Choosing the Right Accounting Software
|Many businesses start out recording financial data in spreadsheets and using an adding machine to balance their budget. While this is a necessary phase, business owners will soon be confronted by the reality that they can’t do it all on their own.|
A study by software company Xero showed that the two biggest mistakes small businesses make are failing to keep financial records up to date and misunderstanding their tax obligations.
When coupled with best practices and professional expertise, financial software such as can be found from companies like Synario, is a vital tool for helping businesses properly manage their money, whether it is expenses, income, taxes, or payroll.
This whitepaper will lay out clear logic for different aspects of the software purchasing decision, distilled down to five steps for choosing the right product.
Top 5 Tips for choosing software
Click on Read more to find out the top 5 tips for choosing the right Accounting software for you.
Decide the nature and scale of your needs
What kind of company are you? A small business? A retail store? A full-size enterprise? There are different financial products available to suit each of these unique needs. On one end of the spectrum, you’ll find basic accounting software for small businesses with simple ledger features for tracking expenditures across a handful of accounts. On the other end, you’ll find entire business management suites with comprehensive features like POS, inventory management, and even customer relationship management (CRM).
Typically, the more industry-specific (“vertical market”) the software is, the more expensive it gets, because the features are highly specialized. Generic, out-of-the-box functionality (“horizontal market”) usually retails for less.
Xero would be a good example of a lower-price, horizontal market application. Xero is software-as-a-service (SaaS) bookkeeping for small businesses, with prices ranging from $9 to $70 per month, depending on the number of transactions, invoices, and bills.
Quickbooks Online Simple Start is another solid entry-level program. $12.95 a month buys you a functional group of financial tools like invoicing, sales/expense tracking, banking access, cheque printing, spreadsheet integration and mobile compatibility.
Some vendors even provide free, scaled-back editions of their software, but watch out for fine print, and make sure you’re still getting the functionality your business requires.
Don’t make the mistake of thinking financial software will do all of the work for you. It will certainly eliminate a lot of the manual exertion, but anyone who operates an accounting program will still need to have at least a functional understanding of accounting principles. Stay current on financial best practices for your business by conducting industry specific research, reading articles, and communicating with other professionals. You don’t want to choose an application just because everyone else uses it.
Similarly, accounting software is not intended to eliminate the need for a Chartered Accountant. While many programs provide resources and forms for working through tax prep, an Accountant provides valuable, time-tested insight on financing, taxes, auditing, and payroll that can’t easily be replaced. Think of your company’s finances as a shared responsibility between you (leadership), your accountant, and your financial software.
Decide which features you need and which you don’t
As with any business software purchase, you should avoid paying for features you don’t need, even if you can afford them. Here are a few common software features to consider:
- Expense tracking
- Inventory tracking
- Payroll (deductions, PAYE, leave, etc.) and time tracking
- Foreign currency conversion
- Online invoices
- Tax reports/preparation
- Integrated bill payments
- Recurring expenses
- Profit/Loss reports
- Customizable dashboards
- Account linking (Bank, Paypal, eBay, etc.)
- Mobile compatibility
- Cloud-based or On-premise software
- Cheque printing
- Multi-user collaboration
- Analytics and Forecasting
There may be additional, industry-specific features not included on this list that could be important for your organization, such as medical billing features for physicians or enterprise resource planning (ERP) for manufacturing companies. There are many ERP services around, (look here for one example), so choosing the right one for your manufacturing business is a whole other part of the industry. When talking about medical billing, there is a sense of urgency and no room for mistakes. Many medical-based companies research into their ems billing services for a while before choosing one, to ensure they are choosing a service that is efficient and correct. Sage 300, for example, is a business management program specifically designed for manufacturing and real estate; it offers unique industry tools like model estimating, advanced assembly databases, and service management. Make sure to check industry websites for specific recommendations in your field.
It’s easy to be overwhelmed, but don’t depart from your original business priorities.
Choose between SAAS or on-site software
Some accounting software is housed on-premise, meaning it will take up server space and typically require purchasing a one-time license. SaaS (software-as-a-service) products, on the other hand, are hosted online (on the vendor’s servers) and purchased on a subscription basis (usually per user per month).
There are benefits to each and reasons why your IT administrator may prefer one over the other, although many businesses are now moving to cloud-based solutions. In 2013, almost half of all accountants (43 percent) planned on offering cloud services the following year, up 11 percent from 2012.
Benefits of On-site Software
- Keep administrative control in your hands (or your IT department)
- Less concern about security breaches and information leaks
- You determine storage space
- Sometimes better training/set-up assistance
Benefits of SaaS
- Less in-house software maintenance
- Real-time syncing between users
- Increased mobility (access from mobile devices, remote sites, etc.)
- Constant data back-up
- Lower up-front costs
- Immediate access to upgrades
Get input from Professionals
Consult with your accountant-if you already have one-since he will inevitably be one of your biggest resources in rolling out and using the new software (especially during tax season). If you don’t have an accountant yet, try shopping for one who uses the software you’re interested in.
You can also consult with other businesses about what software they use, as well as the successes and failures they’ve experienced. This can be especially valuable for companies in niche industries. It’s not difficult to find web reviews for off-the-shelf products like Quicken, Peachtree, and MYOB, but companies in need of industry-specific features may have a tougher time finding advice online.
Finally, many businesses find it helpful to use an unbiased consulting service to narrow down the choices and get in touch with a vendor. Many of these services have already conducted research on different software brands and will offer you their services for free, which can save you headaches in the short and long term.
As with any business purchase, the process will look a little different for every organization. Maybe you’re even consulting this guide as someone questioning the effectiveness of a product you’ve already bought. In that case, use the steps above to reevaluate your decision. If you’ve signed up for a SaaS solution, it shouldn’t be too difficult to cancel your subscription. If you purchased a one-time license for on-site software, start building your knowledge now and create a timetable for when your business may be ready to change providers.
Buying the right financial software essentially comes down to understanding your needs, educating yourself about the options, and making a well-informed decision based on your industry and resources.