Accounting software for trading company

Not every company can afford expenditure for accounting department. Trading company is a small business which needs specific software to deal with financial issues and statements. In this post I’ll explain need of accounting software for small business and some free solutions. Boosting your trading business isn’t just about having a good product or service; it’s also about managing your finances really well.

A trading company is a business involved in the buying and selling of items, commodities and sometimes financial instruments. It is a type of distribution channel that not only has the ability to buy and sell, but also to hold inventory (hence actual ownership). This makes a trading company quite different from a trading partnership or an investment company, which do not maintain stock on hand. Basic accountancy is a positive factor contributing to profit growth in companies that don’t meet the aforementioned characteristics.

Accounting software for trading companies is a necessary tool for any company that regularly deals with inventory and transactions. The accounting software used by trading companies can be tailored to the needs of your business, with features like automated inventory management, real-time reporting, and itemized invoicing.

Trading companies are often in need of accounting software that can track their inventory and manage their financials. Software that includes automated inventory management will help you keep track of your products and their locations, so you can easily find them when they’re needed. This feature is especially helpful if your business deals with high volumes of stock or if you have multiple warehouses or locations.

Real-time reporting allows you to receive reports about your business’s performance in real time rather than having to wait until the end of the month or quarter for these updates. Real-time reporting allows for greater visibility into what’s happening within your company at any given moment, which can help you make better decisions about how best to proceed moving forward.

Itemized invoicing allows customers who buy from you to receive an invoice detailing all of their purchases from one place instead of receiving multiple invoices from each vendor they purchase from separately—which saves them time and money!

Accounting software for trading company

One of the main purposes of accounting is to monitor the business process, this is a must for every industries, include for distribution and trading company . Accounting also used as the internal control, it is a tool to provide a complete information to the management regarding the business activity, financial calculations, and monitor the asset existence and movement, use of material, labor and financial resource based on the determined budgets.

Distribution and trading company are most common businesses in the world. The activity in a trading company is mostly related to buying and selling products, and deliver service to customers, such as buying products and selling them, increase the cost of purchased product to gain profit. The business process seems very simple, but in fact conducting this business is hard and more time is needed, especially related to the accounting task.

In trading business, stock, merchandise, and inventory are considered as assets. These make the trading business has a different accounting needs. Typically, they company also distribute the products in a large quantity and the in and out product volume of their warehouse is very high. Therefore, the purchase, inventory and sales process must be accurately counted.

To have a better understanding of the trading and distribution business cycle, there are 5 points to keep in mind:

  1. Company Account

A trading company requires more various account than others. Implementing accounting software will be more beneficial since most software provide the required accounts as determined by the accounting standard.   

  1. Inventory Control

Inventory is one of the keys to increasing the company profit and the competitive advantage to competition. To monitor its inventory and cost, the company create monthly inventory report. The aim of this report is to recognize the actual number between the inventory report in the warehouse (physically) to the inventory report made by staff. There are two systems of inventory keeping records:

  1. Perpetual inventory system: For each sale and purchase transaction, the inventory and cost of goods sold are regularly updated. Any purchases will directly deduct the inventory, where each sale requires two journal entries: one to record the inventory sales values and other to record cost of goods sold.
  2. Periodic inventory system: the inventory and cost of goods sold irregularly updated. The purchases are recorded in purchase account and sales transaction is recorded using single journal entry. The result, cost of goods sold does not appear during the accounting period. It will be stated by the end of the accounting period using a closing entry.
  3. The flow of payable – receivable

The expedite payable influence the inventory availability. Suppliers will put their trust to deliver their products when the payable is properly settled. The cash flow is determined by the receivable aging since cash is earned by the customer purchase. The longer the receivable aging, the more difficult for a company to earn cash.

  1. Cash Flow

The essence of managing a business is cash flow. Properly managed cash flow result in fully maintained business activity, such as business operation, due date receivable-payable, investment, and others. Financial statement, moreover cash flow is necessary to recognize your financial health.

  1. Company Profit

Profit earned is allocated for business development. Without earning it, the company will run stagnant and lost its capability for competition.

In accordance to the above-mentioned points, a tool is needed to achieve them. Manual records take more effort to make it, and it will reduce your time efficiency. Save your time, energy, and maintain accuracy by implementing accounting software.

Nowadays, accounting software has compatible features for trading and distribution process, such as inventory, payable and receivable, balance sheet and income statement. This software also offers some options, such as the focus on the inventory only, or an integrated system to inventory, sales and purchase transactions, payable – receivable, operational cost and financial statement. Zahir Accounting, one of the outstanding accounting software is your best choice.

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