Accounting Software

Accounting is among the most crucial tasks a business has to perform. Accounting requirements vary from basic, such as crediting and debiting accounts, to advanced, such as generating income statements and balance sheets. Accounting software solutions automate processes in line with the relevant accounting rules and regulations and according to the relevant standards. Using this type of software, businesses can handle accounting in a convenient and organized manner. Accounting encapsulates a number of subcategories mentioned below, including tax management, payments and invoicing, as well as financial reporting.  Read the full software guide...

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What is Accounting Software?

Accounting software is used by businesses and organizations to help manage, track and record their financial transactions and activities. Products in this category range from single-entry systems that help automate record-keeping to double-entry systems capable of performing more complex accounting tasks for SMBs or larger companies.

This software often comes with many different accounting applications and computer programs that can help automate an organization’s financial management process. Accounting solutions help finance managers and accounting officers deal with their responsibilities as efficiently as possible.

Accounting can help reduce and track expenses, provide more accurate reporting on financial activities and improve decision-making when it comes to making financial accounting decisions through reliable and curated real-time information.

The software allows businesses to view bank accounts, financial statements, purchase orders, invoicing and cash flow. Some also include specialized modules such as general ledger, accounts receivable and accounts payable. More advanced products may also have functions for financial reporting and analysis, billing, payroll and fixed asset accounting.

Accounting software solutions are ideal for businesses of all sizes as there are a range of solutions available depending on the size and scalability of your business.

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Types Of Accounting Software

Accounting software can either be used on a local server, known as an on-premise deployment or using a cloud-based solution. Both offer the same features and functions, however, the on-premise solution may be better suited for larger enterprises and those with the capabilities to host on local servers.

Cloud-based solutions can be accessed through a software download or a web app through a browser. These are more ideal for SMEs, those who work remotely and businesses that lack the necessary infrastructure.

Depending on the size and industry of your business, you can choose either an integrated suite that combines multiple functionalities into one software package or an entry-level product that focuses on one particular area of accounting. Common types of software include:

Payroll management software

Payroll software solutions are often integrated into accounting solutions, allowing users to manage their accounting tasks and draft detailed reports via drag-and-drop functionality.

This type of accounting software is ideal for better control over your company’s account payables and receivables. Payroll management systems are designed to help you perform a variety of tasks including producing tax reports and payslips, managing salary deductions and bonuses and the ability to pay employees directly through the portal.

Payroll management systems help you manage your financial transactions as well as help reduce expenses in the long run and enable you to prepare accurate and detailed reports for management.

Billing and invoicing software

This type of accounting solution is typically used by businesses to facilitate the day-to-day processes and transactions. These may include issuing checks, payment processing, issuing invoices to customers and informing clients of due/pending payments. The software can also be utilized for tracking expenses, monitoring payables and receivable and other important financial transactions.

Typically integrated into full-featured accounting solutions, billing and invoicing systems are integral in ensuring the accuracy and transparency of accounting figures. They also add credibility and professionalism to every transaction.

Enterprise resource planning (ERP) systems

An ERP system is among the most important accounting software types, especially for medium and large organizations. Enterprise resource planning (ERP) effectively combines all systems associated with marketing, finance, inventory management, human resources, product planning, purchase orders, distribution and accounting.

Most ERP software solutions come as a suite that includes all the features and functions mentioned. Additional platforms can also be integrated into ERP suites, such as CRM or customer relationship management solutions, point-of-sale (POS) systems, business intelligence (BI) capabilities, analytics and reporting modules.

This type of accounting software may also be industry-specific, particularly in the manufacturing, retail, wholesale distribution and construction sectors.

Time and expense management solutions

This type of accounting software is specifically designed to help improve billing and payment processing, approve or deny expenses quickly and identify inefficient practices that can slow down billing cycles.

