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5 considerations for choosing accounting software

Accounting software offers businesses a wide range of advantages: automation of routine tasks, enhanced accuracy in financial transactions, better visibility, and streamlined compliance processes.

Whether you opt for ready-made solutions or develop custom accounting software, there are crucial aspects you need to consider when choosing your new accounting software. In this article, we provide considerations and tips to help you make a wise investment.

1. Alignment with business needs

Accounting software should cater to the unique aspects of your financial operations. For example, companies operating internationally require features for managing transactions in multiple currencies and handling exchange rate fluctuations. Large enterprises, on the other hand, can seek extensive automation to streamline manual tasks and advanced analytics to process large volumes of financial data.

If your accounting needs are less complex, opting for software with a basic feature set is your best option. Such solutions are typically inexpensive and require less implementation and maintenance efforts. Besides, they are also more user-friendly, which reduces the risk of human errors.

Accounting software should also cater to the other aspects of your financial operation as well. This will include investment portfolio management considerations. For example, companies involved in extensive investment activities may require features to track and manage various investment portfolios efficiently. This could involve tools for monitoring investment performance, assessing risks, and generating reports for stakeholders. If your organization has a significant focus on investment strategies, it’s crucial to include this aspect in your checklist of relevant accounting functions.

What to do: When you don’t have accounting software in place, consult your key stakeholders, including accounting staff, finance managers, CFO, and those involved in investment portfolio management  to get a better understanding of their needs. This collaboration ensures that the software not only meets basic financial requirements but also aligns with specific investment-related needs, providing a comprehensive solution for your business.

Develop a checklist of relevant accounting functions, such as invoicing and billing, expense tracking, bank reconciliation, and payroll processing. Simultaneously, consider developing functionalities related to portfolio tracking, performance analysis, and integration with investment management tools.Distinguish between must-have and desirable but not critical features. In the case of custom development, you can equip your accounting software with any functionalities you wish in addition to the essential ones, but this will reflect on its final cost.

2. Integration

Accounting software should be able to exchange data with various systems, including CRM, ERP, inventory management, document management, payroll, and expense management systems, to streamline multiple financial operations. For example, the integration with CRM helps companies to efficiently handle invoices and process orders.

What you can do: If you opt for custom software, your development team should get acquainted with the technical characteristics of integrated systems to come up with the best solution for each case. In case you go for platform-based software, make sure it offers APIs or other pre-built integration solutions for business applications your company uses, like CRM, payroll systems, ATS systems or ecommerce platforms.

What’s more, ensure that the accounting software supports standard data formats such as CSV, XML, or JSON which will simplify data import and export. Assess the ease of data mapping and transformation during integration by reviewing integration documentation and looking for dedicated functionalities, such as drag-and-drop interfaces, visual mapping tools, or predefined templates.

3. Security

Security in accounting software is crucial since it handles sensitive income and expense data, payroll details, banking information, and personally identifiable information of employees, clients, or vendors. Proper security of accounting software is also necessary when companies have to comply with data protection laws and industry regulations.

What you can do:  Make sure that the software provider or development team follows established secure development standards or frameworks, such as NIST SSDF or PCI SSF.

If you go for off-the-shelf solutions, ask the vendor for security documentation relevant to your case, such as security testing reports or certificates of compliance with standards like SOX, PCI DSS, GDPR, or ISO 27001.

Additionally, evaluate the vendor’s vulnerability management practices, including the frequency of software updates and patch releases, with regular updates proving the vendor’s proactive approach to security. If you choose custom accounting software, you need to schedule security tests into the project’s timeline and ensure all vulnerabilities are fixed in time.

4. User-friendliness

Intuitive interfaces and navigation flows contribute to a great user experience and make completing accounting tasks easier for employees. Additionally, a user-friendly design eliminates the need for extensive staff training and enables swift onboarding of new users. It also reduces the cognitive load on employees, making it easier for them to understand the software’s functionality. Easy-to-use accounting software is also essential for companies where non-accounting professionals can access the system and handle financial data.

What you can do: The menus and buttons should be logically arranged to align with established accounting processes. The interface design should be clear and consistent with standardized color codes, fonts, and icons for balance sheets, income statements, and other financial documents. Additionally, make sure that search functions enable quick and accurate retrieval of specific financial transactions, records, or reports.

Last but not least, evaluate the availability of training materials, guides, tutorials, and customer support options to help users understand the context and best practices for various accounting operations. In the case of custom development, you can ask your technology partner to provide detailed instructions or incorporate tooltips and in-app guidance.

5. Flexibility

Flexible accounting software is a great investment for the long term because you can modify it to meet new requirements without replacing it. Your accounting software should scale as your business grows to handle more data, transactions, and users and have customizable features.

What you can do: Find out if the architecture of a given accounting platform allows for flexibility. For example, modular architecture consists of individual modules that you can change without affecting the entire system. Additionally, microservices, as well as cloud-based solutions, are highly scalable and can adapt to growing demands faster.

You should also evaluate data storage capacity, structure, and optimization strategies for efficient performance as data volume increases. Besides, you can inquire about load balancing mechanisms to distribute resources effectively and ensure consistent performance during peak usage. What’s more, investigate customization options: if the software allows tailoring settings, workflows, contract automation and reports to align with specific accounting tasks.

With custom development, you can make your accounting software as flexible as you need. However, it is important to ensure that your development team fully grasps the nuances of your accounting processes.

Final thoughts

Choosing the right accounting solution begins with understanding your company’s present and future accounting needs. After that, it’s time for research and careful consideration.

You can also request free trials and live demonstrations to review the accounting software’s functionality hands-on. Additionally, you can review available documents and reports, including details of the software architecture and technology stack, testing reports, documented security policies, compliance certifications, software performance metrics, and user manuals. Another great practice is to ask the vendor for case studies and read users´ reviews to see how the software performs in real-life accounting scenarios. This way, you can make an informed decision and select the best solution within your budget.