General Ledger Software in 2024: Benefits & Key Features

General ledger softwares have become an increasingly popular choice for businesses looking to streamline their financial processes and improve accuracy. These systems use software to automatically organize and record financial transactions, eliminating the need for manual data entry and reducing the risk of errors.

Despite the significance of automation for businesses, the deployment of automated AP systems has been slow so far:

• 9% of AP departments consider themselves completely automated.

However, AP departments are now starting to invest heavily in automation:

• In 2023, 41% of businesses expect to implement Accounts Payable automation.

To help those investing in AP automation, this article demonstrates the benefits of using a general ledger software, as well as the tools and technologies available to help businesses manage their general ledger effectively.

What is a general ledger software?

A general ledger (GL) is a record of a company’s financial transactions. A general ledger software is a computerized accounting system that automates recording and tracking these transactions, including:

• Assets
• Liabilities
• Equity
• Expenses
• Revenue

Transactions are recorded in general ledger in a chronological order, with each transaction being recorded in at least two accounts. For example, when a company buys goods on credit, the transaction will be recorded in the accounts receivable account and the inventory account. 

General ledger is usually maintained by the company’s accounting department and is an important tool for financial reporting and analysis because it serves as the central repository for all of a company’s financial transactions. It includes all of the accounts that a company uses to record its financial activity. 

GL software is an advanced version of a manual general ledger and is designed to streamline the inventory management.

A general ledger software can also:

• Generate journal entries automatically and reduce the risk of errors and ensures that transactions are recorded accurately
• Provide real-time financial reporting, allowing a company to track its financial performance on an ongoing basis. 
• Generate financial statements such as the balance sheet and income statement.

4 benefits of general ledger software

1. Increased efficiency

A general ledger can be complex to set up and maintain, especially for companies with a large number of financial accounts. This can be time-consuming and requires a high level of technical expertise. 

A general ledger software is typically less complex than a manual general ledger because it automates

• The generation of journal entries
• The preparation of financial statements
• The tracking of financial transactions.

In addition, if a general ledger is not properly integrated with other systems, it can lead to data inconsistencies and inefficiencies. A general ledger software can be integrated with other accounting systems, such as:

• Accounts payable
• Accounts receivable
• Inventory management systems

 This allows for seamless and efficient data entry and eliminates the need for manual data entry, which helps reduce costs and allows AP departments to focus on other tasks. As a result, businesses can save money on audits and reports and improve productivity at the same time.

2. Increased accuracy

Manual data entry into a general ledger system can lead to errors, which can have serious consequences for a company’s financial reports such as decreased credibility due to inaccurate data. Inaccuracies and wasted time in accounting can be minimized with the use of a general ledger software.

Figure 1. Manual data entry in Excel Source: Journal of Accountancy

Accuracy of financial data is also improved with accounting software. General ledger’s primary function is to record the company’s financial activities and to generate financial and management reports like balance sheets and profit & loss accounts to assist stakeholders in making decisions.

A general ledger software automatically creates detailed account balances for financial reports and keeps financial data

• Up to date
• On-demand
• Correct

so that stakeholders can reach efficient decisions.

Figure 2. Data entry in GL software Source: SapphireOne

3. Better security

Companies must ensure that sensitive financial data is secure and protected against unauthorized access. General ledger software has robust security measures in place to protect against unauthorized access to financial data. This can help to prevent financial fraud and data breaches or leaks.

4. Improved visibility

Automating the general ledger can help companies keep an eye on transactions and detect any unintended charges so that they can be fixed promptly. GL software also enables you to track actual revenue rather than just projected income. This provides businesses with a real-time view of the company’s financial situation and helps AP departments adjust their budget and keep costs under control.

8 key features of general ledger software

Accounting systems are built around a general ledger. General ledger software is therefore important tools for financial reporting and analysis to ease the processes for business’ accounting departments.

Accounting firms look for financial software that is dynamic, adaptive, and scalable, while also providing them with the flexibility, insights, and control to keep up with rapidly changing business requirements. Here we provide 8 key features of general ledger software:

1. Automatic generation of journal entries

GL software can automatically generate journal entries based on data entered into the system. General ledger software can be customized to automatically add transactions in more than one accounting ledger, which streamlines the process.

Automated journal-entry approval workflows ensure accuracy by verifying criteria such as threshold amounts and approval limits before the journal is posted. Automated systems can also handle routine calculations like amortization and depreciation schedules and P&L allocations, which reduces the amount of work even more. So, using automated journal entry systems can help cut down on the time spent and work needed for audits, closes, and account reconciliation.

2. Automated data entry

A general ledger software can be integrated with other systems, such as accounts payable, accounts receivable, and inventory management systems as mentioned above. This allows for seamless and efficient data entry and eliminates the need for manual data entry.

3. Customizable chart of accounts (COA)

General ledger software can create a common chart of account structure across different processes, modules, and entities. This allows for greater flexibility and control over the journal entry process and enables companies to manage their financial processes in an integrated manner.

Chart of accounts can be protected against unauthorized intrusions, which secures sensitive financial data, and the automated structure can also support salesforce account hierarchies to group accounting data. Integrated COA simplifies reporting while helping companies to better manage their financial processes and ensure the accuracy and security of data.

4. Custom segments

Custom general ledger segments including:

• Profit centers
• Funds
• Programs
• Product lines

can be defined with GL software. This can be particularly useful for companies with complex financial structures or operations in multiple locations.

5. Financial transparency

Using general ledger software, income and expenses can be tracked in real time against budgets. These budgets can be created within the system or imported as files, allowing organizations to closely monitor their financial performance and make informed business decisions. This feature can be particularly useful for organizations looking to optimize their financial planning and management.

6. Financial reporting

An automated general ledger system can provide real-time financial reporting, allowing a company to track its financial performance regularly. It can also generate financial statements such as the balance sheet and income statement.

7. Support for multiple currencies and banking integration: 

General ledger software can provide complex financial needs with multi-currency capabilities. These features can:

• Convert
• Revalue
• Remeasure
• Translate

several currencies according to local and worldwide accounting standards.

GL software can also provide real-time cash flow data by automatically importing bank and credit card data from global banks. General ledger software uses an intelligent rules engine to automatically reconcile matching entries and identify exceptions. In this way, statements can be reconciled with general ledger accounts. This can help organizations quickly and easily track their cash flow and address any discrepancies.

8. Multiple books

General ledger software can help companies navigate complex and regulated environments by streamlining compliance with local regulations and multiple reporting requirements.

Automated ledgers are defined based on their multiple varying needs while using the same underlying financial data. Multiple ledger accounts for a single transaction are kept in sync with a single source of data entry, allowing for flexibility in terms of chart of accounts, calendar, currency, and accounting principles. A single journal entry in the primary ledger can be displayed directly in several ledgers even if each ledger uses different parameters.

This streamlined approach can help to reduce the time and effort required to manage multiple books and ensure compliance with various accounting standards.

Recommendations

Automated general ledger is a feature in AP software. Check out this list to learn more about accounting software and evaluate 483 services based on comprehensive, transparent and objective AIMultiple scores.

If you have further questions regarding AP automation you can reach us:

This article was drafted by former AIMultiple industry analyst Kübra İpek.