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How to Choose the Right Accounting Software for Your Company

By Mark Birchall on 24/03/2017 - 0 Comments

How to Choose the Right Accounting Software for Your Company

Having operated in finance over many years, I have seen plenty of accounting providers claiming to be the solution provider for the business owner. Traditional software providers included those of Sage, Pegasus and Access.

As businesses grew, they desired tailor made solutions which led to software companies adapting programming to meet customer needs and central mainframes being established. This heralded the emergence of specialist companies with several bolt-on solutions that could be purchased. However, the internet has revolutionised the accounting market creating a substantial amount of choice.

The market now supplies a broad range of accounting packages from standard packages for PC/networks, be-spoke packages for business, and online or cloud based solutions. This article sets out a process for examining the various accounting package on offer so that business owners can decide which may be best fit.

What is an accounting package?

It essentially captures all the revenue, costs, assets, liabilities in one location to enable various reports to be run like trial balance, profit and loss account, balance sheet, aged debtors’ reports, aged creditors report, aged stock reports, VAT collation etc. This data will be used for management reports, bank compliance, HMRC, statutory compliance and accountants.

Once you exceed the audit turnover threshold, this will be audited by an auditor so it’s important choosing the right package. The accounting packages do not do payroll or auto pensions. These can link into accounting software and separate packages are available to link into such accountancy offerings.

The elements of a financial system.

The table illustrates the typical functions of accountancy package.

 

 

Many packages will start with a basic version, where you can upgrade to the higher version as your business grows. Some businesses purchase an un-necessary specification system so it’s important you research what is available and what you need for now and for the future.

Company requirements.

Many companies go through absolute hell when the time comes to choosing software. This applies to any new start up business choosing its first package and to an existing business changing its software because the lack of real financial information is holding back business growth.

Do companies go for the 100% accounts package solution to meet the finance department needs, or go for package that will 100% support the operations needs or aim for a compromise with both areas partially suffering. As a generalisation, some will choose an integrated system where the operations data feeds into the true accounts package. These can work very well but can also be counterproductive if they fail to link correctly.

The data may transfer but the operations may not link to the accounts data in reverse. For example, a customer is placed on stop in the accounts package but the operations system is not aware of the stop status. Some companies will choose a solution offering that meets 80% of today’s needs. Some will work with software and designed procedures to work around the software tool they are using.

It is best to consider software change as a 3 to 5-year cost or investment, because if you get it wrong it will represent a massive cost to the business.  If you get it right, you have a solid foundation in place for the future which has become an investment. The accounting solutions market, technology and the way business is performed is rapidly changing so it is critical your software can handle these demands.

Summary what a business owner needs

The following table is aimed to help the business determine the basic functions required for an accounting system where specialists are available to put a software specification together.

  Construction Consultancy Design House Manufacturing Retail
Stock Control Y N N Y Y
Sales Order Processing Y Y Y Y Y
Sales Ledger Y Y Y Y Y
Product Pricing N N N Y Y
Project Accounting Y Y Y N N
Cashbook Y Y Y Y Y
Accounting Systems Manager Y Y Y Y Y
Bills of Materials N N N Y N
Purchase Ledger Y Y Y Y Y
Purchase Order Processing Y Y Y Y Y
Nominal Ledger Y Y Y Y Y

 

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