Disadvantages of Manual Accounting Processes


For a small business, manual accounting processes may be manageable but as your business grows and you need to make more financial decisions, it will become increasingly difficult to rely on manual practices. As the business owner or manager, you need to have the most up-to-date information possible in order to make quick business decisions. Learn about the many disadvantages of manual accounting processes:


One person is responsible for all of the accounts, which means they are often bogged down with tasks such as entering data into ledgers. This takes up time that would be better spent analyzing business performance and looking for ways to improve profitability. Also if anything were to happen to your accountant then all the data will get lost or it will take some time for the new person to figure out the workings of that person.

Not Real-Time

The accountant has to wait until all of the data has been entered before they can create reports and analyze the performance of the business. These reports can be created using a range of software applications, so you can run them when it suits your schedule rather than waiting for an accountant to submit their report.

Lack of Flexibility

If you have multiple branches and each one is responsible for its own accounts, there is no central accountancy function making it difficult to monitor how each branch is performing and how they can be improved.

More Error-Prone

Manual accounting processes are error-prone. The more manual work that is involved in accounting processes, the higher the risk of errors. When an account gets recorded erroneously, it can lead to misleading financial statements and reports. Unreconciled transactions are a common issue with manual accounting processes. If you’re using a spreadsheet program as an accounting system, for instance, your checkbook may not get reconciled with your bank statement every month.

This can result in incorrect balances in your books, which will make it difficult to prepare accurate financial statements and tax returns. Manual accounting processes also make it difficult to track important data such as profit margins and cost of goods sold (COGS). This is especially true for businesses that have to keep extensive inventory records or manage multiple projects at once.

Can’t Handle Complicated Transactions

The larger your company becomes, the more complicated its bookkeeping needs become. Manual accounting processes aren’t sufficient to handle all transactions involving sales taxes, payroll taxes, and benefits deductions which is why most businesses require some type of online accounting software solution by the time they reach 20 employees.


Get the Best Book Keeping Solutions

At 3Alpha LLC our professionals use the latest accounting software to help do the most accurate bookkeeping and accounting. Our experienced bookkeeping experts have an excellent track record of handling a diverse range of jobs including bookkeeping accounts payable, timely tax preparations, and payroll services.

We provide their services in a variety of locations, including New York, Ohio, Florida, and Texas.

Contact us now for more information.