Accountants, who keep track of the financials, are often the unsung heroes of an organisation. While the focus has always been on marketing, sales and, nowadays, IT, they are the ones who have a hand on the pulse of a company and are the first ones to detect if something is wrong. Tallying numbers to balance the books, has been an essential practice in running successful organisations.
In today’s digitally disrupted business landscape, good accounting software is a must for ambitious organisations that are looking to expand rapidly. Technological advances are increasingly bringing accountancy out of the back office. New accounting software allows professionals to not only tally the financials, but also provides new tools for predictive analytics. The software helps to capture financial insights that can help the business grow.
Accounting software should not only be capable of presenting a quick summary or detailed presentations 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. It should, at the very minimum, be able to show the financial status of a company through a single pane of glass.
A lot of entrepreneurs use DIY accounting solutions to keep track of the financial performance of their company, at least initially. There are several DIY accounting software available, such as Microsoft Excel, Google Sheets or OpenOffice that are free, or in some cases available in freemium models, at nominal rates. Usually, these programs have enough bells and whistles to service the needs of small- and medium-sized enterprises (SMEs), especially start-ups. A spreadsheet can be adapted to almost any basic accounting need, such as listing expenses, sales or other relevant financial data.
Free, Freemium, or Hidden Costs?
Before choosing free or DIY accounting software, there are some questions that company leaders need to ask themselves. Is the free accounting software compliant with regulations in Singapore? Is free software really free in the long-run? Will the software get regular updates with new features and functionalities? Is the software secure against possible cyber-attacks?
There are various free accounting software packages that can be an attractive option for SMEs or start-ups. However, choosing the right one could be a challenge, especially for companies that do not have dedicated IT specialists on their payroll.
Thorough research about the software and the company offering it is required to ensure that “free” is not just an excuse for a scam. If a vendor asks for detailed personal data and credit card information at the initial stages, then that should ring alarm bells as most legitimate vendors do not do that. The credit card information is only required when a company is about to buy the product.
There is also a need to ask, why is the vendor giving away accounting software for free when it must have cost thousands of man-hours to develop?
Most companies give away free software as a promotion to attract new customers. Free cloud computing accounting software users are a critical market entry strategy for new vendors, given that the difficult in switching products midway will likely make them loyal customers for years. As the customers grow, so too does the vendor’s business. Free software is a form of investment for future sales from companies. As it is difficult to change from one accounting package to another, many companies remain stuck with the same product.
The catch is that a free accounting program offers only basic functionalities like accounts payable and accounts receivable, payroll, and standard reporting. For new SMEs or start-ups, that may suffice. However, as business complexity grows, financial requirements also grow. These vendors provide more critical modules only after a payment, so free no longer remains free.
Since requirements will grow over time, companies need to consider whether the free accounting software vendor has the capability to provide high-end modules that may be required for multi-region compliance, multi-currency transaction tracking and the ability to deliver predictive analysis – when they become necessary as the business grows. It should also be kept in mind that securing data while using a free model may end up costing more than a subscription-based accounting package.
Most big accounting software vendors nowadays provide tiered cloud computing software services and it often makes sense to buy the lowest tier as an entry point. There is then a clear pathway for growth of the accounting model, as needs change.
Accounting software comes in a variety of packages and pricing. 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 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.
Cloud Accounting Software: Worth Paying For?
Cloud computing accounting software has made it much easier for companies to be flexible in their financial bookkeeping, right from the start. By providing a paperless format and with the accounts and financial data being stored in the cloud, businesses can be more agile and that allows for quick decision-making. With no requirement for on-premise servers to store the financial data, cloud software saves on cost, space and manpower. For small businesses, there is minimal requirement for dedicated IT staff as all data, as well as programs, run in the cloud.
Web-based accounting software allows employees to access the accounting system on-the-go on mobile devices and, in some cases, allows for remote upload of invoices and expenses vouchers. Good cloud accounting software not only has full functionality but also the necessary security protocols in place to ensure that vital financial data does not fall into the wrong hands.
Cloud accounting provides real-time financial information, and this allows business owners to make important business decisions quickly. It is little wonder that cloud computing accounting is one of the most cost-effective and efficient ways to handle business finances.
With financial information that can be accessed from anywhere in the world and at any time of the day, businesses can be more flexible and make important business decisions more quickly. Businesses can cut back on their costs while improving productivity and operating more efficiently, giving them the opportunity to grow into a real player in their industry.
In conclusion, one can say that an organisation needs to evaluate accounting software based on their requirements. These could range from factors like accessibility and data storage capabilities to integration with other programs that are already in use.
While free or freemium accounting software packages can be a good entry point into the world of cloud-based accounting, it is crucial for managements to assess the long-term potential of a piece of software and look at things like the scalability potential of the program as it applies to the business.
An accounting software program is a long-term investment and it is difficult to change to another program once requirements change. In many cases, it may be advisable to buy paid software as most cloud-based accounting software vendors have different licensing tiers and the entry level is usually not very high.
As needs change, it would then be possible to move up the functionality that is available. The kinds of features that are required immediately are important, but the functions required in the future as the business grows are just as critical.
Since most new businesses may not initially have experienced accountants on the payroll, it is important to ensure that the software that is chosen has an approachable learning curve that won’t be too steep, an intuitive design with excellent user experience, and the vendor a reputation for friendly customer service.
The reason for that is, however impressive the accounting software is (or how venerable the company that produced it is), to experience the full value of the piece of software, it is a must that all its features, including quirks, if any – are well understood. A badly utilised or underutilised piece of accounting software can be a sure-shot pathway to low return on investment (ROI) that can put a business in the red.