Bookkeeping Software Needs the Human Factor

All bookkeeping software, be it QuickBooks, Peachtree, Sage, BeanCounter or my custom written software, is designed to produce the same end product: a general ledger. The output will look somewhat different, but the result should be exactly identical.

Howard Lipset - Bookkeeping software Given the size of the company, there may be a few options as to who handles data entry for the bookkeeping software system:

Option A – The small business owner does it himself– might be able to see financial problems as they are developing but it becomes a terrible, wasteful use of their time. Probable best use of their time is in marketing and selling of product, not in saving overhead dollars.

Option B – A data entry clerk – can be cost efficient, but without the accounting and business background to recognize an ongoing financial problem. And if there is an accounting firm, how often will they be reviewing the books? If the problems are not caught immediately, will it be too late to save the company?

Option C – A full charge bookkeeper – will not be as cost effective as option B, and comes with the same problems.

What becomes incredibly important is that while this type of software may seem inexpensive and cost efficient at the outset, in reality, it may not be. This is primarily due to the combination of the software and the person doing the data input not being able to recognize problems in the day to day mechanical operations of the business. What appears to be the simplest and most mundane of functions is, in reality, the small business’ first line of defense against financial insolvency. And, in today’s economy, isn’t that what it is all about?

I saw a quote once that read “In a few minutes a computer can make a mistake so great that it would have taken many men many months to equal it.” This is the risk that small businesses take by relying on software alone. The experienced human factor here is simply invaluable to ensure that the errors the computer can not catch are actually caught and that business continues to remain viable.

One response to “Bookkeeping Software Needs the Human Factor

  1. Great post Howard. How about an option D – an outsourced accounting department – cost efficient in a sense that $ paid is less than the opportunity cost the owner will incur in option A and comparable to option C. AND the team that you bring on will have the accounting and business background to recognize an ongoing financial problem.

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