Choosing an accounting software is important for any company that's scaling-up. Keeping your system updated gives you immediate information on your current business position while providing a platform for future growth. Here's what you need to consider before choosing a software.
We understand that navigating this process can be challenging, so we always recommend getting advice as early as possible. Strong financial management software is an asset that will help your business achieve its goals by setting the right financial targets while acting as a strategic driver towards future growth.
In the current climate, with hybrid working and staff positioned in different locations, more businesses are reaping the benefits of a cloud-based accounting system. Such systems can also integrate other third-party business apps, enabling increased communication between businesses and their external service providers.
The increased amount of choice available to firms makes the process of selecting a software more challenging, which is why we recommend using the below list of desired features and functionality to evaluate the available options:
The right accounting software and applications allow businesses to perform more value-adding activities by automating tasks and shortening data entry times. Software providers such as Dext and AutoEntry both use Optical Character Recognition (OCR), which is a technology that recognises text in an image, usually in scanned documents and images. Such technology and software capture key information from invoices and prevent your finance team from the time-consuming task of entering data manually.
Pro tip – It's best to consider the software's ability to integrate with your other softwares, especially internal project management applications so that you can further streamline your business processes. Check the Application Programming Interface (API) of your apps/ software to understand how well your new and existing softwares will communicate.
Your firm's spending capacity should be measured when choosing between software providers. It's important to ask the questions whether your scale-up:
- Can afford the set-up costs and any additional costs for any add-ons and upgrades
- Is willing and able to pay for the software's monthly/ annual subscription
- Requires additional training and/ or support to use the software efficiently.
While cloud accounting software can seem to have an expensive up-front cost, the benefits of it are reaped through the cost-saving techniques seen in more efficient process times and increased time available to concentrate on value-adding tasks instead.
Consider the amount of data that needs to be processed through the software such as the number of transactions and their complexity. Your firm's data regarding invoicing, stock management, staff expenses and/ or payroll processing should also be assessed, especially regarding busier periods of the year.
Pro tip – If you have employees with different levels of accounting experience, then the software must come with sufficient support resources such as online webinars and tutorials. Correspondingly, this could relate to the budget considerations if more bespoke training is required for your employees.
Your management team, and more importantly its shareholders may want to see certain Key Performance Indicators (KPIs) that may accurately reflect the performance of the business, be it financial or non-financial. Therefore, it would be best to consider the business's internal reporting requirements before choosing an accounting software.
Similarly, consider if the software's reporting options cover UK Generally Accepted Accounting Principles (GAAP) and/ or International Financial Reporting Standards (IFRS). It is also important to confirm that the accounting software meets industry standard levels and that its storage of sensitive financial data complies with the up-to-date General Data Protection Regulation (GDPR).
If your business is VAT registered, you may also want to ensure that the software is Making Tax Digital (MTD) compliant to allow for efficient digital submission of VAT returns to HMRC.
Pro tip – Taking advantage of trial periods and demos offered by accounting software providers is advisable, allowing you to evaluate the software in further detail.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.