Business and Finance Blog

Keeping track of every business-related financial transaction — be it income or expenditure, tax-based or vendor payment — requires utmost diligence and time. Whether you choose to manage bookkeeping on your own or have it done by a professional, accounting software errors can creep in and become a major concern for your business. This is why it is best to get aware of common bookkeeping mistakes so you can address them proactively and prevent them from causing your business any kind of financial harm.

In this article, we’ll look at some of the most common accounting software mistakes that can arise even with the best accounting software. We’ll also find out what you can do to avoid them.

1. Data entry errors

When entering data manually into your software, there are chances of human errors like entry reversals or transposition errors occurring. For instance, instead of entering $5676, you might end up entering $6576, or you may enter $50,000 in accounts receivable instead of the $5000 that was actually owed.

In other scenarios, you might enter a debit entry into a credit report or vice versa.

They are simple errors but can lead to major problems at the time of taxes and cost your business tons of money. Not to mention, they usually only become prominent at the time of bank reconciliation, which throws your accounting out of balance. It might then take you sifting through months and months of data to locate the error.

How can you prevent it: If you wish to fix reversal errors manually, you can do so by referring to the trial balance sheet where you subtract the credits and debits to see if they match. In the case of subsidiary entries, find out if your trial balance matches the sum on your bank statement.

To remain on the safe side, leverage your accounting software to capture your receipts and accounts instead of manually entering them. Once done, you can tally the entries manually and double-check the accuracy of the software.

Dext allows you to upload invoices, receipts, and bank statements, and capture finance data automatically to eliminate human errors.

2. Errors due to outdated data

In practice, accountants don’t pay due attention to backing up financial data, leaving companies ill-prepared for emergencies. This also means businesses cannot restore valuable data in case of unsolicited access, data theft, or hacking.

Furthermore, if a company onboards new accountants or bookkeepers, they are unable to access historical data on payroll and taxes, which makes handling finances difficult.

How can you prevent it: Make sure your accounting software has an auto-backup option to ensure your data is up-to-date at all times. In this manner, you will be able to access or restore data whenever the need arises. In addition to this, make sure you opt for the best accounting software, one that is cloud-based and thus, stores your backup data securely.

3. Security concerns due to unauthorized access

If your accounting software is not designed to limit controlling access to different teams at different levels, it poses a risk to your system’s security and confidentiality.

How to prevent it:

Make sure your accounting software allows access to individuals based on the level of their security clearance. There should be passwords provided to everyone which should be changed regularly to prevent unauthorized access.

Conclusion

Regardless of who is tracking your finances, mistakes are bound to happen. However, with best business practices and documentation procedures in place, it is possible to identify errors promptly and prevent them from becoming serious concerns down the line. It is recommended you backup your finance data and upgrade your accounting software regularly to access historical data and effectively manage your accounts, taxes, and payroll.

With Dext as your centralized accounting software, you can eliminate manual accounting mistakes since the system is integrated with your bank and automatically synchronizes data to ensure top-notch financial management. Furthermore, backups take place regularly and data is encrypted at different levels to ensure confidentiality and security.