Selecting the right accounting software is crucial for accurately managing your business finances. Statistics have shown that 67% of businesses using accounting software have reported a reduction in the time spent on accounting tasks, allowing the accountant to focus on more essential strategic duties.
However, with numerous accounting software options available, choosing a suitable accounting software for your organization can be overwhelming. This article will explore six key factors to consider when choosing accounting software for your business.
By carefully evaluating these factors, you can select a software programme that aligns with your company’s specific needs and ensures proper financial management.
Factors to Consider When Choosing an Accounting Software
Here are the factors to consider to ensure you choose the most suitable accounting software for your business:
1. Nature and Volume of Transactions
Choose a software programme that supports the nature and volume of your business transactions. Accounting software programmes are built to support specific types of transactions. No accounting software fits every business, so you must assess each software to ascertain it aligns with your business type and nature. For instance, if you are small business in retail, you will need software like QuickBooks or Xero, which supports detailed sales tracking, inventory management, and supplier management.
For a medium or large company with many employees, you will need Gusto or ADP, which offer comprehensive payroll functionalities to manage payroll calculations, deductions, and tax filings. For companies that deal with international clients or suppliers, you will need software that supports multicurrency transactions, foreign exchange updates, and automatic currency conversion, and Sage Intact is an ideal choice.
Additionally, software like NetSuite ERP is suitable for large and medium businesses due to its ability to handle large volumes of transactions and provide advanced analytics. For comprehensive invoicing features, FreshBooks is an ideal choice.
2. Desktop vs. Cloud-Based Software
Another major factor to consider when selecting accounting software is whether you prefer a desktop or cloud-based solution. Each option has its peculiarities and limitations. Here are three factors that will guide you in choosing the best accounting software for your business, whether desktop or cloud-based.
- Data Privacy and Cybersecurity: Assess the security measures of each type and determine what they entail. Cloud-based software have advanced encryption and compliance with data protection regulations, while desktop software relies on local security measures. According to research, 67% of accountants prefer cloud-based accounting software to locally installed software programmes (desktop software). Cloud-based software gives better security and data privacy; however, desktop software gives you more control over your data.
- Data Storage and Retrieval: Cloud software offers remote access and automatic backups. You can easily access your data and perform necessary actions on it anywhere globally, as long as you have an internet connection. This makes it suitable for businesses with remote teams and multiple locations. For desktop-based software programmes, you can only assess your information on local storage and manual backups.
- IT Infrastructure Requirements: Desktop software requires local hardware resources and maintenance, increasing the cost of IT support and maintenance. On the other hand, cloud software only needs reliable internet access and minimal local resources, thereby saving you costs that would have been spent on ongoing IT support. This makes cloud-based solutions more attractive for businesses looking to optimize their IT infrastructure and reduce costs.
3. Industry-Specific Functionality
When selecting accounting software, ensure it caters to the specific needs of your business and industry. Each industry has its peculiar requirements, and there are software programmes tailored to address these unique needs. If you are in the construction industry, you will need project-based accounting software such as Sage 300 Construction and Real Estate that has features specifically tailored to the industry.
For those in the healthcare industry, Kareo is suitable software as it provides functions such as patient scheduling, medical billing, and EHR integration for healthcare providers. Also, if you are into manufacturing, a suitable software to choose is NetSuite Manufacturing due to its advanced production scheduling, cost accounting, and supply chain management features.
Additionally, FreshBooks is ideal for freelancers and service-based businesses. Blackbaud Financial Edge NXT is designed for nonprofits and has features that perform fund accounting, grant management, and donor tracking functions.
4. Compatibility
Compatibility is another crucial factor to consider when choosing an accounting software. Choose software that integrates seamlessly with other business systems you use, such as CRM, ERP, inventory management software, or industry-specific software. For instance, if you use CRM software in your business, you can get QuickBooks accounting software, as it easily integrates with Salesforce CRM and allows you to manage finances and customers better.
For a large business that uses ERP, you need a unifying accounting platform like NetSuite ERP, which integrates financial management with CRM, order management, and inventory for a holistic view of your business. Additionally, if you have an online business based on Shopify, you can integrate it with Xero to streamline your accounting and e-commerce functions.
5. Customer Support Service
Assess the quality and availability of the customer support service of the accounting software provider to ascertain that adequate software support, maintenance and upgrade exists to resolve issues and keep the software functioning optimally. Also, consider factors like response time, support channels, quality of support, onboarding, and training while choosing software. For instance, QuickBooks provides 24/7 customer support for its users, making help available whenever needed. FreshBooks offers quick responses, addressing customer queries quickly. For multichannel support, Xero provides support through email, live chat, and a detailed online help center. Wave Accounting provides an active community forum where users can ask questions and share solutions Last but not least, for support for specific critical issues (for companies that deal with crucial services), you can go with NetSuite.
6. Price vs. Budget
When choosing accounting software, evaluate the cost against your budget. Factor in both upfront costs and ongoing expenses, including updates, support, and any additional features. The upfront cost refers to the purchase and implementation costs. You have to find out the initial cost of acquiring the software. For desktop-based software programmes, you usually pay a one-time purchase price, while for cloud-based software, the subscription fee is ongoing.
For cloud-based software, the subscription can be on a weekly, monthly, or annual basis. Usually, the fee varies and is usually determined by the complexity and number of the features, number of users, and storage requirements. Most of the cloud-based software programmes offer different subscription plans; for instance, Xero offers three plans, which are Starter, Standard, and Premium.
In addition to the purchase and ongoing subscription fee, you should also consider the update and upgrade costs. Some providers include updates in the subscription fee, while others charge separately. Furthermore, consider the cost of any add-ons or integrations your business may need. Some software requires additional fees for advanced features or third-party integrations.
Considering all six factors will help you choose a software programme that aligns with your business type, meets your business-specific needs, and gives you value for your money.
Final Words
Transform your business’s financial management with MacAdebowale Professional Services. Whether you need industry-specific functionality, top-notch customer support, or cost-effective solutions, we guide you every step of the way. Don’t let accounting tasks hold your business back—contact Mac Adebowale Professional Services today at emails@macadebowale.com or macadebowaleadvisory@gmail.com, and let’s get started!