How To Use Zoho Accounting Software: Process, Application, And Usage

Zoho Accounting Books is a cloud-based accounting software designed for small and medium-sized businesses, offering a seamless, intuitive platform to manage finances without complexity. Part of the Zoho ecosystem, it automates invoicing, expense tracking, bank reconciliation, and tax compliance with GST, VAT, and multi-currency support. 

Users can create professional invoices, set up recurring billing, track inventory, and generate real-time financial reports—all from a mobile-friendly dashboard.

With role-based access, workflow automation, and integrations with Zoho apps (CRM, Inventory) and third-party tools (PayPal, Stripe), it eliminates manual data entry and reduces errors. 

Zoho Books ensures data security with AES encryption and regular backups. Affordable plans start free for basic use, scaling with business growth. Trusted by over 3 million users globally, it simplifies accounting, saves time, and empowers data-driven decisions—making it the smart choice for modern businesses.

What Is ZOHO Accounting? 

Zoho Accounting refers to Zoho Books, Zoho’s cloud-based accounting software tailored for small and medium-sized businesses (SMBs). It’s a complete financial management tool that automates core accounting tasks—invoicing, expense tracking, bank reconciliation, inventory management, and tax compliance—all within a clean, mobile-friendly interface.

How To Use Zoho Accounting Software? 

Here’s a step-by-step beginner’s guide to using Zoho Books (Zoho Accounting) — from setup to daily operations. Follow this to go live in under 60 minutes.  

1. Set Up 

2. Create & Send Invoices 

• Sales → Invoices → + New
• Select Customer (or + New Customer)
• Add Items (create on-the-fly or from inventory)
• Apply Tax, Discount, Recurring (optional)
• Customize PDF (logo, terms)
• Send → Email/SMS or Client Portal link
• Record Payment → Mark as Paid (auto-match bank)

3. Record Expenses 

• Purchases → Expenses → + New
• Upload receipt (mobile app → snap photo)
• Categorize (Travel, Supplies) → Split if needed
• Reimburse or Billable to client
• Auto-match with bank feed

4. Bank Reconciliation 

• Banking → Select account
• Transactions auto-imported daily
• Match (drag-drop) or Add manually
• Reconcile → Balance matches statement

5. Track Inventory 

• Items → + New Item → Set price, stock, SKU
• Link to Warehouse
• Auto-adjust stock on Invoice or Bill
• Get Low Stock Alerts

6. Generate Reports & Insights 

7. Automate & Scale 

8. Prepare Day Checklist 

•  Sign up & set currency/tax
•  Connect 1 bank account
•  Create 3 sample items
•  Send 1 test invoice
•  Record 1 expense with receipt
• Match 5 bank transactions
• Run P&L report
• Enable payment reminders

Zoho Accounting Pricing 

Zoho Books offers flexible, per-organization pricing starting with a free plan for small businesses (under $50K annual revenue). Paid plans are billed monthly or annually (annual saves ~17%—exact rates calculated at signup). All include a 14-day free trial for paid tiers. Prices exclude taxes; add-ons available for extras like users or locations.  

Application Of Zoho In Accounting 

There are several applications of Zoho In Accounting. Some of the key factors to consider here are as follows:- 

1. Invoicing & Account Receivable 

• Professional invoicing: Customize templates with logos, terms, and multilingual support.
• Recurring billing: Set up subscriptions (weekly, monthly, yearly) with auto-charge via Stripe/PayPal.
• Client portal: Customers view, download, and pay invoices online — reducing DSO (Days Sales Outstanding).
• Payment reminders: Automated 3-stage email/SMS sequences for overdue invoices.
• Multi-currency: Send USD invoices to US clients, auto-convert to INR, and record FX gains/losses.

2. Bills Expenses & Accounts Payable 

• Vendor bill entry: Upload PDF → AI extracts data (OCR) → auto-categorize.
• Bill payment scheduling: Pay via ACH, card, or bank transfer with approval workflows.
• Expense tracking: Mobile app → snap receipt → categorize → mark billable → add to client invoice.
• Reimbursement: Employees submit claims → manager approves → auto-pay via payroll sync.

3. Bank Reconciliation & Cash Management 

• Automated bank feeds: Connect 20,000+ banks globally (Plaid, Yodlee) — transactions import daily.
• One-click matching: Drag-drop to match invoices/bills or let AI suggest.
• Cash flow forecasting: 30/60/90-day projections based on recurring income/expenses.
• Petty cash & multi-account: Track 50+ bank/cash accounts in one org.

4. Compliance & Tax Application 

5. Inventory & Cost Accounting 

• Stock tracking: Real-time levels, low-stock alerts, serial/batch numbers.
• Composite items: BOM (Bill of Materials) for manufacturers — auto-deduct components.
• Landed cost: Include freight, customs, insurance in COGS.
• Warehouse management: Multi-location stock transfer (Elite/Ultimate plans).
• E-commerce sync: Shopify, Amazon, WooCommerce → auto-update inventory on sale.

