Choosing accounting software: Do you really need it?
Are you still managing your finances on an Excel spreadsheet? Perhaps it’s time to switch to a more sophisticated accounting system. But where do you begin?
Contemplating a new accounting system can be stressful, especially if you’ve been using your existing software or Excel spreadsheet for a long time and find it familiar and comfortable.
Combined with financial management concerns, nervousness about making an accounting software purchase you might live to regret can lead to procrastination – sometimes for years on end. But putting up with an accounting system that has outlived its usefulness probably isn’t saving you money or time – in fact, it’s probably costing you both.
This is the first article in a four-part series aimed at helping you confidently choose an accounting system that’s ideal for your business.
Changing your accounting system isn’t something you should do on a whim – it has serious strategic and operational implications for your business, so it’s important that you get the timing right.
"Putting up with an accounting system that has outlived its usefulness probably isn’t saving you money or time – in fact, it’s probably costing you both."
The first thing you need to determine is whether you need a new system at all. In my experience, these are some of the triggers that might indicate that it’s time to make a change:
- You’re in start-up mode and want to put efficient systems in place right from the beginning of your business journey.
- Your business is growing rapidly, and you need confidence that your system can handle your future expansion.
- Your current system doesn’t give you immediate, easy access to accurate financial and operational information.
- You’re trading online or internationally and using workarounds because your current system wasn’t designed with your needs in mind.
- You’re repeatedly spending time on inefficient processes such as re-keying data to duplicate it from one system to another.
- You’re contemplating hiring staff, and realise that your existing system won’t cope with your payroll requirements.
- You realise that your current system is way more complicated than you need and contains many features you’re unlikely to ever use – and that you’re paying annual upgrade fees for the privilege.
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Chosen well, a new accounting system should overcome all these issues and offer many valuable benefits to your business, including:
- Delivering ongoing efficiency and productivity enhancements that minimise repetitive administrative tasks.
- Providing information about your business that is accurate, up-to-date and enables you to make insightful business decisions.
- Improving your cash flow by enhancing transparency about your accounts receivable, accounts payable and inventory requirements.
- Allowing your business to easily scale up to cope with more customers, more products, more sales and more staff.
If your existing system isn’t fulfilling all those objectives, it’s time to seriously consider a new one.
In the next article in this series I’ll address some of the most important issues to consider before trying to work out which software to buy. The subsequent article will guide you through the process of evaluating different software packages, and the final article in the series will give you some handy tips for efficient implementation of your new accounting software.
Have you implemented new accounting software in your business? How did you know it was time to change, and what has the outcome been for you?