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