We all know that accounting is an important part of business ownership, but having good financial control over your business goes beyond bookkeeping and posting journal entries. It also includes:
Paying bills timely
Tracking inventory
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Preparing payroll reports
Reconciling accounts
Tracking hours worked and approving timecards
Safeguarding customer information
Having quick and easy access to vendor information
Preparing financial reports
Reviewing budgets
Tracking progress on long-term projects
Tracing where company assets are being used
Establishing connections with prospective clients
Fortunately, there are accounting systems that help you with each of these things – you just need to find the software (or the right combination of software) that is right for you.
Commercial Bookkeeping Software
Many small businesses begin their foray into accounting by purchasing a commercially available software package like QuickBooks, Quicken, Xero, FreshBooks, or Sage. Although each of these are unique, they are all:
Simple to set up,
Simple to use, and
Broad enough to be a good fit for most businesses.
Commercial accounting software will meet most of your day-to-day bookkeeping needs. This type of software will help you build a general ledger, book journal entries, create invoices, pay bills, and run basic reports. But this software also has its downsides.
Even though most of these software packages are created for users without accounting backgrounds, there will still be a learning curve. Give yourself time to learn the ins and outs of the software so that you’re using it effectively and to its fullest potential.
Additionally, many basic bookkeeping packages will not support niche industries. For example:
Construction businesses often need a way to track progress toward the completion of long-term projects, especially projects span multiple years. Tracking expenses on multi-year projects are not supported by most commercial software.
Car rental companies have thousands of assets to track, and they need an accounting system that can trace unique information to each individual vehicle. For example, for multistate reporting, they might need to know in which jurisdictions their assets have been used or rented. This information isn’t typically available in standard accounting software.
Commercial software will also need to be upgraded frequently. While cloud-based software is becoming more common, many business owners prefer to use desktop-based software. Software that is housed on a desktop or network will need regular maintenance, and troubleshooting problems may be difficult and time-consuming.
Custom (or Customizable) Software
If commercial software doesn’t meet all your needs, you can purchase custom software. Most small or medium-sized businesses cannot afford fully custom-built software, but customizing commercially available software may be within your price range.
Customizing existing software is a great option for businesses with unique needs or businesses in certain industries. Hospital systems, for instance, typically purchase commercial software but work with the software provider to build applications or shortcuts that help them do their jobs more efficiently.
Some software companies will also work with you to get their software to “talk” to another application. For example, Bill.com now syncs with QuickBooks. When your customer pays their invoice on Bill.com, QuickBooks will automatically post an entry that reduces accounts receivable. If the software that you’re using now does not integrate with your general ledger software, talk to your provider to see if they can create that connection. Paying for that integration may be costly upfront, but doing so can save time and reduce human error.
Enterprise Resource Planning
Enterprise resource planning systems – known as ERP – are all but ubiquitous in large companies, especially those that have complex operations. ERP systems integrate the company’s accounting software with other areas of the business, including:
Workflow management
Project planning
Asset procurement
Risk management
Compliance
Supply chain operations
Budgets and plans
ERP systems can be simple or extraordinarily complex, so all sizes of companies can benefit from implementing an ERP system. And fortunately, ERP systems are now commercially available. For example, QuickBooks provides ERP software by integrating payroll reporting and inventory management into its standard general ledger-based software. Other ERP systems can be purchased at:
Because ERP systems integrate many different types of technologies — like account reconciliation software, billing, and many more — and applications, they are not as simple to alter. Most businesses utilize fixed ERP systems and must undergo hefty changes to their model if they need to fix a bug or add something else into their web of systems. Fortunately, cloud-based technology and artificial intelligence are likely to make this process even easier in the years to come. With cloud-based applications, bugs and fixes can be deployed automatically and regularly. When artificial intelligence is employed in an ERP system, it will grow to fit the needs of the user.
Accounting Systems Make All the Difference
Accounting systems matter. They are the backbone of your business. Take the time to review your options carefully so you can make the selection that’s best for you and your company.
