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Money / Financial management

Choosing accounting software: Define your needs

Before purchasing a new accounting software package, it’s essential that you identify exactly what you need it to do.

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Before choosing and implementing new accounting software, big businesses go through an extensive process to identify what functions it will need to perform and any issues it needs to overcome.

As a soloist, your process needn’t be as complex or arduous, but it’s still worthwhile spending time on these issues up front so nothing falls through the cracks.

Don’t be tempted to skip these preliminary steps in the software evaluation process, because the last thing you want to discover after you shift all your data and processes over to your new accounting system is that it’s incapable of doing something that’s vital to your business.

This very expensive and time-consuming problem happens to small business owners far more frequently than you’d expect. Luckily it’s easily avoided by doing your homework, so grab a notepad or set up a spreadsheet and let’s start determining what your software requirements are. (Not sure if you need new accounting software? Read the first article in this series, “Choosing accounting software: Do you really need it?” to find out.)

Make a list of all the functions you currently perform in your business, and all those you would perform if your existing system had the capability. Ask yourself (and any team members) what you like about your current system, what frustrates you, and what functions or features you wish you had available.

"The last thing you want to discover after you shift all your data and processes over to your new accounting system is that it’s incapable of doing something that’s vital to your business."

Want more articles like this? Check out the financial management section.

When making your list, consider these questions: 

  • What challenges do you experience in your business?
  • Which of your business functions and processes are the most frustrating, painful or time-consuming?
  • What administrative tasks are performed repeatedly? How much time do they take up, and at what cost? (And what else could you do with that time and money?)
  • What types of information would help you make better strategic decisions? Examples might include sales data, inventory levels, the performance of individual products, and increased awareness of cash flow.
  • Where do your various business functions take place? Do you want to be able to access your data from multiple locations and multiple devices, or are you content to keep all your data on one desktop or server? (And if so, what back-up systems will you need to have in place?)
  • Are you doing business online, offline or both? Do you need your different areas of operation to integrate with each other? (This can be a critical issue for retailers, who typically face issues maintaining the visibility of stock levels between their bricks and mortar and online stores.)
  • Do you have employees, or are you planning to hire some in the future? If so, an integrated payroll function should be an important consideration.
  • Are you looking for a system that will support your needs over the long term, or will you be happy to upgrade again in a year or two? 

When you’ve finished working your way through this list of questions, you’ll be a long way towards identifying the criteria your new software needs to fulfil. You’ll probably also have additional issues to consider that are specific to your business. 

This is the second in a series of four articles aimed at helping you confidently choose an accounting system for your business (read the first here). The next article in the series will help you evaluate the software you’re considering against the requirements document you’ve just produced, and the final article will provide you with some handy tips for an effective implementation process. 

Does your current accounting software answer all of your needs? Are you considering purchasing a new system? Please share your experience below.  

Rhys Roberts

is a commercial accountant who provides the range of services a CFO typically provides to a larger business. He will help you implement financial systems, run your accounts department and provide the information you need to improve the performance of your business.

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