The days of the accountant spending a month at the end of the year combing through the ledgers are most certainly over. Today even the smallest business has some form of accounting software to make life easier and to create efficiency for the finances of a company. The market is currently stacked with accounting software packages, the choice can seem limitless and as the software usually costs a fair amount of money, it is quite an expense.
The question for the small business owner is how to select the right accounting software package. There are many considerations to make; while the wrong choice can cause mayhem in your business and seriously harm your financial records. Subsequently your choice of accounting software is of vital importance. Of the factors that you must consider when choosing an accounting software package, capability, expandability, compatibility and cost are the four that can be deemed the most important.
The first step is to recognise what capabilities your accounting software will have to fulfil. This will require assessing your business' needs. You should be asking yourself whether your company regularly sells goods or services. A predominantly product focussed business will benefit from an accounting package that has inventory provisions; those who sell services will be more likely to benefit from a software system that can keep records of client information.
At the most basic level your accounting software package should be able to meet the needs of your business in terms of tax reporting, payroll information and invoicing. It should also be able to monitor your sales and expenditure as it happens, without the need for a lengthy updating procedure. Try to find a package that suits the needs of your business; buying an all singing all dancing system may seem the best idea, but it will certainly hurt your pocket.
As a budding entrepreneur you will want your business to grow, this is when the expandability of your accounting system becomes an important feature. By planning for growth when selecting your software package you will save yourself the need for constant upgrades, this will not only save stress in the long run, but will also save your business money.
There are a few products on the market that actively encourage a growth aspect in their operation. The ideal is to find a package that will accommodate the growth of your business, whether this means buying a software system that has optional add-ons or a large system first off is up to you. If you are likely to opt for the former, it is advisable to find a company with a good reputation when purchasing your accounting software. Often it is the case that a great deal of information and expertise is needed to install a package, so finding a good service, rather than purely a cheap price is advisable.
You will most probably have some form of accounting software already, even if this is just an Excel spreadsheet. Hence it is important when looking for a package to find one that will be compatible with your current system. The first question will be if the new software will work with your operating system although other considerations such as how easy it will be to import old data to the new system must be taken into account. Having to re-enter all of the information from your old system can be extremely time consuming, time you could be devoting to the success of your business.
Finally there is cost, usually a factor in most decisions in life. In this case you must weigh the cost of your new accounting software package against the effectiveness and efficiency it will deliver. There are extremely cheap systems out there, but if you consider the three factors above you should have a better idea of what you are looking for and find a suitably priced package. With this advice and methodology you should be able to find the right software system to care for company finances and reduce stress for yourself.
Business expert Thomas Pretty looks into the importance of accounting software and ways to select the right package.