The cost of small business accounting software and the ease of setting up small networks make computerized accounting an attractive idea for many small businesses. Unless carefully planned and managed, the impact of computerization on an accounting department may not be wholly positive. It's important to be aware of the factors involved and their potential effect on employees and customers. Some of the negative effects may be reduced by computerizing only part of the system or by introducing it in planned stages.

Cost

If the business already uses computers for some tasks, extending that use to the accounting department may not be a significant expense. There will, however, be a capital outlay and an ongoing financial cost for software, equipment, security systems and staff training. Existing staff will need training, and not all of your employees will be able to adjust to the new system. Once computerization has been fully implemented, you may require fewer employees to run it on a daily basis; this creates a human cost alongside the financial savings.

Speed and Accuracy

While computers can process data more accurately and quickly than humans, computerized accounting systems are still subject to the same human errors as manual systems. Employees are likely to make a lot of data entry mistakes initially; you will need to allow extra time for checking and also for running the manual and computer systems concurrently for at least a few months. Computerized accounts are always in balance and reports can be accessed on demand, so employees spend less time on tedious tasks.

Security

Computerized systems are at risk from system breakdowns, and data can easily be corrupted unless you install effective back-up procedures and ensure they're implemented rigorously. The nature of accounting software means that employees may have access to far more sensitive and confidential information about the company, its employees and its customers than under the manual system. Some employees may respond by acting more responsibly, but others may need to have their access restricted.

Information

Managers can access a wide variety of reports on demand and in greater detail than under a manual system. Credit control is usually improved and employees are able to respond to account queries quickly and accurately, providing better customer service. There may be less interpersonal communication between different areas of the business if other employees can download reports directly to their computers and accounting employees may feel less valued in consequence.