Accounting software is a kind of application that has the capability to record and manage accounting data. It processes accounting transactions using functional modules. Accounting software may either be developed in-house, purchased from a third party or a combination, where it is purchased from a third party and then customized according to the business’ needs.
When a business expands, it comes to a point when changing accounting software becomes a need. This point might come when the business’ financial growth cannot be managed with the existing financial system anymore or when the there is a need to upgrade the outdated system. Some of the reasons that cause businesses to switch their accounting software are:
1. Difficulty in generating reports and in performing analyses of operational data
2. Ineffective processing of transactions
3. Inefficient data entry of multiple currencies and information
Switching accounting software requires proper knowledge. Assessment of its impact with the actual business situation is also crucial. Factors to consider when switching accounting software include:
The cost of the existing accounting software is usually doubled compared with newer and updated ones. Prices are higher for the latter because they have faster processing capabilities and have more functional modules than older ones.
2. Hosted versus desktop software
Most business systems initially make use of desktop software to manage their accounting data. Making a decision if there is a need to switch from desktop software to hosted software can make a big impact on the business. It can affect how accounting data is managed, processed, archived and stored. If there is need to access data remotely, anytime or anywhere, then switching to hosted accounting software might be needed.
3. Impact on the business in the future
Switching accounting software will certainly have an impact on any business. Assessment of how and to what extent are the questions. The how will answer if it will give a positive or negative impact on the business. To what extent determines whether the change made a minor or major change to the company.
Once the need to switch accounting software has been decided, looking for the best software is the next task. When checking what kind of software will best fit the business, these are the important factors that businesses need to consider:
1. Software’s capability
Simple accounting software packages are usually easy to navigate and are more user-friendly. These software packages may be feasible for small, local businesses. However, those with a large number of employees and have international operations will require a complex software package that is capable of integrating various business tools with the accounting system. Complex accounting software packages can manage and process accounting queries from any department within the company. Some have project management (PM) and customer relationship management (CRM) capabilities.
2. Software’s database
Considering the software’s database is important because it is how all business information and data are stored. A single user system relies on the software vendor’s database. Some vendors put limitations on the amount of data that can be stored on their system. Therefore, before purchasing any software package, it is important to determine if the software’s database can be expanded or can be handled by different databases.
3. POS (Point-of-Sale) integration
Some accounting software packages are not capable of POS integration. This may be a big problem for businesses that required small transactions from different locations, like restaurants. POS integration is needed to automatically get, organize and sync transactions within a single system. This allows the accounting team to have an oversight as to when and where the transaction has been done.
4. Existing Human Resources (HR) software (if any)
If a business has existing HR software, it is important for it to be considered when switching accounting software. Integration of these two software kinds will enable departments to exchange information and process transactions and requests. Recruitment, promotions, and layoffs can be easily processed.
When the new accounting software has been chosen, the transition process becomes crucial. Checking if all accounts are updated is a must. This will ensure proper input of data in the new system. Outdated information on accounts will cause information inconsistencies that may be a problem in the future. Evaluation of the current business process is also important. Proper integration and adjustment with the new software will help save the business a lot of time and money.
Switching accounting software entails money, time and lots of effort. But with proper assessment, planning and transition, it can definitely add value that may foster growth for any company or business.