These days, there are dozens of accounting software solutions from which to choose.
But not all tools are created equal, and it is important that you take into consideration your unique needs and interests before you commit. In fact, choosing the right accounting software can sometimes distinguish businesses that are profitable from those that are not.
This post will help you to identify priorities so you can ensure that you make a thoughtful and strategic decision when purchasing accounting software.
1. Understand the different types of accounting software that are available
There is a wide range of software tools available to help small and mid sized businesses with their accounting needs, but they all essentially fit into one of four categories:
- Free tools: Even Quickbooks offers ‘freeware’ to create invoices, handle payroll and print cheques. But there are limitations – for Quickbooks, the free version only supports 20 accounts. For a growing company, free is not generally the right option.
- Business management tools: These full-featured applications usually include other financial functions (CRM, ERP, billing, etc.) to run your business from end to end. The price point is therefore typically much higher, but you get an all-in-one solution to meet all of your business needs.
- SMB payroll and accounting: These are generally downloadable on the Internet or available off the shelf, and tend to be very user friendly and affordable. They meet most of your small business needs and provide you with the accounting tools and reports you will use on a regular basis.
- Cloud solutions: These web hosted accounting applications take advantage of the accessibility and scalabilty of the Cloud. In some cases, the payroll and accounting vendors offer a more lightweight version in the Cloud as well.
2. Determine your budget
A key factor in determining the right accounting software for your business is the cost.
Each of the four types of solutions vary in price (off the shelf applications, for instance, will sometimes be more expensive than Cloud based). But there are other variables.
If you need a vertical-specific accounting software, for instance, that can drive the cost up further. If you need support implementing, and then managing the software, that cost should be added to your budget projection.
3. Understand your business needs
How will you be using the software? Do you simply need to run high level reports and track your expenses and revenues? Or is your business model complex, with many different product lines and inventory considerations?
Here are some of the typical features and functions that accounting applications include:
- Sales tracking
- Inventory management
- Merchant services to accept credit card payments
- Management of customer contacts or integration with CRM
- Business tax reporting
- Payroll management
Make sure you thoroughly understand your business needs and how the accounting software is intended to support those needs, before you make a commitment. Talk to your accountant or bookkeeper who can help define your implementation goals and reporting needs.
4. Do you need to integrate?
You should review what other systems and tools integrate with your accounting software. For instance, do you use a CRM? Or an ERP? What about an incentive compensation program? Do you need to integrate with those systems? And even if you don’t need to integrate, would integration enhance efficiencies and streamline processes?
You might also want to determine with which accounting software your bank integrates. Integration with your bank accounts can streamline processes considerably.
5. Can you access a free trial?
Today, most software companies allow you to try their product for a period of time before making a longer-term commitment.
Being able to take advantage of a free trial allows you to familiarize yourself with the application and its features. You can explore the user interface, upload information, generate reports and test whether or not the accounting software meets your needs.
So if you’re considering purchasing accounting software, make sure you review these factors before you invest too much time and resources. If you would like additional advice or would like to meet with one of our accountants to discussion your unique needs, contact us to set up a free consultation.