Accounting software is rapidly becoming an essential element for a vast number of businesses. With so many accounting packages on the market today with a huge array of different software applications, the choices can be almost limitless. Some of these software packages are suited for use by large corporations while others are perfect for personal accounting functions. Software that is available ranges from the sublimely simple to the ultimately complex; it is important to recognise your needs before making any purchase.
Accounting software is usually categorised by the functions it performs. These different functions are usually referred to as core modules, the following gives definitions of these functions and which should be included in your package.
One function your software should perform involves accounting transactions. The core module labelled 'accounts receivable' is the billing of customers automatically. This would normally done by sending out invoices and the like, it is possible with accounting software to optimise the process so less time is spent calculating charges and all you simply must do is pop it in the post.
Another accounting function is the 'accounts payable' module. This works in much the same way as the accounts receivable but instead of customers it is the funds that must be paid to suppliers of energy. Put simply it is the expenses that your company must pay out.
A 'general ledger' is also referred to as a nominal ledger. Put simply this is the main accounting record for a business and in most cases will use a double entry bookkeeping method. Included are figures for fixed and current assets liabilities, revenue and expenses. With use of efficient software it should be able to surmise your businesses gains or losses from the general ledger.
Billing is another function that accounting software should possess, this is generally the production of bills and receipts for customers. Invoices also fall into this category and should be used by businesses that do a lot of delivery orders as part of their commercial operation.
Accounting software should also be able to help with stocktaking and inventories. By recording and updating a list of stock constantly the software should be able to produce a list of all the items you currently hold in stock.
So far we have looked at the fundamental applications your software package should include. There are however peripheral functions that the package should be able to carry out.
One of these functions is 'debt collection'; where the software is able to track any debts that may be owed to the company. Some software packages will also be able to record information on customer enquiries including what kind of goods and services they were looking to buy.
Payroll information should be included in your accounting software package. Put simply this is the recording of all the salaries and wages that are paid to staff members, including information on tax paid, bonuses and any deductions that may have to be made.
Naturally not all accounting software will include these applications. Depending on your business requirements it may not be essential to use all of these functions. Packages usually come dedicated to the size of the business. Usually in terms of large, medium or small business operations; while the small business software may be cheap it doesn't always fulfil your needs while larger businesses will benefit from the extensive range of applications contained in top flight packages.
It is worth remembering that when you are looking at buying an accounting software package to factor in the growth of your business. Packages can be expensive and if you do not get one that is efficient enough to cope with the growth of your business for a number of years you may find yourself upgrading in six or twelve months time. Considering the functions your need the software to carry out is important, make sure the package suits your immediate needs and can cope with growth. By following this advice you should be able to find a package to suit your business requirements perfectly.
Financial expert Thomas Pretty looks into the functions and applications that your accounting software package should perform for efficient business practices.