Remember how the rise of the P.C. was going to free us from mundane tasks, opening up great swathes of time for more interesting activities? Accounting software is one area where that promise came true. Helen Bradley considers the options.
It’s not a glamour application but accounting software is, nevertheless, a key business tool. It plays a number of roles, the simplest of which is recording transactions and keeping track of money owed and received, and money you pay out and owe to others. Beyond this, accounting software helps your business comply with the legal requirements of lodging tax returns, paying taxes, and accounting for GST.
The most important role it plays, though, is helping you manage your business better. Good accounting software provides reports and calculations to inform you about core areas of the business and how they’re performing. It provides information so you and your management team can make changes and fine-tune strategies.
For every business the first step in choosing accounting software is determining needs. If yours is a small business upgrading from a manual system, you’ll look for accounting software that can take you to the next step in financial management. For larger organisations, the choice is whether to upgrade to another program from the same developer or move to a new vendor.
The starting point is to understand how your business functions and what you require the software to do. This needs to be evaluated in two areas: day-to-day transaction processing, and the management reporting required to support decision-making. Grant Cowie, managing director of Cognito Software, developer of the MoneyWorks solutions, cautions: “The most important thing when choosing any software package is to identify your individual and unique needs, as it is these that the package must address. It’s this aspect that so often leads businesses astray; they tend to rely on the advice of accountants and bookkeepers and too often this is narrowly focused on tax compliance, not on business requirements.”
From your analysis of business needs, develop a list of tasks the software should perform and categorise these as either mission critical or ‘nice to have’. You’re now ready to go shopping.
True Cost
Never purchase a program on ticket price alone; it’s not an accurate representation of what you’ll spend. The true cost of software includes the cost of installation, as well as the time it takes to learn and use, convert from another system, and keep it updated and maintained. “Chances are that any accounting solution is ultimately going to have to work with other systems, such as CRM, e-commerce, or manufacturing,” Cowie says. “Businesses need to look at how the software inter-operates with other key business applications. It is, for example, totally pointless (and expensive) to be manually re-keying information from one system into another. So, looking at the total cost of ownership is vital, as opposed to just considering the purchase price.”
Avoid making a decision on the basis that someone outside your organisation thinks one program is ‘great’. Accounting software must fit your business and give you the tools you need to function effectively, and no one without inside knowledge of your business can make that determination.
Factors to consider when purchasing software include its ability to be upgraded. Many software vendors like MYOB, Quicken and MoneyWorks have a range of products from entry level to enterprise solutions, and you can upgrade from one program to the next in the range. Other vendors, like Attache and Sybiz, provide modular solutions allowing you to start with, say, a general ledger module and add other modules such as payroll and inventory management, later. This way you’re not paying for features you won’t use.
Security is vital if the person doing the accounts is not the business owner. It is important that the program has an audit trail so you can track what has been entered and changed. Entry-level programs typically allow changes to be made and don’t record them, making it difficult to recognise or prove fraudulent activity.
Another thing to consider is room to grow. John Kingsley-Jones, PR manager, Quicken Australia, says there are questions to ask when choosing your accounting software. “As my business grows in size, because it has hired more employees or because it has a greater range of products, can my software cope with this growth? If not, then you need another accounting software solution.”
