As time goes on, more and more accountants are moving their workload onto a digital format, but some still prefer the more old-fashioned ways of working.

Each process has its benefits and drawbacks, depending on how you and your business works.

This post will explain the differences between manual accounting and accounting software, as well as the pros and cons.

What are the differences?

The main differences between the two are in the names.

Manual accounting is the paper-based method that involves you filling out journals and registers and filing everything by hand. Smaller businesses usually use this way of working, such as shopkeepers who may not have the level of business transactions as a restaurant chain.

Accounting software keeps everything stored on a chosen program, such as Xero or Sage. This digitises the whole process from the ground up and allows accountants and businesses to store their data in a cloud database.

Pros and cons of manual accounting

One of the main advantages of manual accounting is its accessibility, as you’ll have all your paperwork and figures to hand. Unlike accounting software, you won’t have passwords to forget or worry about your internet connection going down and being locked out of your system.

But manual accounting has a few disadvantages compared to using accounting software.

The time spent having to fill out endless forms and copying data across to physical spreadsheets can build up. It’s a long and tedious process. Not only that, but if your attention were to slip, you could make many errors and not spot them in time, which will be costly.

With the rollout of Making Tax Digital (MTD), VAT and tax payments must be made online, so manual accounting is falling by the wayside in favour of digitised processes.

The amount of space you’ll need for your paperwork will increase depending on your workload. Filing cabinets soon fill an office, when with accounting software, you’ll only be using a couple of gigabytes on your phone or computer.

Your financial data is at risk should there be an accident in your offices. Suppose there’s a flood or a fire. You can lose months or years of hard work in one fell swoop.

Security is another concern when it comes to manual accounting. Even if your work is behind a locked door, there is always the chance of someone picking up some confidential paperwork and walking away with it.

Pros and cons of accounting software

There are many benefits of using accounting software for your business.

Unlike manual accounting, you can do your accounting on the go without carrying around heavy piles of paperwork. Accessing your back-end data on your phone or computer gives you flexibility and lets you stay on top of your workload in real-time.

Accounting software is usually cloud-based, so your data is encrypted and protected by firewalls.

Your data will also be backed up in the cloud, so should your laptop run out of battery at an inopportune moment, everything is stored and accessible when you’re back up and running.

The only main drawbacks to accounting software are the costs of using a program and getting accustomed to the new ways of working.

Even though programs like Xero and QuickBooks are accessible, they do require some getting used to, but with expert advice from the team at Capium, you’ll soon be a dab hand at online accounting.

If you want to make the most of your accounting software, you’ll be required to pay on a subscription basis.

Even though this is more costly than using ledgers and paper, it’ll save you money on any mistakes you make as they’ll be much easier to fix and minimise the risk of HMRC penalties.


If you need any help or advice on your accounting processes, the team at Capium is keen to help. We know all there is to know about manual accounting and account software and are more than happy to give you honest and impartial advice.

Get in touch today.

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