The basics of accounting systems, at the very least, should cover the main aspects of a business. These basic aspects are:
- Tracking income. Which covers invoicing and managing money received.
- Tracking expenses. Which covers buying products for resale and paying overheads such as wages and rent.
- Providing reports showing the profitability of the business.
Most accounting systems should cover these basic aspects. It is however vital that you define your needs before you start to look for one. There are many accounting software solutions out there and if you don’t define your most important requirements before you start your search, you will end up feeling overwhelmed and confused.
The type of business you have will greatly determine your accounting requirements. A plumber has very different needs from a retail shop. The next factor to consider is the size of your business. If you have many employees and perhaps have some branches in different locations, you will be looking for accounting software that can handle these volumes and requirements. Whereas if you have a couple of employees and a small shop your needs will be quite different.
It’s also helpful to look at your current frustrations and problem areas within your accounting system of accounting as well as what currently works well. These will help you define your ‘must have’ features.
What are the Basic Features of an Accounting Software?
There are some basic features that are a requirement for accounting software no matter what type or size of the business.
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Fully integrated single entry system
This means you enter information into the system only once and all necessary accounts and records are updated by this source entry.
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Stability
The software and the database should be stable and robust. Having a bookkeeping software that is unstable and prone to errors or a database that often is prone to corruption will compromise your data, cost you money, and cause endless frustration.
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Easy to use software
You should not need to be a fully qualified accountant to use the software. The processes should be easy and user-friendly.
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Time-saving software
The system must be able to save you time and make your business accounting processes run more efficiently.
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Comprehensive audit trails
It is important that each function and transaction is tracked and that you can find the originating source entry easily. This means that any capturing errors can be easily traced and corrected. It also makes life easy for your accountant or auditor.
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Easy month and year-end procedures
Month Ends and Year Ends should be quick and simple and there must be the ability to backdate transactions.
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Reporting capabilities
Reports should be easy to extract and be flexible so that you can extract information quickly and in the format you require. Extracting statutory reports easily is essential.
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Ability to export data
Options to export data to spreadsheets are extremely useful.
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Compliance with basic accounting principles
The system should comply with all the IFRS and GAAP standards.
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Good accounting support
Especially in the initial phase and also on an ongoing basis you will need to be able to access support from the vendor. This should be available via email, telephone, and remote login. It has been said that buying an accounting system is much like getting married. You need to be wise and due diligence in your choice of partner.
What’s Next?
Once you have checked the essentials, then depending on your type of business and the number of people that will be using the accounting software, there are further considerations.
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Scalability
A business is never static, it either expands or contracts. It is vital that the system is able to grow with your business. So, ensure that the system will be able to handle the requirements of your business as it grows. The ability to add-on functionality to the system should be readily available and not be a major exercise involving migrating data and retraining staff. The add-on functionality should be fully integrated, essentially providing an ability to grow the system into a full ERP (Enterprise Resource Planning) system.
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Multi-user software
Ensure the system can handle the number of staff that will be using it currently as well as the likely increase in staff as the business expands. These should be concurrent users, which means the number of people using the system at any one time.
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Security
For a business that has multiple staff members using the system, it is important to ensure that the ability to control what functionality and information the various users have access to. Some information in accounting is sensitive and confidential and it is important to ensure that you have control over this.
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Multiple Currencies
In today’s world of globalization, it may be useful to have accounting software that can handle working in different currencies.
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ERP Integration
With the ever-increasing use of the Internet, very few businesses can now do without a website. Many software solutions provide the ability to integrate into a website. It may also be useful to integrate into third-party software solutions, depending on the type of business.
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References
Try and talk to some other businesses who are using the accounting product. It is even better if you can find similar types and sizes of businesses to yours. Websites and advertising material only show the good stuff. Talking to existing users of the product can be extremely useful.
Conclusion
These are just some of the key points to look at when looking for an accounting software solution which often gets overlooked in the search to find a solution which fulfils your requirements.
It is important to take these factors into consideration and not to just think of the immediate short-term requirements, but to look for a product that will grow with your business.
It should not be a process you rush into as the process of migrating to a different accounting package is time-consuming and costly.
