To make a decision on purchasing an accounting software system, start by evaluating what you actually need. Some general guidelines/questions are as follows:
1. Realize that all software systems can produce income statements, balance sheets, and basic reports on cash, checking and other accounts. Most can generate lists of outstanding invoices, outstanding payables, and missing checks.
2. Does the system accomodate your specific industry situation?
3. Does your business require sales tracking by store or by product line?
4. Does your business need reporting tools to figure out a project or item's profitability?
5. Can it track billable hours of employees or keep records for commissions or bonuses?
6. Do you go on a trip and pay for your specific travel charges on your personal credit card and require reimbursement through your billable invoice?
If so, you may need more specialized software for your particular business. Here are some ways to determine that:
1. What kind of business is your company? Accounting needs vary by industry and business type. Look at how your company operates to find the elements that work best for your accounting system.
Specific industries by design of how they operate require specialized accounting methods. Take some of these industries for example:
1. Manufacturing industries: This type of industry needs systems capable of tracking purchases, value-added products, inventory and shipping. They prepay for goods, as well resulting in large cash payments for goods not delivered yet. They should be able to generate reports that track costs, profitability and cash flow well.
2. Retail and distribution industries: This type of industry requires different ways to track inventory such as inventory turnover. They might also want to trank sales by department, or store, etc.
3. Service and consulting industries: They must be able to track billable hours and expenses of each specific client or project.
Beyond the kind of business is also the types of reports your specific business needs. This is vital tool to every business. Without it, businesses can fail since they don't know where to focus their efforts in their operations. Your business needs will vary due to your industry. Look at some types of reports that businesses use to help manage:
1. Budget versus actual forecasts. This type of report can be looked at monthly, quarterly, or annually. A great tool for managing your cash flow.
2. Detailed comparisons of the sales of your product for a specific period versus the year before. This can greatly improve your purchasing methods, since if you see fluctuations that match on a yearly basis, you can plan what months sales of a particular product are better or worse than others.
3. Integration of the software program into spreadsheets, programs designed to export data into spreadsheets to summarize data.
Once you have determined your criteria for your particular compay's needs, make sure you talk to other business owners or ask your accountant what may be the best solution for your business. Also, make sure the software you are looking at can run on your current computer system as well as how much training will be required to learn the new accounting software. Following thse prerequisites will help you determine what is best for your company.
Copyright Jeanine Pfeiffer
When you finally have the software package that you like, now it is time to operate it. Perhaps more important than selecting the software is in choosing who operates it. Truly, even if you have a great software package, if you don't have someone operating the software with the skills required for it, you won't have much luck with creating accurate financial information.
All accounting software has three basic options for producing financial statements:
1. Preparing your financial statements in house. This option requires good accounting and computer skills.
2. Entering the data in-house but having an accountant available to "clean up" statements by doing monthly journal entries.
3. Providing organized information according to the accountant's needs for a professional preparation of the financial statements.
There is no right or wrong option here. It is all dependent upon who you have available to do the work accurately and efficiently. Also, remember, even with the appropriate accounting skills, it takes some time to become familiar with new software. Installing it is the easy part. The real work begins once the transactions start to get entered into the accounting software system.
That being said, take the time to know your product, learn it well, and you will be off to a good start.
There is more to purchasing an accounting software package than just looking around. Make sure you review the sales material available from the software companies. Look at their websites to get more specific information as to how the software works. Some companies let you try out their demo before you decide to buy it.
If your company is a small business, try looking at the inexpensive types of software that integrate with your company's needs. You can also talk to other businesssmen and women who are using the same systems. Find a friend or a colleague of yours who could rate the product for you , or trade associations and software vendors might be able to give you names of people to contact about the quality and effectiveness of their software. If you have to convert to another system, make sure you ask about technical support. When learning a new system, it is imperative to get help since there will always be something that goes wrong.
You can also ask your accountant what type of software they recommend. They can steer you in the right direction when they know your industry and the kind of information you process on a day to day basis.
Copyright Jeanine Pfeiffer
In determining your best fit for the software that will work best for your company, you must also consider if the current software you decide to get wil be sufficient for the future business needs. For example, if you own a retail store and you add another business location, maybe you will need to upgrade to a network version of the software you currently have. If it doesn't allow you to do this, then you may have to convert to a new software package which is time consuming and tedious given the fact that if you did the right research from the beginning and selected the right software, you would eliminate this hassle.
By planning and careful consideration of any accounting software package you will substantially improve business operations. An automated system far exceeds the paper system that once was since it will handle all of the routine work with limited errors. An automated system will let you know when something is not in balance whereas with manual posting, errors and accounts out of balance were a normal part of the transaction process.
Generally, a small business will want their accounting packange integrated as an 'all in one' type ssystem, one which records transactions, offers reporting tools, and allows the infomation to be available for planning, taxes and other types of functions.
Software systems on the market offer many tools that help management with reporting methods. These include income statements, balance sheets, accounts receivable and accounts payable reports, among other reports for planning and operationals purposes. Some may also generate key industry ratios to help your company look at profitabiity.
Looking into accounting software for efficiency is a vital part of any business structure, and should be well thought out to help the company save time and money.
Copyright Jeanine Pfeiffer