How to choose the right accounting software in 5 easy steps
So you’re at a point in your business journey where you think you might need accounting software. That’s great but how do you choose the software that’s right for your business? Here is an easy-to-follow five step process to help you make an informed decision.
Why accounting software?
When you first start out in business, you may not be dealing with many transactions and you might be able to keep organised via a spreadsheet. As time goes on however, for various reasons this system can become unmanageable and you might need to look at buying accounting software. Not only will this software make your bookkeeping easier, it will also properly track all of your critical financial data from which you’ll be able to measure the health of your business. This is important for future growth and development and to help you make pertinent decisions about your business.
How to choose accounting software
Something to remember right off the bat is that there is no one ‘best’ accounting software package, but there is one that’s best for your business. Finding that software however,can prove difficult because we are spoiled for choice and it’s hard to know where to start. By following my five steps below, I aim to make your decision-making a little easier.
1. Talk to people and research
Assuming you don’t know much about accounting software, the first thing you are going to have to do is some research. Start by talking to your competitors and find out what software they use and why. You can also ask your accountant or bookkeeper for software suggestions. Your accountant might have a preference for a particular software which might make your choice simple. Once you have a few software suggestions, note them down – this will become your initial software list. Using Google search, review each software vendors’ literature and third-party reviews to better understand their functionality. You might be able to play with some trial versions to give you hands-on experience so you can try before you buy. If a trial version isn’t available then review the feature screens made available by most vendors. As you go, cross off software on your list that isn’t suitable.
2. Industry specific or generic?
There are two types of accounting software: industry specific and generic. You need to decide which one will be best for your business. Industry specific software has been specially created for each industry, honing in on particular features required by those industries. Generic software is also known as “off-the-shelf” software and offers a broader range of features to suit most users. Industry specific software is often much more expensive than its generic counterpart but may be worth looking at because it might be more suitable in the long run. Again, do your research and amend your software list as needed.
3. Decide on your budget
Your software choice may be dependent on your cash flow. You need to decide on a budget for your accounting software purchase. Your budget needs to take into account more than just the software itself. When deciding on your budget, also include the following costs:
- Installation setup and ongoing maintenance fees
- Initial and ongoing training via a software consultant or your bookkeeper and/or accountant
- Remember, if you decide on industry-specific software, this can be very expensive and you will need to factor the overall cost of such software into your budget.
- Consider your current computer hardware – will the software run properly on this hardware or will you need to upgrade?
4. Make a wish-list for your business
Now that you have an initial software list and a budget in place, the next thing to do is define your business requirements. You need to list every feature your business needs in a software to enable it to function and grow. Some common features might include:
- Invoicing (sales and purchases)
- Purchase orders
- Estimates or quoting
- Comprehensive reporting (what sorts of reports do you need?)
- Contact database or light CRM
- GST tracking and BAS reporting
- Simple interface and user-friendly
Other features that you business may require could include:
- Bank feeds
- Foreign currency
- Point of sale
- Ability to connect to other software i.e. Addons
- Multi-user capability
- Scalability (software grows with your business)
- Access on multiple devices i.e. mobile access
- Reliable support e.g. local consultants, email and/or telephone
- Audit trail (software keeps records of who did what and when)
Don’t go overboard with your wish-list. Keep it simple and stay focussed on your business’ needs otherwise you might end up purchasing software that has loads of extra features you will never use.
5. Match your wishlist to software features
Okay, now you’re on the home-run. You are getting closer to making your final software choice. The last task is to look at the initial software list you made in steps one and two and match the features they offer to the list you created in step four. Choose the software that provides all or most of the features on your list. Don’t forget to stay within your budget but also remember that cost should not be the only critical factor you take into account; it’s important to make a choice that will suit the needs of your business now and into the future.
My last piece of advice for software choice: keep it simple and focus mainly on the needs of your business. Don’t get caught up with all of the bells and whistles that some vendors can throw at you. At the same time, look at scalability and consider future business needs too.
Good luck with your software shopping! I hope these 5 steps have helped you with your choice. If you would like more assistance, you can contact me here at e-BAS Accounts to discuss your software needs. I am more than happy to advise you about the software we support.