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Not All Accounting Software Is Created Equal – Does Yours Have What You Need?

Choosing accounting software is not as easy as it seems. Every company seems to offer the same thing yet different things. It’s tempting to just choose the first one you come across or go with the company that comes in with the lowest bid. But there’s a better way to do things. Namely, identifying your needs and evaluating how you’ll use the software before you make a purchase.Typical Accounting Software ApplicationsThese applications go beyond Quickbooks or an Excel spreadsheet. The software acts like an information system that handles many different accounting functions. The most commonly seen modules are: accounts payable and accounts receivable, general ledger, payroll, billing, reporting and purchase orders. Additional functions may include an inventory feature or job tracking or costing and stock or inventory features.Identifying Your NeedsBlind purchasing almost never works out well for anyone, which is why it’s so important to evaluate your needs before you make a purchasing decision. Just as important are your capabilities and your plans for the future. Don’t limit yourself to your current situation. Think about what future needs you’ll have and consider the capabilities of your employees. If you have a strong payroll department, maybe you can skip the business solutions that include that function, for example.The biggest reason companies use these programs is to reduce human error and speed up the entire bookkeeping process. However, with the reporting features available in some of the programs business owners and managers can learn much more about how the company is doing. Programs can generate sales forecasts, determine stock levels and help companies identify high and low performing services.Choosing programs and applications for your company will require you to understand your current functions and assess the products on the market against your needs. If you’re planning to grow, keep that in mind as you make your selection. You want something that can grow with you, not something you’ll have to change soon.Factors To Consider When Choosing Business Solutions• Is it suitable for businesses of your size? Small business accounting differs from big business accounting. Smaller companies won’t need all the bells and whistles that a bigger company needs.• Can it produce the reports you need? The software won’t be as much help to you if you can’t produce the reports required of you by the IRS or the state.• Can you add modules on in the future? If your company changes, can the software adapt or will you need to purchase a whole new system?• Does your industry necessitate specialized modules? Manufacturers have different inventory needs than retailers, for instance. There are even modules that can be used to bill third parties, such as a medical practice billing insurance companies.• What does your accountant recommend? This should go without saying, but talk to your accountants, either in-house or outside consultants, about the different programs and modules. Get their insights and recommendations. They may be familiar with the products on the market and might even be able to recommend a product that will integrate with programs used on their end.• What are the IT requirements and can you meet them? Accounting software requires a large database. Work with your IT department to determine disk space needed and how much you have available. Also consider the age of your IT infrastructure. Can it support the demands of a new system?Don’t fall into the trap of thinking you don’t need to understand your accounting system or needs when purchasing accounting software. What you get out of your programs is only as good as what you put in to them.