Mistakes to Avoid When Choosing Accounting Software
The growth and success of a business depends on focusing on your core competencies while paying attention to the management of your accounts and overall finances and track of your income and expenses. Choosing the right accounting software could be the difference between easily managing your finances and manually keeping track of all expenses.
Following are some mistakes that businesses make when it comes to choosing an accounting software:
(Probably) Don’t Buy On-Premises
If you’re expecting your business to grow, you don’t want to purchase a system that’s reliant on your data center infrastructure. With cloud-based systems, you’ll wind up paying a small fee to increase your vendor’s infrastructure demands, but that’s nothing compared to what you’ll pay if you have to upgrade your own in-house ecosystem.
Increasing the scale of on-premises accounting software will require you to pay more in licensing and maintenance fees. You’ll also have to continually upgrade your hardware to more capable and expansive servers to handle the additional data requirements, and this means more energy costs, and more software to monitor your network performance. As I previously mentioned, cloud-based solutions will still require you to pay a bit more as your needs grow, but the costs won’t be nearly as dramatic as with an on-premises system. Now if you can afford to upgrade across the board, or just feel more comfortable housing your data in your own data center, ignore everything in this sub-section.
Don’t Ignore the Database
Regardless of whether you choose on- or off-premises software, you’re going to want to be mindful of the database you’re using to store all your information. If you opt for a single user or off-the-shelf system, you’ll likely rely on the vendor’s database to house all of your data. Some vendors limit the amount of data you can store on their systems, so you’ll have to switch software if your company dramatically expands.
Fortunately, most enterprise-class solutions can handle a variety of databases, so it’s important to determine whether or not the database and system can work well with one another to maximize your back-end performance. Microsoft’s SQL Server is a capable and standard choice many of you might already be using. MYSQL is another popular choice. Most accounting systems jibe with both databases pretty well. Work with your IT department and accounting team to determine which system is the best choice for syncing with your data, especially if your company uses a niche or unique database programming language.
Not Determining Needs
Most enterprises invest in accounting software without understanding the exact reason or your unique need for purchasing such a system. Finding the right software requires you to understand the reason for investing in an accounting system. Your prime reason for making such a purchase is to keep track of your finances. Are you simply looking to track the income and profit generated from sales? If you know what exactly you want to do with the software, you can compare the options and shortlist the right product.
Not Reviewing Processes
There are many important considerations to make before buying an accounting solution, ignoring which could result in problems later. Sometimes process improvement is required from an organizational perspective, while other times process change will result from utilizing improved functionality. Get the teams together to find how process improvements can be made.
Not involving the right people
When it comes to choosing an accounting software, not involving the right people could be a big mistake. Your accounting software generates information for the entire organization. Thus it is important to involve the right people in choosing the best software, rather than delegating the task to a single department. Participation across functional groups, such as system users, system managers, system customers, and representatives from information systems, will help you select the best possible financial software solution.
Not Reviewing the Challenges
Before choosing accounting software, it is important to review the challenges faced by the accounting department. A business owner needs to check whether the accounts team faces any inaccuracies in accounting. Businesses make a common mistake of choosing software without evaluating the challenges faced by their accounting teams. Before selecting accounting software, a business owner needs to consider many factors such as ease of use, components, functionality and multi-currency conversion to make the right decision.
Ignoring the Security Factors
Hackers always target small businesses. The reason is that small businesses provide easy access to large businesses with valuable data. Any business owner doesn’t want their organization to be the reason for a security hack as it may result in legal action, fines, and liability damages. If modern accounting systems implement accounting software correctly, protect data to avoid any such problems.
How frequently is the accounting software updated? One of the great things about Quickbooks is the fact that it’s updated on a regular basis, with developers patching bugs while implementing new features. Accounting software that’s updated less frequently is more prone to bugs and errors, as well as security vulnerabilities. And given the fact that accounting software contains sensitive financial data like bank accounts and customer invoices, you’ll want to ensure it’s protected from such vulnerabilities.
What kind of customization options does the accounting software offer? Quickbooks, for instance, allows its users to customize nearly every form, including invoices. So instead of sending a generic invoice, you can send customers and clients a fully customized invoice containing your company’s name, logo and other brandable elements.
Common Accounting Software Mistakes to Avoid
No company can afford to operate without the right accounting software. When considering whether to buy a new product or upgrade their current solutions, however, business owners often fall prey to some common mistakes. Here are five gaffes to avoid:
1. Relying on a generic solution. Some companies rush into buying an accounting system without stopping to consider all their options. Perhaps most important, they may be missing out on specific versions for their industries.
For instance, construction companies can choose from many applications with built-in features specific to how their businesses work. Nonprofit organizations also have industry-specific accounting software. If you haven’t already, check into whether a product addresses your company’s area of focus.
2. Spending too much or too little. When buying or upgrading something as important as an accounting system, it’s easy to overspend. Those bells and whistles can be enticing. Then again, frugal-minded business owners may underspend, picking up a low-end product and letting staff deal with the headaches.
The ideal approach generally lies somewhere in the middle. Perform a thorough review of your accounting needs, transaction volume and required reports, as well as your employees’ proficiency and the availability of tech support. Then calculate a reasonable budgeted amount to spend.
3. Getting stuck in a rut. Assuming you already have an accounting system, one of the keys to managing it is knowing precisely when to upgrade. You don’t want to spend money unnecessarily, but you also shouldn’t risk errors or outdated functionality by waiting too long.
There’s no one-size-fits-all answer. Your financial statements are a potentially helpful source of information. A general rule of thumb says that, when revenues hit certain benchmarks (perhaps $5 million, $10 million or $15 million), a business may want to start thinking “upgrade.” The right tipping point depends on various factors, however.
4. Neglecting the importance of integration and mobile access. Once upon a time, a company’s accounting software was a standalone application, and data from across the company had to be manually entered into the system. But integration is the name of the game these days. You should be able to integrate your accounting system with all (or most) of your other software so that data can be shared seamlessly and securely.
Also consider the availability and functionality of mobile access to your accounting system. Many solutions now include apps that users can use on their smartphones or tablets.
5. Going it alone. Which accounting package you choose may seem an entirely internal decision. After all, you and your staff will be the ones using it, right? But you may be forgetting one rather obvious person who could help: your accountant.
We can help you assess and determine your accounting needs, set a feasible budget, choose the right solution (or upgrade) and implement it properly. Going forward, we can even periodically test your system to ensure it’s providing accurate data and generating the proper reports.