As you know, there are different types of accounting, the two main being cost and financial accounting. While cost accounting keeps record of how much money has been spent in running the business, financial accounting keeps track of financial transactions through balance sheet and income statement. This helps to evaluate a company’s performance. Information related to financial accounting is usually shown to a third party organization who wish to invest in the company. In short, financial accounting plays a critical role in decision making for investors. In an integrated accounting system, the financial and cost accounting are combined into a single accounting system. This means both the cost and financial transactions are present in one set of accounting records. One can say, it is a composite system that maintains accounting information associated with both financial and cost accounting. While accounting software integration with your existing system can help to reduce operational costs, it is important that you implement an integrated accounting system to streamline business operations in the accounts department.
Advantages of Integrated Accounting System
A wholesale office supply distributor not keeping cost & financial accounts separately in an integrated accounting system has several advantages. Since both types of accounts exist at one place, this can help to improve the efficiency, accuracy and productivity of your accounts department.
Eliminate Duplicate Information Duplicacy of information in both financial and cost accounting is one of the biggest problems in non-integrated accounting system. This never happens in an integrated accounting system because everything is stored at one place in one set of records. While entering data in an integrated accounting system, duplication check functionality is always implemented. This ensures that the records entered in the system are always unique.
Reconciliation not required In a non-integrated accounting system, since both cost and financial transactions are maintained in separate accounting records, many times profit/loss data differs in both the records. To resolve the issue, reconciliation is needed, that involves tallying the profit/loss mentioned in both set of accounts. This is a tedious and time-consuming process. However, with integrated accounting system, the question of reconciliation does not occur. This is because there are no two profit figures,
since all the information related to financial and cost accounting is present in one set of accounting records.
Decrease in Administrative Effort With issues related to reconciliation and duplication of accounting information not arising in integrated accounting system, it is far easier to manage integral accounts. Hence, the amount of administrative efforts and time required to maintain integrated accounting system are substantially less.
Speedy Reporting When all the information related to cost and financial accounting is available in one set of accounting records, it becomes much easier to retrieve and report information. On the other hand, storing information in a separate set of books can cause a lot of delay in reporting due to difficulty in obtaining information.
All in all, with an integrated accounting system at your disposal, you get correct and reliable data, provided the cost and financial accounting records are well integrated. So the next time, you go for a QuickBooks integration, make sure you adopt an integrated accounting system in order to manage your financial operations easily.