If you’re providing a type of service and bill customers based on time spent, this accounting solution can also help you produce detailed reports on how you’ve been spending your billable hours. This can also be used for direct employees. Time and expense management tools can be a great small business accounting software, as they allow you to be more transparent with the amount that is being paid.

Specalized accounting software

The software can be tailored and adapted to any industry that requires an accounting solution. Most platforms include industry-specific features. For instance, if you are running a real estate firm, you may look for a product that automates commission calculations. If you often need to send financial reports to regulatory authorities, you may look for a product with strong financial reporting capability. Some products even allow you to report depreciation to your tangible assets, such as equipment and buildings.

Freemium options

Most solutions allow you to complete a free trial period before investing in the product, mainly to ensure that the features, functions and capabilities of the software are what you need. From here, you can upgrade into the full version or choose another software solution.

Some software is classified as “freemium”, which offer the features required to conduct basic accounting processes but require an upgraded version to access more advanced features that you may need.

How To Choose Accounting Software

When choosing accounting software, you must consider what type of buyer you are by identifying your needs and preferences as a buyer or an organization. Important considerations include the features and capabilities of the software as well as scalability, user interface, ease of navigation and the number of users the system can handle.

The most important questions to consider are:

What do you need from an accounting software solution?

How are you going to use it?

Do you require advanced features of the core functions like tracking income and expenses for your business?

A large portion of accounting software buyers can be categorized by small or medium-sized businesses, enterprise or best-in-class buyers.

Small and medium-sized businesses

These businesses are growing and expanding rapidly and need accounting software with features and functions to help complete their processes. Replacing a basic accounting solution with more robust and scalable software that is capable of supporting more complex functions, including on-demand forecasting, increased data capacity, intercompany accounts and more advanced features could help your business save time, money and resources.

Enterprise buyers

Enterprise-level businesses and organizations need enterprise-level accounting software. These types of buyers represent larger companies and organizations that require the functionality of a full-featured enterprise resource planning (ERP) system. Normally, ERP solutions have multi-company consolidation, foreign currency, international operations features and other features crucial to the day-to-day processes of larger businesses.

For this software, seamless integration into existing platforms is often more important than some of the features they get from their accounting solutions. You should carefully consider and analyze which features are most useful to you and whether or not you can easily integrate the program into your existing software architecture, as many solutions offer software that includes advanced features and functions that may not be necessary or applicable for your business.

Best-in-class or industry-specific buyers

Businesses looking for premium, market-leading software find they contain advanced features and functions that can automate and make the accounting process even more efficient, especially when dealing with complex sectors of business or large numbers of employees. These solutions will be ideal for businesses with a large budget, the capability for advanced features and applicable use cases for the software.

Industry-specific buyers may need to upgrade their software for their specific industry needs or their growth is too large for their particular solution. For example, buyers in the construction and engineering sectors may utilize the software's features and functionality, rather than its integration capabilities or buyers in the academic sector may need an accounting solution that offers higher education-specific features such as tracking of the disbursement of financial aid or student loan payments.

Benefits Of Accounting Software

Businesses using accounting software can take advantage of many benefits that using the solution offers, including:

Save money, time and resources

Using accounting software means that payroll and other accounting functions don’t have to be outsourced. The software helps automate key functions and provides a more efficient experience for the user, meaning that the functions can be done by trained staff and users of the software.

The time and resources saved using the software can be invested in more appropriate departments of your organization.

Improved productivity and process efficiency

Accounting software allows you to automate complex tasks that are otherwise very time-consuming and allow you to compile and collect important information and data that can be utilized to further improve processes.

Being an online solution, core processes are automated and you can significantly reduce the time it normally takes to process, including sales tax, expenses, cash flow, inventory, bank accounts and other financial transactions. The software can also increase the accuracy of your accounting records and ensure that documents aren’t misplaced as they’re stored in the software.

Easy to use and understand

Most accounting systems are designed with ease of use in mind and often include training resources, help guides and support options alongside simple, user-friendly interfaces for inexperienced users.

