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Choosing the right accounting software – How do I?

how do I choose

There are a myriad of software packages on the market now that allow access from anywhere at anytime so business managers can have ready access.  But which one is the right one for you?  Making a choice from such a big range can be quite a task, but if you take the time to consider exactly what your business does and doesn’t need, you can quickly move to a more manageable shortlist.

For example, if you need a system that can manage multiple bank feeds, track stock, issue quotes and purchase orders, and track income and expenses by job or division – and provide a range of customisable reports on all of these things, you will find the range of available options is much more manageable.

If it seems overwhelming to you, consult with a business consultant or business coach
who can help you determine the right fit for your unique business.

So while the popular applications all offer a range of key requirements of bookkeeping, some do certain tasks better or more comprehensively than others, some have better and greater reporting options,  and – with some you can end up paying for features your business may not need, or you may be limited in the number of transactions you can process.

Most of the popular commercial applications, such as Xero, Quickbooks, MYOB, Sage, Saasu, Reckon etc. offer a variety of different pricing plan levels and module options which you need to carefully consider before making a decision.  Generally speaking, as the prices increase, so do the number of features included.

Whether you, or one of your team members is going to keep the books, or you choose to engage an independent bookkeeper to maintain your financial records, you will need the right software that –

  • talks in a language and presents information that is easy for you to understand,
  • is relatively simple to manage,
  • can provide you with the information you need to make considered business decisions, and
  • can grow with your business.

 Do I need one with every functionality on offer?

Of course the success of our businesses depends on having current, up to date, accurate records and most of the generic packages available offer a variety of useful dashboard graphs and readily accessible reports that make it easy for you to measure your business performance in a variety of ways.  And a number of them also integrate with a broad range of apps and add-ons to give you even greater functionality.

But that doesn’t mean you need a software package that includes absolutely everything.   For example, if you don’t have more than one division or worksite, then category or job tracking is unlikely to be important to you; if you don’t have any direct employees – and don’t plan on having anytime soon – you won’t need a system with built-in payroll; if you’re in the service industry and don’t sell products, it’s unlikely you will need clever inventory management; if you don’t charge for your or your team’s time, you probably won’t need time tracking and billing, etc.

However it might be that to get a specific area of functionality that you require, you have no option but to buy a software package or higher level of a package that also includes things you don’t need.  For example, time billing might only be available at the top level plan of a particular software (such as in Quickbooks), in which case you will get all the other things, regardless of whether you want them or not.  But if time billing is an integral function for your business, it might just be worth it.   Your business growth over time may even result in some of those “extras” becoming useful down the track.

Yes, we all plan for our businesses to grow, but business growth will not always mean you need greater or more comprehensive software.   For example, whilst business growth might result in far more transaction entries than when the business first started out, it might not require additional functionality outside of the scope of your current package.

Nor, for that matter, does business growth automatically mean your business requires you to change software to one that has all the bells and whistles on offer.  You may just need to upgrade to a higher level plan in your current software, and/or take advantage of some of the fantastic “add-ons” on offer for a number of these commercial packages.

 

Whether you source help, or do the research yourself, at the end of the day having an up-to-date cloud-based accounting system
makes it easy for you to ascertain your financial position and make informed business decisions at any time, anywhere.

My Accountant recommends I use ….

Hold that thought!  There are pros and cons to this.  If your Accountant has recommended a specific software for your business, you need to ask “why”?   Does it mean the software they recommend is in your best interests?  Does it mean it is the right software for you and for your business?

On the plus side, it may be their considered and informed opinion with their knowledge of your business industry and operational structure.

However, it may also be because your Accountant is an agent for that particular software – in which case it will be in their best interests to recommend the software to you as they;

  • will be competent its use, and
  • will also probably receive a commission for every license sold

For example, some of the packages out there offer Accountants and Bookkeepers a commission on each subscription they sell to their clients, and, the more subscribers they have, the more prominence they are given on the software website (cross promotion).    So be aware that some Accountants and Bookkeepers have a strong incentive to recommend specific software to you.

It could also be that the package they recommend for you is more than you need for your business – and you may be charged for functions that are included but not relevant or necessary to your business.

Irrespective, it may still be the best option for you, particularly if you choose to rely on your Accountant to train you in its use, or provide bookkeeping services for you.   Although there are some accounting firms that will provide this level of service, for the smaller accounting practice it is often not a cost-effective service to provide, and they may or may not recomend an independent bookkeeper to you, or offer an alternate outsourced bookkeeping option for this, rather than providing the services themselves.

You are, of course, free to engage an independent bookkeeper yourself (if so, try to find one who commonly works with clients in your industry, i.e,  if you are in the retail industry, a bookkeeper that has previously only worked with service consultancies might not be the perfect fit).

So where do I start?

Firstly, write down what features and functions your business needs to operate well right now – and what you think it may need in the next 12 months, 3 years and even in 5 years, given the big picture you have for your business.

But be realistic!  Consider your –

  • main competition
  • customer demographic,
  • competitive market share, and
  • personal as well as business goals

as all of these things will have a significant impact on the potential growth of your business.

 Which features do I need?

An example of “now” and “in 12 months time” might look something like this –

NOW –

  • multi-device functionality (i.e., the ability to access the features you need from your PC, laptop, iPad, tablet, mobile phone etc.),
  • automated activities such as repeating invoices (e.g. for monthly subscriptions etc.)
  • at least 200 (inwards and outwards) transactions included per month
  • inventory management (particularly if your business is product based)

IN 12 MONTHS TIME –

  • time tracking
  • multi-divisional and/or multi-site reporting
  • integrated payroll
  • the ability to integrate with other software you may be using such as Customer Relationship Management software, project software etc.

Do some research and see if you can determine what software other businesses in your industry use, and how simple, effective, efficient – and relevant – that software is to your business.  Talk to other business owners within your business network about what they use – and why they chose the software they have.

Once you know what you functionality you definitely need/want, check out the available packages online – both generic and industry based – to see if they meet your needs.

Keep in mind your big picture and research to see what apps and “add ons” are available for your short-listed software choices that might be useful as your business grows; particulary add ons such as Customer Relationship Management software, project/task software etc.

Look carefully at the pricing plans of your short-listed options (which should give a list of inclusions and exclusions) to gauge the best pricing and option for your business.

Most of the generic packages available offer free trials, so take advantage and test a few out before committing.  You can either use real data or just play in them – invent customers and suppliers, sales, expenses, inventory items, and/or check out their demonstration files to find the right fit for you.

Note – there may be restrictions on what you can and can’t do until you subscribe, for example, using live bank feeds, but you should still get enough of an overview to make an informed decision.   If you choose to use your real business data in the trial period, once your trial period is over and you subscribe, your information will usually remain accessible in your new subscription.

What if none of them are right for my business?

Sometimes these readily available and non-industry specific packages are not a close enough fit for some businesses – and yours may be one of them; for example in construction where staged and percentage based progress billing is common, and specific payroll functions not commonly included in generalised software are required.  Other examples can include manufacturing, hospitality, and retail.  If the popular commercial applications won’t work for your business, you might be better to seek an industry specific software.

Significant business growth and change  can sometimes mean that rather than going for one of these readily available bookkeeping packages, your business may reach a point where you need one developed specifically designed for your business and its reporting needs, and many businesses at that point engage a software developer to do so.

If, however, after researching, testing and trialling,  you are still unsure which online accounting software is right for your business – get some professional advice.

A good business coach can help you with your business growth plans and in recognising potential opportunities and pitfalls that you may not have considered.

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