Accounting software is a logical leap from spreadsheets, but using a program that doesn't cover all your bases can cause more than a few financial errors. Even minor mistakes in financial records can lead to cost overruns, cash flow problems, and missed tax deductions. To avoid these pitfalls, here are seven essential tips for choosing the best accounting software for your business.
The core function of accounting software is to track financial transactions and generate reports. However, selling more than a few products or providing services will likely require additional features. Consider factors such as company size, sales volume, managing vendors, international sales, and billable hours.
Here are some top accounting features to consider:
Bank account integrations are another popular feature that can simplify basic accounting tasks. Look for accounting software that imports bank transactions and statements. Xero is one tool that does this and it automatically categorizes transactions for tax reporting.
As your business grows, the volume of transactions will naturally increase. Free or low-cost accounting software may work well for now, but it might not have the capacity to keep up with future demands. Choosing a scalable solution means you won't have to worry about outgrowing accounting software or switching systems.
Enterprise-level solutions have room to grow, but they may be too expensive and feature-rich for smaller operations or startups. Look for accounting software with multiple versions that can easily be upgraded as needed. For example, Intuit QuickBooks Online has four pricing plans for basic and advanced accounting needs.
Most business owners don't have an accounting background, so the software should be easy to understand. Consider the learning curve and avoid accounting programs that are overly complex or stuffed with unnecessary features. Choosing a user-friendly solution will minimize the need for extensive training and reduce the chances of human error.
Look for accounting software with an intuitive layout that users with varying levels of financial expertise can navigate. The main dashboard should display a financial summary that can be customized for each department. Take advantage of trial versions and demos to make sure the software is a good fit before spending any money.
When reviewing accounting software, price out options based on what you'll be paying now and later if your needs change. Look at all of the costs, not just subscription fees. For example, Wave Apps (Wave) accounting and invoicing are free, but payment processing, mobile receipts, payroll, and support cost extra.
Costs to consider for accounting software include:
Most accounting software options have multiple packages with different price points based on the features that they include. The cheapest option might get the job done but end up costing more in the long run if you have to pay for more features or users. Look for a plan that includes most or all of the functions and users you need without any surprise bills.
With remote work spreading teams across borders, business accounting software can no longer be tied to a desktop. Cloud-based solutions are accessible from anywhere with internet access. Some providers even have a mobile app to manage tasks and monitor finances on the go using smartphones and tablets.
Cloud-based accounting software also syncs and updates data in real-time, eliminating the need for manual data entry. Plus, multiple users can access and work on the same financial documents simultaneously. This means spending less time on back-and-forth emails or phone calls while ensuring everyone is on the same page.
Customer service is often overlooked when choosing accounting software programs. Issues will inevitably come up and accounting is too important to not have adequate support. Look for accounting software providers that offer reliable customer service when you need it. Monday to Friday support may not be suitable for teams working outside of business hours or in different time zones.
Here are some tips on evaluating customer support:
Customer support representatives should be knowledgeable about the software and its features. Expertise in accounting should also be considered so you receive accurate and helpful guidance. Don't forget to check for any hidden fees in accounting software packages that charge for support.
Data security should always be top of mind, especially when working with sensitive financial information. Choose accounting software solutions from well-known vendors and always ask about the security measures they are using to safeguard your data. Also, check the vendor's track record for data breaches or cyber-attacks.
Security features and measures to look for include:
Backups of financial data should be stored in an off-site location or on a cloud-based server (or both). Using multiple recovery points makes it more difficult for unauthorized users to retrieve or delete files. This also makes it easier to recover files if there is a data breach or system failure.
Switching accounting systems isn't ideal, but sometimes it's the only way to keep things moving. After going through all the checkpoints listed above, back up existing accounting data, remove any duplicates and errors, and determine the fields before uploading data to the new accounting platform.
This process may sound relatively simple but every bookkeeping entry, invoice, payroll form, inventory report, and other financial records have to be uploaded in a specific way. If that sounds like a lot, consider outsourcing a fractional finance consultant. They can handle migrations and setting up new accounting systems while you focus on running your business.
Schedule a free consultation with one of our finance experts to get help with system migrations or setting up new accounting software.