This means that employees and users of the system don’t have to learn complex accounting techniques to conduct operations. The learning curve is low and designed so those with minimal technical knowledge can operate the software after adequate training.

Easier tax management and compliance

Tax management and compliance for businesses of all sizes involve significant documentation and paperwork. When it comes to taxes and regulatory compliance, organizations have to make sure they are accurate and vigilant to avoid penalties. Accounting software stores account information and financial records to ensure that the tax reporting process is made easier for business owners and financial managers.

Accounting software is crucial for businesses of all sizes, as it legitimizes your operation, ensures proper financial management, automates core accounting processes, provides a way of tracking expenses and cash flow, assists with payroll and account functions and helps with tax management and regulatory compliance.

Common Features of Accounting

2-Factor Authentication Adds an additional layer of security by requiring an extra step in the login process. Usually external devices are required for this or a text message with a verification code is sent to the user when trying to login.
Accounts Payable Keep on top of payables and manage what you owe to creditors and suppliers.
Accounts Receivable Track unpaid invoices and keep on top of what your customers and debtors owe you.
API Application Programming Interfaces (APIs) are programmatic intersections with external products or platforms that allow for custom integrations with your own solutions or other solutions you are using.
Balance Sheet A common financial statement used as a snapshot of a business's assets, liabilities and capital at a particular point in time.
Billing/Invoicing Issue bills and invoices to customers, often combined with tracking capabilities for outstanding payments.
BitCoin BitCoin support - a digital currency operating independently of a central bank.
Budgeting Planning and tracking capabilities for financial budgets and plans often used to manage funds across different departments or for investor / shareholder oversight.
Calendar Management Manage and update calendars for scheduling or consolidation of events across teams, departments or business functions.
Contact Management Manage large amounts of personal or business contacts in a centralized system.
CRM Integration This indicates whether integrations with Customer Relationship Management (CRM) software are supported by a software application.
Customer Management Manage customer databases and/or track outstanding shipments, payments and more.
Dashboard Dashboards are digital interfaces commonly used to visualise data or give quick access to important features and functions of online platforms. They often serve as an overview gateway in software applications.
Data Export Exporting functionality can be used to streamline the migration of data sets and information across systems, platforms or applications.
Data Import Importing functionality allows you to use data sets from other systems or platforms to cut down on data entry requirements or to more easily migrate records from similar applications you have used in the past.
Data Visualization Data visualization features render a visual interpretation of data sets through the use of charts, infographics and other visual cues generally in form of a reporting dashboard.
Expense Tracking Track employee travel and other expenses to stay on top of budgeting requirements and reimbursements.
External Integrations Integrations with other software products or platforms to improve efficiency and compatibility across systems.
Forecasting Forecast upcoming expenses, sales, revenue, user levels, etc. through the use of predictive methods and past data.
General Account Ledger Track transactions in the form of account information to prepare financial statements and reports.
Inventory Tracking Stay on top of inventory levels, to manage the storing, reordering or production of stock items.
Multi-Currency Support of different currencies for payments, accounting purposes, taxes, reports and more.
Multi-User Supports more than just one user account and generally allows for collaboration with colleagues.
Notifications Includes notification support and sends you alerts with information on important events and other time sensitive instances. For example through push notifications on mobile phones or email notifications.
PayPal PayPal support allowing for the transfer funds electronically or online payments.
Payroll Manage employee payroll to keep track of taxes due to the government, pension schemes and payments to employees.
P&L Support for Profit & Loss statements in financial / accounting systems.
SAP Integration Integrates with common SAP services.
Stripe Stripe support as a payment gateway allowing you to accept payments online and via mobile apps.
Supplier Management Manage suppliers and purchases required in the day-to-day operation of a business.
Tax Management Manage tax payments and reporting requirements to ensure compliance with local or national taxation regulations.

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