6. Project & Time-Based Accounting 

• Time tracking: Log hours per project/task (web or mobile).
• Billable vs non-billable: Auto-convert logged time to invoices.
• Project profitability: Compare budgeted vs actual costs/revenue.
• Retainers: Track consumed hours against prepaid balances.

7. Advanced Financial Applications 

8. Reporting & Business Intelligence 

9. Integration Powered Accounting 

How Zoho Accounting & Inventory Works? 

Inventory management in Zoho can be basic (via Zoho Books) or advanced (via Zoho Inventory). Both track stock in real-time, but Zoho Inventory adds depth for e-commerce and multi-location businesses.  

Basic Inventory in Zoho Books

• Enable Tracking: Go to Settings > Items > Enable Inventory Tracking. For each item, select “Track Inventory” and set opening stock/reorder points.
• Stock Updates: Automatic adjustments on sales (invoices reduce stock) or purchases (bills increase stock). Example: Starting stock of 100 units; sell 70 → stock = 30; buy 100 → stock = 130.
• Features: Barcode scanning, composite items (bundles), adjustments for losses/thefts, and reports like Inventory Summary (shows on-hand, committed, available stock).
• Valuation: Supports FIFO/LIFO for cost tracking; integrates with accounting for COGS entries.

Advanced Inventory In Zoho Inventory

• Core Tracking: Manage items with SKUs, images, vendors, and categories. Supports serial/batch numbers for traceability.
• Orders & Fulfillment: Create sales/purchase orders; handle backorders, drop-shipping, and returns. Track from confirmation to shipment.
• Warehouses & Shipping: Multi-warehouse support; integrate with carriers (e.g., UPS, FedEx) for labels and tracking.
• Reports: ABC analysis (categorizes items by revenue impact), valuation summaries, and reorder alerts.
• Multichannel: Sync with e-commerce platforms (Amazon, Shopify) for automated order import.

How Zoho Accounting & CRM Works? 

Zoho Accounting CRM is a cloud-based platform for managing the entire customer lifecycle, from leads to loyalty. It uses AI (Zia) for predictions, anomaly detection, and task automation, with a drag-and-drop interface for customization. Start by setting up teamspaces, importing data (e.g., from spreadsheets), and defining sales pipelines.

Benefits Of Zoho Accounting Automation 

Zoho Accounting Automation, powered by Zoho Books, transforms manual, error-prone financial processes into a streamlined, accurate, and intelligent system. Here are the key benefits in clear, narrative form:  

1. Massive Time Savings 

Automation eliminates hours of repetitive work. Bank transactions are imported and categorized automatically using AI-driven rules, matching over 90% of entries without manual input. Recurring invoices are generated and sent on schedule, while overdue reminders go out via email or SMS—no follow-up chasing needed. Workflow approvals for bills and expenses move through multi-level reviews instantly, cutting out email back-and-forth. Bulk actions let you import thousands of transactions or update items in seconds. Businesses typically save 10–20 hours per month on reconciliation alone.

2. Near Zero Errors 

Duplicate data entry becomes a thing of the past. When integrated with Zoho CRM or Zoho Inventory, customer details, products, and transactions flow seamlessly between systems. Taxes, discounts, and currency conversions are calculated in real time based on location and rules. Stock sales automatically update Cost of Goods Sold (COGS) with accurate journal entries. Every action is logged with user, timestamp, and IP for a full audit trail—ensuring compliance and accuracy during audits.

3. Faster Payments & Stronger Cash Flow 

Online payment links (Stripe, PayPal, ACH) embedded in invoices make it easy for customers to pay instantly. Automated reminders reduce average collection time by 30–50%. Real-time dashboards show accounts receivable aging, cash balance, and top expenses at a glance. 

AI-powered cash flow forecasting, especially when synced with CRM pipelines, predicts shortfalls days or weeks in advance—so you’re never caught off guard. Zoho Accounting can make the process of your brand development work well in your favor. 

4. Effortless Compliance 

Zoho Books handles tax compliance automatically. It calculates GST, VAT, or sales tax based on customer location and files returns directly with authorities like HMRC (for UK MTD). 

Multi-currency transactions are revalued daily to reflect accurate forex gains or losses. Over 40 financial reports—Profit & Loss, Balance Sheet, Tax Summary—are generated with one click and can be scheduled for automatic delivery. Role-based access ensures only authorized users see sensitive data, supporting GDPR, SOC 2, and SOX compliance.

5. Scalability Without Complexity 

Grow your team and operations without growing your accounting workload. Add unlimited users (on paid plans) at no extra cost—accountants, sales reps, warehouse staff, and vendors all access what they need. Clients view and pay invoices through secure portals. 

Vendors upload POs or check payment status. Mobile apps let you approve bills, send invoices, or scan receipts from anywhere. Through Zoho Flow and APIs, connect to custom apps or legacy systems without disruption.

