Selecting The Best Accounting Software For Your Business – Tips From A Finance Manager

Selecting The Best Accounting Software For Your Business – Tips From A Finance Manager

Throughout the economic history of the world, one of the cornerstones of a successful business has always been bookkeeping. Bookkeeping, or keeping the book accounts, has been a vital part of businesses over the ages.

Keeping track of the inflow and outflow of money and profits is key to running any successful business. The equation has always been very simple. For a successful business, inflow (of money) always needs to be greater than outflow and the difference is profits. If the outflow becomes greater than inflow, the business collapses.

This simple truism applied to kingdoms and nation states as well. It is no surprise, therefore, that accountants skilled in numbers and mathematics have always been looked upon favourably as they have kept track of money earned, be it from the sale of goods and services or taxes, money spent in public works – in the case of governments – or in purchasing materials and resources (including salaries to employees) required to keep a business running.

Fast forward to the new millennium and accounting still has the same importance for organisations. What has changed is that software has become a new tool in the hands of accountants to keep track of the numbers.

Accounting System Accountant

For businesses that look to grow and scale, a solid accounting system is as necessary as a good accountant. The software should not only be capable of presenting a quick summary or detailed presentation of profits and losses and other financial transactions; it also needs to, for compliance purposes, meet legal requirements of the specific region or country where the business is operating. In the case of businesses with global reach, the software needs to be able to keep track of the legal requirements of every country or region.

Types Of Accounting Software

Broadly, there are three types of accounting software that companies can acquire depending on their requirements.

For small and medium-sized enterprises (SMEs), spreadsheets can help with bookkeeping. Programs like Microsoft Excel, Google Sheets or OpenOffice suffice for this purpose. A spreadsheet can be adapted to almost any basic account need, such as listing expenses, sales or other relevant financial data.

Accounting Spreadsheet

They can even handle more advanced accounting functions. However, one big disadvantage of spreadsheets is that data entry can be tedious and error prone. If information is entered into the wrong field, the entire accounting process can be jeopardised.

Generally, only very simple businesses should rely solely on spreadsheets to handle accounting. For most others, spreadsheets usually compliment other accounting processes.

For larger SMEs and mid-sized companies with more complicated requirements, free accounting software like cloud-based spreadsheets do not work and they require commercial accounting software. Such software works with any business and allows for a customised function to fit the specific needs of companies, such as the creation of charts and graphs. There are several vendors in the market who sell accounting software, and each has its strengths and weaknesses.

Larger companies with more complex set-ups require enterprise-grade accounting software, which integrates accounting with other services like workflow management, business intelligence, and project planning.

Accounting Software versus ERP Software

While sophisticated enterprise-grade accounting software can provide services like business intelligence and project planning, they are not enterprise resource planning (ERP) software. Accounting software typically covers areas like financial reporting, accounts payables and receivables, banking, recording of basic revenues, sales and more.

ERP solutions, on the other hand, usually include multiple modules with accounting being one of them. Depending on the configuration, other modules could include supply chain optimisation, planning, inventory management, warehouse management, production, human resources (HR), sales and purchasing, among other functions.

What Does Accounting Software Cost?

There are no easy answers to this question and pricing varies widely depending on functionality and the level of customisation required. According to Software Advice, a Gartner company, accounting software costs can start as low as US$9 per user to as high as US$500 per user per month. One-time license fees can start at around US$499. For more advanced accounting systems and more users, prices can start from US$375 per user per month, or more than US$1,000 for a licence.

The bottom-line is there are options to suit every budget. Most small businesses should be able to find a solution within the US$5 to US$20 per user, per month range.

Accounting Software Package

Accounting software vendors offer different purchase options depending on an organisation’s requirement or budget. Perpetual pricing models usually require upfront payments for unlimited access to the system for as long as one needs it. Subscription pricing models don’t typically require upfront fees and are paid for in a monthly or annual subscription.

Built-in scalability is an important factor to consider when purchasing an accounting software package. Small businesses, for example, can grow and change rapidly and the functionality of a software package may no longer match future requirements within one- or two-years’ time as operations grow and more offices are opened in different locations.

It is important to look at accounting software packages that can grow with the business. For example, if a company is planning to expand overseas, it will need software that can operate across multiple locations or undertake and reconcile transactions in different currencies. When mergers or acquisitions happen, the system will need to be able to handle the disruption that is likely to occur.

In short, when buying an accounting software or package, ambitious companies that are looking to grow fast and diversify need to buy systems that allow them to initially start with simple accounting and, as needs grow, the system should be able to smoothly scale up.

It makes much more sense to stick to one software system rather than changing accounting programs as company needs and business processes change. Opting for financial management software that can support the growth and development of the business and support the growing needs of employees like expense capture via mobile, early on, makes for good business sense.

Using Software To Automate Your Accounting Tasks

Complexity in financial accounting that stems from increased diversity and reach of companies is a natural area for process automation. It is, therefore, no surprise that automating the accounting process to free up human resources and eliminate the possibility of error stemming from manual data entry is a major area of advance in the accounting software business.

Robotic process automation (RPA) is a new area that companies are looking at with keen interest. RPA automates high-volume, repeatable tasks and mimics human actions. This allows for machines to augment and replace the work of humans in certain tasks.

Since RPA captures, manipulates and interprets transactional data flowing from myriad IT systems and applications, it frees up the accounting staff to become strategic accountants. Instead of data entry and data checking, accountants can make sense of the financial data to improve business decisions.

So Are Accountants Doomed?

It is unlikely that robots will fully take over the accounting profession. However, transactional roles like general ledger, accounts receivable and payable may become automated. At the same time, there will be greater demand for other higher-level skill roles like financial planning and analysis, forensic accounting, compliance with fast changing global rules, due diligence for an acquisition target and others. Accountants need to upskill to more strategic roles to negate the risk of obsolescence.

Over the next few decades, the accounting profession will face major challenges. Professional organisations, their members, and educational institutions need to respond accordingly.

The first challenge is smart and digital technologies like RPA. Individual members of the community and professional bodies need to be prepared for the large-scale role change that these technologies can bring. Adequate education and understanding are a must to ensure that no one is left behind.

Accounting Digital Technology

The other major challenge is the continued globalisation of businesses in an environment where compliance standards are going up across all regions. Added to that is the changing regulations and associated disclosure rules that are already having a major impact.

Education will play a vital role as future accountants will increasingly need training in digital technology, globalisation (including outsourcing of accounting services), evolving tax regulations, new forms of corporate reporting, integrated reporting regulations, and others.

In short, it’s a very challenging time for the profession but one with immense possibilities to uplift its simple number crunching to a more strategic business development role.