Does your business need to deploy business accounting software? This is an important question, given that accounting is one of the most important business functions. Choosing the right program to meet your business needs, now and in the future, makes the difference between having a well-run accounting operation and dealing with a financial mess.
The software market offers a variety of products ranging from relatively simple accounting applications to large accounting platforms that integrate with multiple business processes.
For example, the low end of the market includes reliable but relatively unsophisticated accounting software packages that are generally suitable for SMEs but do not meet the needs of large companies. At the high end of the product line are comprehensive enterprise resource planning (ERP) systems that have accounting software modules as a key component.
Then there’s a middle ground, a sweet spot for many organizations, including growing SMBs and midsize businesses. These are stand-alone financial management suites or enterprise accounting software packages capable of handling relatively complex accounting, but without full ERP functionality.
Determining Factors When Choosing Accounting Software
What type of business accounting software is best? Often, geographic reach is a key factor. A company with global operations and an international customer base should have accounting software that supports international subsidiaries, customers, labor and contractors, or other business partners. This way, he can do business, including e-commerce, around the world without problems arising due to currency differences, language barriers, regulatory limitations, and other challenges.
Tax rules, compliance and inventory
Each country has its own tax rules and reporting requirements, so any selection of accounting software should be able to track these and keep up with any changes in reporting or regulatory compliance.
In addition to international operations, inventory processes can determine business accounting software needs. Specifically, does the company have distributed inventory, including warehouses, in multiple regions or countries?
Inventory management capabilities of software platforms help businesses maintain the correct inventory levels to maximize profits, avoid overspending, and control costs associated with inventory depreciation. These systems also keep inventory data up to date by tracking product levels, orders, sales, and shipments.
The U.S. Securities and Exchange Commission’s Generally Accepted Accounting Principles (GAAP) outlines specific ways in which companies should report the value of inventory to note depreciation or other changes. Accounting software with inventory management capabilities use GAAP to accomplish these tasks. But it’s important to note that some businesses will need to upgrade from a standalone accounting package to a full ERP platform or purchase separate inventory management software to gain these features.
Divisions and Subsidiaries
More robust business accounting systems support multiple divisions or subsidiaries within a single company, including interdivisional or intercompany transactions, or across multiple countries.
Some small businesses also operate multiple divisions or under separate trade names, so business accounting software should allow employees to access each division or entity as a user, not as a separate business. This way, the business can operate multiple businesses or divisions within the same system and manage them under the same account.
Business accounting software price and return on investment
Other major considerations include price and return on investment. Quantifying the benefits of accounting software can be a challenge, especially for a rapidly growing business or operating in a very dynamic market.
Factors such as time savings due to automation features and error reduction, as well as costs associated with potential non-compliance issues also fall into this category. And while it’s not part of a formal ROI calculation, improving employee satisfaction with the new software is significant. As with any other major IT purchase, you’ll want to create a business case for deploying business accounting software.
Benefits of accounting software
Among the benefits that businesses can expect from using accounting software are reliable financial records and reports. With older or more limited accounting software – and manual accounting practices – businesses run the risk of errors leading to inaccurate financial figures and reports. This can lead to audits, legal and regulatory issues and fines, as well as disputes with customers, suppliers and other business partners.
Many vendors offer sophisticated role-based reporting features that allow managers to easily view records, such as orders and payments, in real time. Accountants, administrators, inventory managers, purchasing managers and others can also quickly view relevant financial records using these features.
Better visibility of business processes into all accounting transactions and other financial data is essential to running an efficient and profitable business. Business accounting software platforms provide complete visibility across an organization, so managers and authorized executives can access and review financial information. In some packages, access is based on preconfigured roles and business intelligence metrics are displayed graphically on dashboards. This level of visibility into accounting data is essential to meet regulatory compliance requirements.
Visibility also extends to the area of sales performance. Accounting software allows businesses to measure financial performance against a variety of metrics and present that data to executives for review. Users can track metrics — such as revenue, customer loyalty and retention, procurement costs, and payroll — over time to determine business performance. Other metrics may include working capital ratios or sales by product, region or channel.
Improved forecasting is another benefit. Businesses can use the apps for financial planning and analysis, based in part on data from accounting records, such as a general ledger, accounts receivable, and accounts payable.
Finally, business accounting software automates all major accounting functions. Automation capabilities for reporting, consolidation, payments, cash management, and other areas mean fewer errors in calculations, estimates, and other accounting-critical financial functions. With less advanced manual accounting systems or processes, organizations can take far too long to complete tasks such as closing the books. This can be a major problem when trying to meet tax and other filing deadlines.
Business accounting software isn’t just for large corporations. Growing small and medium businesses can use technology to optimize their accounting processes and operate as efficiently as possible.
The benefits of accounting software can be compelling, so if your business meets any of the above factors, it makes sense to explore the options in the market.