Friday, January 23, 2009

Accounting Software Considerations

An off-the-shelf mainstream accounting program works well for small business. Large companies are much better off with customized enterprise resource planning (ERP) systems that integrate supply chain, customer relationship management, human resources and all other data systems. Whereas a dedicated accounting software is all you need to run your medium-sized business.

Assessing Your Business Needs
Requirements vary by industry so make sure whatever you look at works for your industry! Regaradless, your accounting software must provide income and expense tracking and report generation.

Before you start sending RFPs, take some time to figure out exactly what you want from your accounting system. Products vary from simple checkbooks and cash-accounting systems to more complex financial management, payroll, inventory management, tax accounting and job costing. Many software offerings are modular so you buy what you need now and then add additional functions when needed.

Accounting software should provide the following tools:

  • Generate balance sheets and profit and loss statements
  • Track accounts receivable/payable
  • AR/AP aging
  • Job costing
  • Quarterly tax payment estimates
  • Income tax preparation
  • Sales tax preparation
  • Payroll
  • Quarterly and year-end reports
  • Available inventory
  • Inventory aging
  • Purchase order creation
  • Compute cost of goods sold
Some of these features are standard on all accounting programs. Others are exclusive to ERP systems. Remmeber, that software created specifically for your industry may be the best solution, especially if you are dealing with complex processes or regulation.

Other Concerns
You may also want to consider other features, such as customizable reports, check printing and electronic invoices, to name a few. A service business will likely require an hourly billing function too. You may wish to consider a Web-based or "hosted" solution, which offers faster implementation, easier upgrading, lower costs and avoids technology infrastructure expenses.

Ease of Use
You should include input from the primary users of your accounting software. This will ensure that you get the right product based on their needs. It will also minimize complaints and buy-in when you make a final decision.

When you give any software a trial run, test the software publisher's technical support and sales team. The ideal accounting software publisher should be a business partner. If they aren't willing to go the extra mile for you, then look somewhere else.

Choosing accounting software for your business might just be the most important decision you make. Choose wisely. If you need help, feel free to contact me for help. That's why I'm here.

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