An Accounting Software is not a Billing Software

Quite a lot of societies use accounting software as billing software as well. It meets many of their requirements but falls much short of good billing software. The society management is generally not expected to be aware of the differences between the accounting and billing software. Even the accountants employed by the societies are not aware of the same. Allow us to present key points.

Accounting software deals with statement of account – payment and receipts. It has built in functionality to calculate profit and loss, account statement and cash flow. It falls short of the billing software of the following accounts:

<(A)   General Purpose Accounting: An accounting system is typically designed for all the types of industries and it does not have specific features which are used for utility / periodic billing.

(B)   Annual Statement: An accounting system is typically designed to generate annual statement. The controls available in the system work within an accounting year.  Normally, an accountant is not allowed to make changes in the past year statement but can make changes in the current year statement based on the business requirements.

   (C)   No control on number of Items: An accounting system allows the user to put as many items for income / revenue in a month/billing cycle as required. It has typically no restriction on number of bills or on invoice line items. A good billing system would allow putting an invoice items such as ‘Maintenance Charges’ only once in the invoice and only one invoice in one billing cycle. One may put maintenance charges more than once in a billing cycle in a n accounting system. In fact, in one of the cases one party has provided a billing logic on top of an accounting system. The user may still create multiple bills for one unit in one billing cycle.

(D)   Concept of a Billing Cycle: An accounting system does not really understand a billing cycle. It does understand monthly or quarterly periods. Thus an accountant can put ‘arrear’ an invoice item in each billing cycle in an accounting system but the accounting system has no concept of calculating an arrear in a billing cycle. It treats arrears just as item without putting any logic around the calculations of the arrears. The consequence is that an account can easily make a change in a past bill without getting it reflected on the present bill. A good utility billing system would not allow making any changes in the past bill.

(E)  Billing Functions: A typical accounting system does not understand a concept of billing functions. An example is electricity billing which may have a flat billing function or slab wise billing functions. There is also a concept of tariff in a billing system with time validity. The accounting system would simply allow for a flat tariff (or rate or price whatever you call it). It also would not allow for slab tariffs or complex billing functions. It would not allow for complex late payment and interest logics as employed in the billing segment.

   (F)    MIS: A billing system require specific MIS reports such as arrears report, outstanding report, collection report, ageing report etc. An accounting system does not really have provision for the same.


There are many more differences between accounting and billing system. Accounting systems are loved by accountants because they can make any change into the system and only they can make a change. But using an accounting system as a billing system is a just a ‘Jugad’.

We would request you to invest into a collaborating billing system where a resident can view their own data on line and also the email / sms can flow out of the system seamlessly.

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