If you have a business, you must record all the financial transactions that happen in the business. There are various accounting software that help the business owners to record the financial transactions. However, certain considerations must be made by the business owners before deciding on which accounting software shall be used in the business.
Here are the main considerations for choosing the right accounting software for your company.
- Accessibility: It means whether the company wants online or offline access to the accounts. If the company is small in size, it can use Microsoft Excel easily as the volume of transactions are low. However, most businesses adopt cloud-based accounting like Xero or Quickbooks which records the financial transactions in real time and providing access to the stakeholders at anytime from anywhere. The advantages of cloud-based accounting outweigh its cost of buying. Upgrades and changes to software are automatically pushed. Cloud accounting software also takes care of backup and maintenance. Data across all the branches of company are automatically synchronized. It is only recommended to the businesses with good revenue.
- Features: The company should make a list of features it envisages in the accounting software. This list may be more or less the following – creating invoices, tracking expenses and categorizing them, recording journal voucher entries, viewing accounts payables and receivables, viewing financial statements i.e. profit and loss account, balance sheet and cash flow statements, tracking incomes and ageing analysis of debtors, bank reconciliation, managing purchase orders and record inventory purchases, managing customer and vendors and so on.
- Scalability: Most businesses make this mistake of investing heavily in accounting setup without planning in advance whether the accounting software can cope with pace of growth of the business. Sometimes, when an accounting software or perhaps a license fails to match the progress of the business, companies will have to migrate to another accounting software. Hence, the companies shall look at the accounting software which provides basic version and also forays into rich features as the business progresses gradually.
- Hidden Costs: There are certain variances in cost of different accounting software. For instance, a software might be offered at a lower cost, only to know later that there are costs of various add-ons which are integral to business requirements and could exceed the cost of other software. The companies should therefore do a proper diligence before buying software. If the software vendors are selling additional services, they should mention these in the websites.
- User Interface: Companies want the accounting software to be simple and easy to use as much as possible. Small business owners do not have accounting background and are only nuanced with basic accounting terms. Even if they hire an accountant, they would like to look at the financial statements at some time or other. Hence, software should be easy for employee and owners to use. Complex user interface shall be avoided as far as possible if the size of the company is small.
- Integration with existing systems: As a basic feature, small businesses would like to export their financial data in MS Office to share and report data at board meetings or conference. If the business is booming, having an accounting software that integrates with e-commerce, inventory management, CRM, etc. saves time and keeps the book updated in real time.
- Tax Reporting and Financial Statements: If accounting software is well integrated with tax requirements, it is easy for the company for compliance. However, for that software, where it is not possible, it is important that they export document to a required format which can be later on uploaded for compliance purposes.
- After Sales Service: It does not matter how good the accounting software is, what matters is the customer support which will be required at some point or other. Lack of good customer support is one of important reasons on why some accounting software is sold cheap and some are sold on high prices. The company can check the customer infrastructure before buying a software by posting a query on customer chat or calling customer support centre.
The choice of accounting software also depends on your company’s size, nature and complexity. For small and medium-sized companies, the most popular and affordable accounting software are Xero and Quickbooks, which provide almost all the basic requirements for bookkeeping which Excel does not.
If you need advice on setup of an accounting software, please reach out to us for guidance on how to do so!