Accounting software helps you manage the routine financial tasks of your business effectively. Gartner predicted that automation can save finance departments 25,000 hours of routine work every year. Accounting software helps you achieve automation. It helps you with invoicing, cash management, reporting, and analyzing financial ratios (e.g. working capital, liquidity, quick ratio, etc.). You can quickly analyze the financial performance of your business with a few clicks if you are using the right accounting software.
What exactly is the right accounting software and how do you find one for your business?
Finding accounting software solutions gets easier if you know how to evaluate and compare them. You need to understand critical factors that make an accounting tool good or bad for your business.
Here is an overview of the most important factors that you must consider before choosing an accounting software for your business:
1. Business Alignment
This is the most important factor that must be considered, and it should be your top priority. What objectives you want to achieve from the accounting software. The tool you need must align with your business objectives, strategy, and policy.
A better approach is to create an accounting software scope document. List your accounting and financial requirements.
For example, what other things you want to achieve from accounting software other than accounting? Do you need invoicing, billing, inventory management, etc. too? Do you plan to integrate it with your payment processor and CRM?
Business alignment is essential as an accounting tool can’t (and shouldn’t) act as a standalone tool.
It is a general feature that you must consider. A tool that has a huge learning curve will cost you additional money on training. Additionally, you’ll need to train every new employee and at any given time, only a few people in your business will know how to use the accounting software.
This isn’t how it should work.
The software you choose must be easy-to-use, simple, and must have a user-friendly interface. It must have a minimal learning curve as it will reduce training cost and save a lot of time in the long run.
The accounting software you are interested in must be secure. A data breach is the last thing you expect from your tool. Hackers attack 2244 times every single day and it takes an average of 206 days to identify a breach.
Your accounting software needs to be secure. Most of the accounting tools are cloud-based and this is why it is important to pick a tool that’s secure. Consider factors such as encryption, client-side decryption, data center location, zero-knowledge protocol, and other security measures.
The accounting tool must have the capacity to work with larger businesses and it must be adaptable and scalable.
All businesses grow over time and as your business expands, you’ll need to upgrade tools and software you are using including your accounting software. Switching the software is one of the hardest things to do.
The accounting software you choose must support upgrades e.g. large transactions, team members, proposals, invoicing, time tracking, etc. If the accounting software comes with restrictions and it doesn’t work with large businesses, scaling it will be an issue and you’ll have to change the software as your business grows.
The software must integrate with third-party tools easily. If it doesn’t, it will create problems. An average organization uses up to 90 different tools. And these tools need to be integrated and connected to work effectively.
If your accounting tool doesn’t integrate with other tools, it will be useless and won’t be effective. It must integrate with the payment processor, CRM, Zapier, and other tools and apps to become part of your business’s technology stack.
There are other important factors too like cost, customer support, reporting, etc. but these 5 are the most essential. You need to prioritize the factors that your business considers important.
For example, if security is your business’s top priority, you can screen accounting tools based on their security. Prioritizing factors will make your job easier and will help you screen accounting tools.