What is Accounting software?
Accounting software allows to oversee all the financial transactions within an enterprise or organization. A good accounting system will take care of all the aspects of finances, including reporting, payroll, accounts payable & receivable; as well as general ledger functionalities. Some accounting software will include more specialized functionalities depending on the type of business (e.g. nonprofit organizations…).
There are a market trends you need to understand when evaluating what software to use and which firms to hire:
Mobile apps are on the increase
There is an increased need for native applications to work with mobiles and tablets, and accounting follows the same rule. Many vendors are offering innovations in the mobile area, and it is worth taking a look at what they have to offer.
Software as a Service is getting more popular
Buyers understand the advantages of using web-based software rather than self-hosting it themselves. Not only are the upfront costs lower but the adoption by staff and employees is also easier and therefore faster.
Industry specialization is important
Vendors are having to supply software that is specific to company’s specific industries; due to high demand by consumers who want a solution more tailored to their needs. It is important to check for those specific features when looking to adopt a software solution that will work best for your industry.
The need to gather business intelligence
A lot of data is now being gathered and used to help improving business intelligence, and this data can be gathered and used by adopting the right software solution. Vendors are integrating business intelligence with their financial management systems, and it is an area worth investigating as businesses can greatly benefit from such practices.
Types Of Accounting Software
Accounting software should cover all the necessary aspects of a business’s finances. Here are the main applications:
Main core accounting
This is at the center of every business’s finances, with all the functions required to balance their books. It includes general ledger functionality, along with tracking accounts payable and tracking accounts receivable. Furthermore, it also includes tracking fixed assets and bank reconciliation.
Accounting for projects
This is a more project-oriented module which ensures to maximize job efficiency and profitability by tracking all the costs of said project with accuracy. It accounts for materials, overheads, labor and equipment to help making the best financial decisions for that project.
Expenditure and fund accounting
This helps companies to track the spending of their funds and it supports nonprofit organizations so that they can track their expenditures as well as their donations and grants; ensuring those companies meet GASB (Governmental Accounting Standards Board) regulations.
This sort of solution helps companies to make sure they maintain the right levels of inventory so that they can maximize profit by avoiding to over-spend. It also helps to lower the costs that rise from inventory depreciation.
Dealing with billing and invoicing
This allows to automate the process of collecting payments from customers so that collection gets done with as little errors as possible.
Handling budgeting and forecasting
Those systems can forecast budgets and expenditures by using historical data and estimating future conditions.
Budgeting for fixed assets
This allows to track fixed assets by putting them all into the one centralized database. It collects asset information, maintenance scheduling, cost and depreciation as well as all necessary financial information for fixed assets.
These systems basically help enterprises keep track with employee payrolls. This includes the creation of paychecks with functions to withhold and pay taxes; along with generating tax and legal reports.
Why Use Accounting Software?
The benefit of using Accounting software solutions is vast and goes a long way into helping to make a company’s finances better, more efficient and more profitable:
- Companies have a better clarity to see costs and expenditures, leading to better financial decision making.
- The right audience can have access to clear reports generated by the system.
- Companies are more accountable to donors, lenders and investors; leading to better trust towards that company
- Better accounts reporting ensures a company stays within compliance towards federal requirements and reporting standards.
Your use of software will of course depend on your needs and the needs of your business:
- Small businesses who are looking to upgrade from a very basic system will want a new system that supports more complex functions. Opting for a more robust small business accounting software package. It is important to take into account the functionalities required by their specific industry in order to choose the right solution.
- Enterprise buyers work for different businesses so they will be looking for a system which can integrate and consolidate with multiple company’s systems. In this situation, the integration must be seamless; but it is also worth focusing on the different features that suite has to offer. It is often a compromise between integration and functionality.
- Best-of-breed buyers tend to focus on a software’s specific functions rather than its integration with other systems. Depending on which industry they work in, they will look for software that covers the necessary functions needed by that specific industry. For example, universities need software that can track the distribution of financial aid; whilst construction companies will require software that can break the costs down for each different project. In this case, it is functionality over integration.