The Right Accounting Software for You
October 30th, 2008 | Accounting | No Comments »
Accounting software has been gaining momentum over the past years. Companies which use these software vouch for their efficiency to handle loads of accounting functions but do not add up to the costs unlike hiring a pool of trained and licensed accountants. Basically, an accounting software functions like a true accountant who handles accounts payable, accounts receivable, payroll and trial balance. Furthermore, the software can accommodate other functions which are usually handled by a staff. It too serves as an accounting information system. Accounting software is varied because their appropriateness depends on the revenue or specialties of a company.
1. Software Categories
- Low End
Software from this category perform only general business accounting functions. These are inexpensive application software. Best for starting businesses.
- Mid Market
The software classified under this category are capable of serving the needs of multiple national accountancy standards and allow accounting in multiple currencies. The come-ons in these products are actually the integrated or add-on management information systems and maybe oriented towards one or more markets.
- High End
Softwares covered by this category are among the most complex and expensive business accounting software. Usually, they are part of an extensive suite of software often known as Enterprise Resource Planning or ERP software.
- Vertical Market
Softwares assigned to this are those for specific business types because features needed for an industry is already built in.
2. Setup And Installation
It is very important to undergo a selection process because you have to find the right product, the one that matches your company needs. This may be complicated but you have to bear in mind that installing a new accounting system is very expensive and making the wrong selection may end you broke. Now you have committed the biggest mistake of your life but there is no more room for crying over spilled milk. Think it over in a different light; maybe the purpose of this mishap is to give you a chance to make an overhaul in you business process. You may need to redesign your process. But before you go excited over this whole renovation thing, there are some steps to follow.
3. Steps to Follow
- Form a technology advisory committee (TAC). This committee will head the entire operation – from selection of the product to implementation. Members of this committee must come from the major divisions of the company so that all facets of the business may be considered. However, members of the group must be limited to seven members. TAC should have a senior manager in the group to provide authority, manager of the accounting department and a representative from the information technology department. As much as possible involved your managers.
- Prepare needs analysis. First, ask each division head to prepare an analysis of their department which includes all the things they do and classify it accordingly from the most critical to the mundane tasks. To support this listing, ask them to draw flowcharts to diagram how they perform each task. This will allow full view of how things flow within the organization. This will help you identify if all these duties can be performed by the accounting software of your choice. Much better if samples of every form will be gathered and the reports done by your former software. Include also systems outside your software that do supplemental duties. All these paperworks and analysis will help in the development of a requirements definition – a detailed document that defines what your business needs from an accounting application. As soon as you get these things done, you now have a complete reference guide for your purchasing decision.
- Ask the advice of an independent consultant. This person will guide you all the way through the process. But just make sure that he is not somewhat connected to any of the vendors your company considers or else his lines will all be sounding a sales pitch. After getting an outsider to view things objectively, you can now ask say someone who maybe close with the vendor and who have used the software several times.
- Talk with your current vendor. Now, this is the time to consult the vendor of your former software except if you are buying a new one. Present the detailed analysis you just made and ask him if an upgrade would be necessary to meet the needs of your company.
4. Prepare A Budget
- When preparing a budget consider other expenses required for the installation of the software such as the hardware requirements.
- Be aware of how much the company can afford to spend and plan the timing.
- Prepare a spreadsheet matrix listing key features of the product that impress you. Start eliminating obvious poor choices.
5. Final Assessment
- Prepare a formal request for proposal (RFP) or a less formal request for quote (RFQ) from the vendor.
- Ask for a product demonstration. Do not allow a canned demonstration. You should see the software live in action.
- Ask for a list of references you can call like former and current customers. Be aware of those who cannot answer your questions about the product directly.
- Undergo a prototype testing to know if your systems and data are compatible to the software and identify problem areas.
- Visit the vendor or its agent.
- Review your contract before making a final decision. Ask a counsel to do it. Support the contract or include all agreements discussed, the RFP or RFQ and documented communications.
