputted into both the accounting | | | | One final added benefit of continuing to utilize |
| software and the "Sales" ledger in the accounting | | | | paper-based accounting systems is that, as |
| books. At the end of each month (or quarter), | | | | mentioned before, they are not susceptible to |
| these two can be reviewed and reconciled. | | | | hard drive failures and crashes. If the accounting |
| By reconciling the two systems with each other, | | | | data is lost and irretrievable on the computer |
| errors of input and computation can be detected. | | | | systems, then this would spell disaster for most |
| For example, if the bookkeeper has a regular | | | | businesses. If paper-based accounting systems |
| habit of forgetting to mark invoices as 'paid' in the | | | | are continued, however then this risk is deferred. |
| accounting program, then comparing the two | | | | Using both paper-based and electronic accounting |
| methods can detect this error quickly and | | | | systems is not for everyone. However, it can be |
| efficiently. | | | | extraordinarily useful for the cautious and for |
| When the paper-accounting and accounting | | | | those who want to take as little risk as possible |
| software reviews are implemented for some | | | | when moving to a new technology. |