6. Significant Cost Savings 

Automation reduces the need for full-time bookkeeping staff. A typical SMB saves $15,000–$30,000 annually in accountant time. Faster collections prevent late fees and improve working capital. Avoiding tax penalties saves thousands more. 

Compared to traditional software like QuickBooks Desktop, Zoho Books is 60–80% cheaper for the same or better functionality—especially when you factor in free mobile access, updates, and support. Zoho Accounting forms an essential part of your bookkeeping. 

7. AI-Powered Intelligence 

Accounting software like Zoho Books transforms raw financial data into AI-powered intelligence by embedding machine learning, predictive analytics, and natural language processing directly into everyday workflows. Ensure that you follow the correct process from your end. 

How To Extract Zoho Accounts Backup Code? 

Zoho Accounts (the authentication and user management system for Zoho services like Zoho Books) uses backup verification codes as a recovery option for Multi-Factor Authentication (MFA). These are single-use, 12-digit codes generated during MFA setup to allow login if your authenticator app (e.g., Zoho OneAuth or Google Authenticator) is unavailable. They are not the same as data backups in Zoho Books or other apps—those are CSV/XLS files for organizational data.

If you mean data backup extraction (e.g., from Zoho Books), skip to the section below. Otherwise, here’s how to handle backup verification codes:

1. Generate New Backup Verification Codes (If You Have Account Access)

• Log in to your Zoho account at accounts.zoho.com.
• Go to My Account (top-right profile icon) > Security > Multi-Factor Authentication (or search for “MFA” in settings).
• Under MFA Recovery Options, click Generate New Codes.
• A pop-up will display 10 new 12-digit codes. Use them one at a time for login.
• Save securely: Download as text file, print, or store in a password manager. Do not store them digitally in an unsecured way.
• Important: Each code is single-use. Once used, it’s invalid. Generate new ones if you’ve used all 10.

Time to generate: Instant. Limit: You can regenerate as needed, but old codes become invalid.

2. Use A Backup Code To Log In

• During login, after entering your password, select Use Backup Verification Code (instead of scanning QR or entering app code).
• Enter one unused 12-digit code and click Verify.
• You’ll be logged in, and that code will be marked as used.

3. If You’ve Lost All Backup Codes And Can’t Access Your Account

• Self-Recovery (If Possible):
  • Try logging in and select Can’t access your authenticator? > Follow prompts to verify identity via email or recovery email.
• Contact Support:
  • Email support@zohoaccounts.com with your account email, full name, and proof of identity (e.g., government ID, recent transaction details).
  • They’ll verify you and provide a one-time password reset link + new backup code.
  • Response time: 24–48 hours (expedited if you CC community contacts like reetu@zohocorp.com from forums).
• For Admins (Zoho One/Directory): If you’re an admin, go to Control Panel > Users > Select user > Generate Backup Code under MFA settings.

Zoho Books Online Accounting Software 

Zoho Books is a cloud-based, double-entry accounting system that automates the entire financial lifecycle — from quote to cash to compliance — without spreadsheets or manual journals. It runs entirely online (no installation), syncs in real time, and integrates with 500+ apps via Zoho Flow or API.

Below is how it works, broken into core workflows with live examples.

1. Set Up In <15 Minutes 

2. Money In: Sales & Invoicing 

Flow:

1. Create Quote (Zoho CRM or Books)
   • Client accepts → auto-converts to Sales Order → Invoice.
2. Customize Invoice
   • Add logo, terms, tax rules.
   • Recurring? Set monthly auto-invoice.
3. Send & Track
   • Email with payment link (Stripe, PayPal, Razorpay).
   • Client pays online → auto-recorded.
4. Bank Feed Sync
   • Payment hits bank → Zoho auto-matches to invoice → marks Paid.
   • Unmatched? AI suggests: “Match to Invoice #1023?”

3. Money out: Bills & Expenses 

Flow:

1. Record Vendor Bill
   • Upload PDF → OCR extracts amount, date, vendor.
   • Auto-categorizes (e.g., “AWS” → Hosting).
2. Approve & Pay
   • Workflow: Manager approves → Schedule payment.
   • Pay via ACH, card, or bank transfer.
3. Reconcile
   • Payment leaves bank → Zoho auto-matches bill → marks Paid.

4. Automation Engine ( The Magic Layer) 

5. AI Powered Intelligence 

• Ask Zia: Type “Show profit by client last quarter” → Instant chart.
• Anomaly Detection: “$1,200 expense claimed twice — duplicate?”
• Cash Flow Forecast: “You’ll have $8K surplus in 45 days.”
• Smart Categorization: Learns your patterns → 98% accuracy.

6. Tax & Compliance 

Final Takeaway 

Hence, these are some of the crucial facts about Zoho Accounting that you should consider from your end while meeting your needs with ease. Application of the correct strategy can make things work perfectly well in your favour. 

You can share your views and opinions in our comment box. This will help us to know your take on this matter. Here, proper planning can make things work perfectly well in your favour within a shorter version of time.