Choose the Right Accounting Solution: 5 Questions to Ask Yourself
You know when it’s time.
You need accounting software, an application that is easy to use and that supports the features that your company structure and financials require. It needs to keep your financial data safe and well-organized, and there should be a good support system.
There are countless companies that sell desktop-based and online bookkeeping products. Look at the demos that companies provide. Take advantage of free trials. Ask your social contacts what they use, and why. All the while, think about your answers to these five questions:
Do I want a desktop application, or one that lives in the cloud?
Desktop software with local data storage can be more secure than its cloud-based counterparts that reside on distant servers. Since these programs have been around for decades, some offer more features than the newer web-based applications.
On the other hand, software – and your critical data — that lives on your hard drive can become corrupt if, for example, your computer gets a virus. Every time there’s an update, you have to download and install it. And you’ll have to pay hundreds of dollars upfront, as opposed to submitting a monthly subscription fee.
Web-based accounting software designers have built solutions that don’t just mimic desktop programs. They’ve created new ways of doing the same things. They use bank-grade security, and they store your data at more than one secure location. Updates are automatic. (Truth be told, we are big fans of cloud-based solutions and highly recommend considering these over their desktop counterparts.)
Cloud-based accounting applications can improve your workflow by presenting information and tools in a very organized, accessible fashion.
What accounting functions do I need?
Accounting applications share a similar set of functions. They let you manage income and expenses by connecting online to your bank accounts. You can store records for customers and suppliers. Create and send transaction forms like invoices and purchase orders. Build a database of products and services that you sell. Run reports.
But what do they look like? How do you use them? How much detail can you include in records? What reports are built in, and how much can you customize them? Can you actually track your inventory levels? Run payrolls and pay payroll taxes? Do at least some of your work on your mobile device?
Keep your current needs in mind when you’re researching sites, and leave some room for growth. Your ideal application will be able to do everything you need and then some – but you don’t want to be paying for a lot of features that you’ll never use.
Once you’ve immersed yourself in several of the solutions available, ask yourself this:
Do I want to adjust to this new kind of workflow?
You may not. These online and desktop solutions are designed to be as simple as possible, and to shield you from the arcane, complicated rules of double-entry accounting, but you will probably find this bookkeeping method to be very different from what you’re doing with Excel, paper forms and file folders, and a lot of sticky notes.
If this is the case, and you must do something because your finances have simply gotten too complicated, you might consider outsourcing – having your accounting done by a reputable, experienced firm.
Who will be doing my accounting work, and how much do they already know?
Consider how much your designated in-house financial manager knows about accounting and about using cloud-based applications. Then investigate all avenues of training and guidance offered by every solution you’re considering. Look for:
- In-depth, comprehensive online help,
- A support phone line, or at least email and chat, and,
- A network of accounting professionals whose members are certified in the application’s use.
Can I afford it?
Accounting software and websites are indeed an added expense, albeit a fairly minor one. But they can actually help you save money by reducing the time required to manage the books. The best ones provide financial insight that will help you make better business decisions.
Your days will be interrupted less. You’ll have fast access to financial details that you used to waste time trying to locate. And you’ll be able to focus on making your company grow. How much is all of that worth to you?
Is cash flow the bane of your bookkeeper’s existence? Accounting applications can help you spot bottlenecks and make corrections.