How to choose the right accounting software for your business

When you get a business up and running, there are numerous things to consider. Some of these may include how to find a supplier, where to find funding and how to manage a customer database. One question that is likely to arise is how to choose the right accounting software for your company.

That question can only be answered by considering your needs, experience, plans and hardware. With that in mind, how can you help yourself to find the right accounting package? We’ve put together 10 tips to assist you in your pursuit for the right software for your business.

1. Know what you need

Most entry-level accounts packages will do the basics: customer records, supplier records, create customer invoices and statements, bank reconciliation and record, VAT, reporting (key financial reports and aged debt/aged creditor reports).

Beyond the basics, you are looking at features such as stock control, purchase order processing, foreign currency transactions, project costing, departmental and cost centre analysis. It is important to know what features are key requirements for you as a business and what are nice to haves.

2. Consider your experience

Have you (or the person doing your accounts) used or done training using any accounting packages before?

If so did you like using the package? Could this package or another in the range suit your current needs? If so it may be worth contacting the vendor to see what they have to offer.

The advantage to using software that you have used or trained on before is that you can get up and running right away and will require little if any additional training.

3. What is your internet connection like and are you mobile?

Cloud is a huge concept and theme in accounting software. While a cloud package may be ideal for your business, it is important to factor in the logistics of using one.

A cloud package will require a consistent and reliable internet connection to allow you to access your data, whether that’s via a laptop, desktop or mobile device.

If you or your staff are heavy mobile users or spend a lot of time away from the office, it might be important to have access to live data on the move.

Check if potential vendors offer a cloud accounting package or a mobile app for their on-premise accounting package.

While cloud is fantastic for accessing your accounts from any location, it is important to factor in the ability to and cost of providing suitable broadband access or mobile devices for users.

4. Don’t forget about legislation

Depending on the industry that you work in, you may be bound by specific legislation and have resulting accounting requirements.

Ensure you are aware of these so you can check that any potential software suppliers can provide legally compliant software to meet your needs.

5. Decide how you want to pay

Consider your business finances. Would paying a small amount each month help with your cash flow and avoid a large initial outlay or have you secured funding that you would prefer to invest in a software solution up front?

If paying monthly would suit you best, look at what financial options such as interest-free monthly direct debits potential suppliers can offer you.

6. Talk to your accountant

If you have an accountant, and they will be helping you to look after your accounts or taking them off you throughout or at the end of the year, talk to them about what software packages they use and recommend.

If the package that suits you best is not one your accountant already uses, check if an accountant’s version is available from the supplier.

7. Think about integration

Do you need to integrate with other packages (payroll, HR, customer relationship management (CRM) or industry specific products), with a payment gateway or ecommerce shopping cart?

Make note of any third-party software that you need to integrate with and add this to your list of requirements.

8. Understand return on investment

As stated earlier, it is important to understand what are vital features in software for your business and what are nice to haves. However, it is also important to understand the return on investment that more expensive features may provide.

If, for example, managing stock control manually is costing you significantly, the additional cost of investing in a package which includes stock control may pay for itself.

A package containing stock control may reduce the time spent on manually updating stock and creating despatch documentation, the cost of purchasing and storing slow selling stock and the time spent working out sales units and profits.

This may also increase customer service levels and satisfaction.

In terms of return on investment when pricing potential accounting packages, it is also important to consider the cost of support services and training.

Investing in an accounts package will not pay off if users have never been trained in how to do accounts, how to use the software or are unable to receive help in the event that something goes wrong.

9. Try before you buy

Depending on the size and type of package that suits your business, most suppliers will provide a free 30 day trial or download or an online or onsite product demonstration.

Once you have finalised a shortlist of suppliers, viewing the software in action or using it in a trial environment is a great way of evaluating if it will meet your expectations and of identifying any final pre-purchase questions you need to ask.

10. Don’t forget to grow

When investing in any business software, don’t just consider the business you are right now – think about your short and long-term goals and the business you want to be in future too.

If you are investing in software, it is important to factor in the ability for it to grow with your business or to enable you to move to another package if need be.

Check if your solution is scalable – if your business grows, can the software grow with you? Are there larger solutions that you can move to in time? What support will the supplier offer you in doing so? Making sure you check this will save you a lot of time and money in the future.

Editor’s note: This post was originally published in March 2013 and has been updated for accuracy and relevance.