Choosing accounting software: Evaluate your options
Choosing new accounting software can be daunting, but this systematic approach will help you decide which option is best for you and your business.
If you haven’t already done so, I recommend setting up a spreadsheet listing each of the functions you require your accounting software to perform so you can easily keep a tally of the pros and cons of each system.
Next, visit the websites of each of the accounting software packages on your shortlist, set up a trial of the software, and systematically work your way through your list of essential functions and those that are nice to have.
In my experience, any accounting software should perform the following basic functions; any that don’t should be crossed off your shortlist immediately:
"The security offered by the major cloud accounting suppliers far outweighs anything most small business owners could maintain themselves."
- Invoicing, accounts receivable and accounts payable
- Easy-to-use bank reconciliations
- BAS reporting and other tax office compliance functions
- Good quality reporting tools to provide you with management information
- If you choose a cloud-based solution, you’ll also want live bank-feeds and real-time access to your business finance data from anywhere
Additional functionality you might need to consider includes payroll management, inventory management, integration with your point-of-sale (POS) system and/or online store, time tracking, multi-currency conversion, an ability to work from multiple locations and/or accommodate multiple users simultaneously and cross-platform compatibility (e.g. the ability to work on a PC, Mac, phone and tablet).
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Other issues that factor in your decision-making process may include:
- Ease of use: Starting with the functions that you use every day and test how easy the system is to navigate and operate. In particular, you want to be able to enter information quickly and easily (and only once!).
- Cost: Consider the upfront cost and any ongoing costs of upgrades. Bear in mind that a system that saves you time or gives you deeper insights into your business may well be worthy of additional expenditure.
- Cloud or desktop? I’m a big fan of cloud-based accounting systems, and believe that they offer many advantages to soloists, including minimal upfront costs and no upgrade fees, access to your data from anywhere, real-time information about your business, and the ability to collaborate in real time with external advisors. However, a desktop solution may be more to your liking if your processes require a large amount of manual data entry, or if you require specific functionality.
- Security: Many soloists express concern about the security of cloud computing, but in practice you’ll find that the security offered by the major cloud accounting suppliers far outweighs anything most small business owners could maintain themselves. If your preference is for a desktop solution, make sure to factor appropriate security measures and back-up processes in to your decision making
- Supplier credentials and support: You need your system to keep pace with changes to technology and tax regulations, so consider whether the software provider seems likely to be around for the long haul, what their track record of updating their system is, and how industry experts view their performance. Also consider the kind of technical support and education material on offer.
- Scalability: If you plan to grow your business, how many customers, suppliers, inventory items, users and locations can the system handle?
- Speed of implementation: Factor in the initial set-up, the time it takes for you to be up and running with the new software and any new business processes, and whether your data can easily be imported into the new system from your existing software.
This is the third in a series of four articles aimed at helping you choose the right accounting system for your business. Previous articles discussed how to tell when it’s time for a new accounting system, and how to work out what features you require. The final article in this series will help make the implementation of your new software go smoothly.
Can you suggest any other issues that should be considered when choosing new accounting software? Please share your insights below.