What features should you look for in accounting software?
To find the right accounting software for your business needs, there are a range of questions you should consider at an early stage in relation to the practical features you will require. To be helpful I’ve set out below the key ones below.
Use your answers to narrow down the options into a shortlist, then make sure to trial each potential solution in the shortlist to ensure that it behaves in line with your expectations! Remember, the accounting software you chose should be easy to use and save you time, therefore alleviating stress instead of adding to it!
How many users will require access?
Most providers allow multi-user access, though there is sometimes a limit on the maximum number of users. It’s therefore important to check that the product allows you to add the required number of users, or the cost implications of adding additional users (e.g. the requirement to move to a higher pricing plan).
Will you need to vary the permission levels for different users?
Another useful tool is the ability to provide differing levels of access to different users, so you can control the information they see and tasks they can access. This is extremely important if you only want to grant employees permission to track and send customer invoices for example.
Will you require a mobile app? If so what functionality will you need
The level of functionality of mobile apps can vary significantly between providers, so you’ll need to decide how important mobile is for you. Advanced apps will allow you to view reports and key information, and also complete a variety of tasks via mobile.
You can find my comparison between various mobile offerings here.
Capacity and Scalability
How many clients / contracts do you have? How many transactions and bills do you generate each month?
Some providers may have a hard limit on the number of transactions, clients etc., so it’s worth checking that the software you choose gives you plenty of headroom for growth. Even if a limit is “advisory” and not fixed, it’s been noted by a number of users that overall software performance can be impaired at higher loads.
What new features will you need in the next phase of your growth?
It’s worth thinking about what features you anticipate you will require in the next few months and possibly years - changing accounting software providers can be a time consuming and stressful project, so it’s worth looking for software which is scalable. An easy way to tell is to see what functionality is offered in higher tier packages by providers, in addition to any other modules they may advertise. At the very least there should be a clear and simple way of extracting and exporting data in case you need to switch providers in the future.
What level of support will you require?
Support can come via a number of forms, including live online chat, email and phone - you should make sure that the provider offers your preferred forms. The more established providers are generally pretty good at providing support quickly and at no additional cost, but this is not the case with all providers, so it’s worth looking into before entering into any contract. You should also read the Terms of Service to see what protection you have in case the agreed services are not delivered or you run into issues with the software.
Accounting and Technical Features
What accounting features will you need?
At a minimum, your software should provide the following basic accounting features:
- General ledger - This is the journal summarizing all of the financial transactions in your business.
- Income and expense tracking
- Accounts payable - Allows you to track cash payable to vendors, suppliers, etc.
- Accounts receivable - Allows you to track cash owed by customers and clients etc.
- Fixed assets
- Report generation
- Bank feeds and reconciliation
- Billing and invoicing - Usually part of the core proposition, but sometimes can be offered separately by providers. It allows you to automate the billing, invoicing and collections process, in a manner consistent with your business and industry standard practices. Examples which can save a lot of time include automatically sending recurring invoices and past-due notifications.
Whilst most small businesses can make do with these features, there are a number of other features that may be beneficial:
- Payroll - Allows you to automate all aspects of the payroll process. Again, it is important to understand if there are any restrictions in the number of employees by the provider.
- Inventory tracking and management - Allows you to automate inventory management, including tracking, vendor management and purchase orders.
- Billable hours tracking - If you are a business that bills clients on a time-basis, then this feature may be useful as it allows you to track and/or bill your time.
- Payment processing - Most providers will support credit card processing or PayPal integrations, or offer their own payment processing, providing you with the convenience of accepting client payments online.
- Budgeting and forecasting - Allows you to create budgets based on targets and historic data. Depending on the software, this can either be done as departmental budgets (which the software consolidates), or at an overall company level.
- Project management
Outputs and Reporting
What reports should my software be able to generate?
Automated dashboards and reports should provide a clear and real-time snapshot of the financial performance and position of your business, without the need to manually input any additional information. The right accounting software will provide you with an appropriate level of detail for your needs, and also reporting should be customizable so you can focus on the metrics / financials that are most important for your business.
What software should I be able to integrate my accounting software with?
Good accounting software should integrate with the software you may already be using in your business, such as sales, payment processing, CRM and project management. By real time sharing of data between systems, this will allow you to maintain a live accurate picture of your company’s financial position without having to manually transfer data to your accounting software.