Choosing an accounting software for your business can be extremely frustrating and overly-costly if not entirely thought through. Encourage every relevant person supporting your accounting software transition to take part in the conversations, most importantly your Accounting Supervisor(s), your IT Manager, and managers to any department that will utilize the system. The highlights of all discussions should center around these key considerations:
Start with deciding which features and outputs the software must deliver. It’s best to prioritize between what you need, versus what you want, in order to build “good, better, best” options. Keep in mind that various users expect different outputs. A manager from other departments primarily need relevant, real-time reporting. An accountant is concerned about security, the ease of recording transactions, in addition to accounting-related reports. Ensure that all primary users will receive everything on their Needs List, while compromising on the Wants List. Once you determine the software packages that can deliver these needs and agreed-upon wants, you can use the next considerations to slim down your solutions.
Basic or Complex
The idea of a Basic system versus a Complex system refers to how detailed the software’s features must be to generate the desired System Solutions. For example, QuickBooks is on the Basic side of the accounting software scale. The system is very user-friendly—meaning you do not have to be an accountant to understand how to successfully utilize it, and QuickBooks also comes with all sorts of training and support because it’s so heavily used. Most of its settings are preset so that you can get started as soon as you’ve installed it. A system like Oracle, however, sits on the complex side of the accounting software scale. Oracle requires custom settings and setup, and utilize functions that a trained accountant would primarily understand. Neither basic nor complex systems equals better, a general mistake many business owners make. Just because an accounting system costs $65,000 (yes they can go that high, and higher!) doesn’t mean you get all the bells and whistles pertaining to your specific business. Likewise, a more affordable $300 system might confine how you can record financial transactions and lack customized reporting.
Cloud-Based versus Server-Based
For many years accounting systems have been purchased and then installed onto a Server-Computer. When accountants log in on their individual devices, they are accessing this Server. If there is a crash on any individual accountant’s PC, the original Server remains operational. Nowadays, hundreds of businesses are converting to a cloud-based system, where accounting platforms are accessed online, eliminating the need for a Server-Computer. Outside of that elimination, and including the ability to access your accounting system from any device that can connect to the internet, there isn’t presently any true benefit for choosing a Cloud-Based accounting system. Furthermore, some systems such as QuickBooks Online doesn’t offer the same features as the QuickBooks desktop software. While those features might not impact reporting, it might make recording transactions much more difficult for your accountant. Be sure to identify any differences between a Cloud-Based and a Software-Based system to avoid any unfortunate surprises.
Multiple Businesses/Divisions Consideration
Many businesses operate under different divisions. For example, John Joe Inc. is a Holdings Company with subsidiary businesses operating as an HR Recruiting firm, a Consulting firm, and a Marketing firm. Each of these divisions have separate streams of revenue and expenses that do not tie to the other firms. So the question remains, do you purchase a system for the Holdings Company, and force the various firms to record their transactions and receive reporting through this general system? Or do you purchase individual accounting systems that work best for the HR Recruiting division (let’s say they want a SAGE accounting product), the Consulting division (they selected QuickBooks), and the Marketing Division (they wanted an Oracle system), and then have all three of these systems integrate with the Holdings accounting system (Intacct)? Though a very costly solution, in this case everyone is happy with their bells and whistles that best fit their division’s industry and needs.
Integration, Continuing Support, Annual Charges
There are other very important categories of fees, support, and integration to consider into the conversation.
Integration concerns how you will install your new system, and all the strategies that go into that setup. For example, you must insert the files from your old accounting system into the new system. Is there a cost for this? Will there be ample support available to assist with training your staff on using the new software, and is IT available to help configure necessary settings?
Once you’ve purchased the software and undergone training, six months later you might have a new hire that needs this same training. Or you might require a new customized report for all managers. Is it possible to access this continued support, and if so, what does it cost?
Many cloud-based systems charge an annual user fee, meaning you might pay $10,000 the first year for the system, including integration and support. The next year, and all years following, will be a $3,000 annual charge. This is an absolute budget killer if this isn’t understood upfront.
There are hundreds of accounting solutions out there; some popular, some very affordable, some highly customized. Always choose the system that best fits your organization. Also remember that software requirements grow with the organization and with modern-day usage. The purpose of accounting is to reports your organization’s performance to internal management and external stakeholders. A decent accounting system makes this process easier once you’ve installed the best software solution, so don’t rush your decision nor neglect to allocate sufficient resources. And above all, seek consultation from a third-party and unbiased individual or firm should you need assistance or a second opinion!