What is an Accounting System?

An accounting system enables a company to monitor all kinds of financial transactions, such as expenditures (expenses), sales (invoices and revenue), obligations (financing, accounts payable), etc., and can produce detailed statistical reports that offer management or stakeholders a transparent array of data to assist in the decision-making process.

Currently, a company's system is typically automated and reliant on computers, utilizing specific software and/or cloud services. Historically, accounting systems consisted of a complicated series of manual computations and reconciliations.

What is included in the Accounting System

Expenses- The sum of money that the company pays in return for goods or services provided by another individual or business constitutes the expenses. In older accounting programs or with a manual system like Excel, you must individually input, balance, and classify each expense. A computerized accounting system enables swift input, classification, and automatic reconciliation of expenditures.

Invoices- Designing an attractive invoice is crucial for fostering a positive brand reputation and instilling trust in clients. Currently, certain accounting platforms like Debitoor enable immediate invoice generation while offering customization options and automatic tracking of paid invoices and revenue.

Funding- All business obligations, including accounts payable, loans from banks to support operations, or mortgages, etc. An accounting system monitors these obligations as payable amounts and automatically adjusts the balances whenever a payment is executed and accounts are reconciled.