There’s a large quantity of accounting software and financial management products on the market today. Specially designed accounting systems are available for nearly any permutation of organization size, and industry you can think of. From a small-business that may require an off-the-shelf option to a larger enterprise that desires a vast amount of customization, this buyer’s guide will cover everything you should care about when reviewing accounting systems.
This guide will provide you with information on the following topics:
Accounting software at a minimum keeps track of financial transactions. Core functionalities include general ledger (GL), accounts payable (AP), and accounts receivable (AR). Common additional functionalities include payroll, billing, and inventory management.
Many industries have customized functionalities/requirements like fund accounting for nonprofits, job costing for construction firms, or DCAA compliance for government contractors. In larger organizations, the terms “accounting software” and “ERP” are often used interchangeably.
|Core accounting||Tracks revenues and expenses. Includes modules such as accounts payable, accounts receivable, and a general ledger.|
|Payroll||Manages employee compensation: wage calculation, ACH deposits, check printing, and compensation tax reports|
|Billing & invoicing||Create, send, and manage outbound invoices for client work.|
|Fixed asset management||Track, depreciate, and amortize large company assets. With standard or custom decay models.|
|Inventory management||Record inventory as current assets on the balance sheet. Track the cost of goods sold on your income statement.|
For some industries, some of the common components above are referred by a different name. Sometimes with different functionality.
|Fund accounting||Nonprofits, government agencies||Core accounting for companies that are funded by donations and/or grants. Emphasizes accountability to donor/grant requirements over profitability.|
|Job costing||Construction, manufacturing||Track costs/accounting/profitability on a job-by-job (project-by-project) basis. Often called construction or project accounting.|
|DCAA compliance||Government contractors||Defense Contract Audit Agency (DCAA) compliance. Specific accounting standards for government contractors as required by the Department of Defense|
As accounting systems get more advanced, they tend to include more specialized industry components, but here’s some common advanced components for all industries
|Budgeting||Provides coordination for the creation and management of detailed corporate financial plans, which estimate a company’s future revenues and expenses.|
|Business Intelligence (BI)||Reports on finances, personnel, operations, and more. “Intelligence” can range from simple reports to historical and predictive analysis.|
|Currency Exchange||Allows organizations to manage international cash, trade for currency of choice, and view reports in single consolidated currency value.|
|Bank reconciliation||Imports bank records, often in real time, and attempts to auto-match bank and accounting records|
|Customer Relationship Management (CRM)||Manages customers and prospects to aid marketing, sales, and customer service efforts|
The recently published Accounting Software Buyer Trends report reviewed more than 3,000 accounting software projects and found the needs and motivations of many buyers. While many types of buyers exist, most can fit into these common categories below.
With how many accounting solutions exist on the market, it can be hard to decide which one is right for you. Many small businesses will start with an off-the-shelf product that has a small barrier to entry, such as being affordable and easy to learn. For many, that solution is Quickbooks.
The above video demonstrates the use of Quickbooks for accounting purposes and offers an insight into the layout and functionalities offered in the program.
Undoubtedly, QuickBooks is a massively popular product. While QuickBooks can serve many needs, it’s also the most commonly replaced accounting software on the market. Our previously mentioned buyer trends survey found that 33% of upgraders are coming from QuickBooks.
We also conducted a study on over 4,000 previous users for their most popular quickbooks replacement options. The solutions will vary by industry, but these options were found to be the most common choices for companies to review:
The landscape of features and technology offered by software vendors is constantly changing. And as software changes, so do the demand for specific features.