The financial software you choose today will have a significant impact on your financial controls in the future. Choosing a financial application is a critical decision that too many small business owners make too quickly. Only later do they realize that they need a far different functionality from the one they have.
Start by telling yourself to resist the temptation to look around to see what kinds of software are out there before you clearly define your needs and goals. To find the right software for your uses, you have to first determine what those uses are going to be. Don’t open yourself up to sales pitches where vendors will try to tell you what you need the software to do. Instead, figure out what you need the software to do before you begin looking at software and speaking with vendors.
Begin with the structure of your business. How many employees do you have? Do you expect to grow in the near future? How complicated is your revenue stream? Do you extra capabilities like payroll software?
Also consider who does the bookkeeping at your business and think about who will be managing the books in the future. If you intend to hire a single person, it is recommended to get a low-cost system. On the other hand, if you need to hire several people to manage your finances, a more expensive package may be required.
After considering your internal business factors, begin thinking about what kind of features you need from the software. What capabilities do you want the software to have?
Invoicing – Some software makes invoicing easier than others by removing the need to re-enter information. Paper-less or “green” invoicing is also becoming more and more popular and you can find software that will play nice with your email, allowing you to create and email an invoice in one simple step.
Credit Control – With a simple mouse click, some packages let you know who owes you money, how much is owned, when payment is due.
Payroll Functionality – Think about whether or not you think your company will benefit from the time savings and ease of use that an accounting software package with a payroll module can provide. In some cases, where companies only employ one or two people, payroll functionality is probably not worth the added expense.
Reporting – One of the biggest advantages of a dedicated accounting software package (versus using a spreadsheet) is the reporting capabilities. Accounting software will be able to quickly and accurately create snapshots of whatever pieces of the accounting pie you want it to. As stated previously, always determine what you need before ‘seeing what’s out there.’ Check accounting software ratings online for reports of how well different systems have worked for companies similar to yours in the past.
One final thing to think about is how much activity your business generates each month. If your business has five large clients, then buying less powerful accounting software will suffice because you can enter the transaction manually. However, if you are operating a business with 100 or more clients who pay different amounts, then getting a more sophisticated package that automates the entire transactions is recommended.
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