10 things you need to know about accounting software 

Accounting software is one of the most widely used digital business tools. About 80% of UK SME employers that use digital tech use accounting software (source: GOV.UK), although the smaller the business, the less likely that is. Only a third of the UK’s solo self-employed use accounting software. 

Some don’t realise the benefits accounting software can bring or they mistakenly believe it to be expensive and difficult to use. Other business owners won’t be shifted away from manual financial record-keeping, whether basic computer spreadsheets or physical ledger books filled with handwritten information and numbers. 

Businesses that do not use accounting software undoubtedly miss out, while many users could be getting far greater value from their accounting software. If you want to find out the key advantages of using accounting software and how to get the most out of it, here are 10 things you need to know. 

1 Manual bookkeeping has many drawbacks

A quarter of small UK businesses still use basic computer spreadsheets or ledger books to record their income and costs, despite potentially costly errors being more likely and it taking up much more valuable time when compared to using accounting software. Paper records are not accessible to many people remotely and they can get lost or damaged (cloud-based accounting software mitigates these risks). Moreover, completing tax returns takes much longer when you use manual records, while creating cash flow forecasts and other reports takes much more time and effort. 

Did you know? Following the full introduction of Making Tax Digital for Income Tax (which began in April 2026), in the coming years, most UK sole traders will be required to use accounting software to record their income and costs, and report quarterly summaries to HMRC, replacing annual Self Assessment tax returns.

2 Accounting software can help to keep your cash flow healthy

Millions of UK businesses use accounting software to record their income and expenses efficiently and accurately. Being able to view up-to-date numbers and summaries on demand allows better financial management, for example, an owner can identify areas where costs need cutting or periods when sales need improving. By providing real-time financial insight, accounting software enables successful cash flow assessment, with detailed forecasts available in seconds, which can prevent cash-flow crises and business failure. 

3 Accounting software can save you lots of time and money

Accounting software automates repetitive tasks, saving businesses lots of time. For example, accounting software can be linked to bank and credit card accounts, with all transactions imported automatically. Regular payments can also be automated, while accounting software often comes with free invoicing capability, making it quicker to send invoices and chase when overdue. Expense management can be easier, too, for example, receipts can be snapped by smart phone, stored online and automatically recorded into the accounting software. Time savings bring significant cost savings, too, while accounting software enables many businesses to save on accountancy and bookkeeper fees.  

4 Accounting software makes costly mistakes less likely

With accounting software minimising manual data entry, omissions and errors are less likely, with built-in checks and validations also protecting data integrity. Manual entry omissions and errors, for example, not accounting for all expenses or overstating income, can result in unnecessarily higher tax bills. Moreover, automating regular payments and invoices means they won’t be forgotten or sent out late, which strains cash flow.  

5 Your current accounting software might be holding you back

Your current accounting software could be slow or crash a lot. There could be problems with updates or compatibility with other software. It may lack the automations or other features you would get from new accounting software. Accounting software has developed greatly in recent years, so, your existing software may not give you handy forecasting and budgeting tools that make cash flow management easier. Your current software may be desk-top based, which limits access, or it may not be as secure as is it should be. You may not be able to easily account for payments in other currencies.  

6 Accounting software really isn’t expensive

Small-business accounting software typically costs £10-£35 per month, depending on features and provider. Some platforms offer free basic plans for sole traders and micro businesses, while fees are higher (£40-£60) for premium options that offer, for example, advanced analytics, multi-currency payments, integrations, multiple users and superior support. Accounting software can be claimed as an allowable tax expense, so it can be deducted from your taxable profits.  

7 Focus on your specific needs when choosing accounting software

First work out how your current methods or software is letting you down and how new accounting software should make a difference. Get input from other team members and your accountant if you use one. Research popular accounting software that meets your needs and budget. Choose cloud-based accounting software that can be integrated with your other systems. Contact vendors for more information and take advantage of free trials. Also find out what free training and support is available.  

8 Good accounting software can scale as your business grows 

Your new accounting software should be scalable. No matter how fast or how much your business grows, you should be able to add more users, with different levels of role-based access. Adding more features and functionality as your business develops should also be easy and affordable. And your software should comfortably be able to handle greater transaction volumes, more clients, multiple currencies, etc.   

9 Introducing new accounting software in straightforward

Decide when you will introduce your new accounting software and set a date/time for migrating financial data from your old system. Clean your data in advance, if required. Make sure your people get the training they need and give role-appropriate access to those who need it. Start with core accounting software functions then move on to advanced features. Automate repetitive tasks and connect to your other business software. Set alerts for spending budget thresholds and tax compliance deadlines. Monitor for any issues and seek feedback from all users.

10 You really need to maximise the value of you accounting software

Use your software to regularly monitor KPIs (key performance indicators) linked to your sales, profitability, liquidity, cash flow and cost control. Accounting software can easily generate onscreen dashboards and reports, conveniently giving you critical information to inform your business decisions. Generate weekly/monthly/quarterly financial reports and give them your full attention. Create cash flow forecasts, too. Listen to what your numbers tell you – never ignore them. They can help to ensure the continued success and growth of your business.