For a new business owner who already has a business plan and registered his new business, the accounting set-up would be next in line. There are many accounting software programs which can easily address the accounting needs of a starting business. Similarly, a computerized accounting system will also benefit a established business which started with a manual or paper-based accounting system.
Small and medium-sized businesses can now buy ‘off-the-shelf’ accounting programs at remarkably low cost. Larger businesses will often prefer customized programs made for their business. The accounting programs carry out functions such as invoicing, receipts, disbursements, purchase orders, paying salaries, providing regular accounting reports and generating financial statements.
Computerized accounting systems provide major advantages such as speed, accuracy of operation, automatic document production, up-to-date information, cost-savings and efficiency. The most fundamental will be the ability to see the real-time state of the company’s financial position. With a computerized accounting system, each accounting transaction needs only to be encoded once; unlike in a manual double entry accounting system where two or more entries are required. The computerized ledger system is fully integrated. This means that when a business transaction is encoded in the computer, it is simultaneously recorded in number of different accounting ledgers, which are packaged with the accounting software program, at the same time.
An accounting software is now easy to find. But the more important question is: which is the best software for your particular purpose? There are already many options available for specific business aspects, and there are also many programs specifically written for specialized industries. Whether general business or specialized, the steps you should follow in choosing your accounting software should cover the following :
Determine your vital accounting functions.
- Do you maintain a large customer database or a small group of specialized companies?
- Are you in trading (buying and selling), production, manufacturing or service business?
- Do you maintain your inventory and resell it?
- How many employees do you have for payroll accounting?
- Will you need a multi-currency accounting system?
- What are your tax requirements?
There are software companies that provide complete business accounting software. They have integrated programs which cover everything from inventory ordering, receiving and selling, to employee database, payroll and tax monitoring. For small businesses, these features offer the best value and function since every aspect of the business can be addressed in one package.
Consider the simplicity or complexity that you require and need.
- How many accounting users will you assign to the software program?
- Who will be the allowed administrators, users or viewers?
Since some software programs are more user-friendly than others, it is best to obtain trial software run from software dealers before finalizing one. It is important that every accounting function is tested and utilized during the trial. You don’t want to buy a program, install it and transfer all of your business data into it, and then find out later that an important function is inadequate. Hands-on testing and training is necessary for every assigned user in your company so you will be able to see any loopholes in the accounting system that will not address your needs.
Assemble the notes and comments from all users after the trial-run.
Do a comparative evaluation of best features and positive attributes of each software program, as well as the negatives. Then narrow your selection into two so you can compare them “apples-to-apples”.
- How clear and logical are the accounting processes? Are they easy to follow and understand? Which is more user-friendly?
- How are the report formats? Do they satisfy your management reporting needs? Are they easy to customize, if necessary?
- Can you customize the company forms within the accounting software program?
- Can you set limits of authority for users?
- How are audit trails of transactions functioning?
Choose and decide the most applicable accounting software program that will fit the needs and requirements of your company.
- For start-up companies, you will have to create your chart of accounts and data listings of your clients, suppliers and employees.
- For established companies converting from manual to computerized accounting system, be certain to review your chart of accounts and database so that they will be updated for the new system.
- For companies who are changing or upgrading their computerized accounting system, be certain to create back-up files of all your database and accounting records before converting to the new system.