Evaluating and Selecting Accounting Software To Streamline Financial Processes

Evaluating and Selecting Accounting Software To Streamline Financial Processes
7 min read
11 August 2023

Accounting software is an error-free and efficient digital tool that can record all the everyday financial transactions of the business organizations, while also managing the finances. The best accounting software can be used for managing financial transactions including management of fixed assets, expenses, revenues, accounts payable, and accounts receivable. It is also efficient for purposes including reporting analytics and sub-ledger accounting.

The end-to-end accounting software solutions can keep a track record of a business's liabilities, assets, expenses, and revenues in real-time and provide access on a controlled and tiered basis. 

The general ledgers carry all the transactions in real-time and the data and information is available to the controllers, treasurers, and the Chief Finance Officers.

Benefits of Accounting Software

Accounting software can provide numerous benefits to business organizations and streamline their financial transactions and other management aspects as well.

Asset and Cash Management: the latest accounting software help business organizations manage the entire lifecycle of all the assets (including the capitalization, acquisition, retirement, and depreciation assets).

The accounting software also increases visibility for cash management and can provide accurate financial and cash positions by reconciling bank statements and cash transactions.

Compliance: apart from the automation of account payables and account receivables, the best accounting software also possesses features for risk management, security, and better audit control.

They can separate the duties and provide internal controls through which organizations can comply with regulations (including the Sarbanes Oxley Act).

Revenue and Collection Management: accounting software can be automated for using analytics, and for maximizing profitability and revenues as they possess the appropriate capabilities for managing revenues.

Also, accounting software can rank the customers, manage the payments, and establish strategies for collection as well through their comprehensive features for managing the collections.

Apart from possessing capabilities for basic accounting, the best accounting software can be used for budgeting, forecasting, and recording the redundancies for expense and cash management. 

As it can be integrated with banking systems, the software can be used for more effective and accurate financial audits.

Analytics and Reporting: accounting software with analytical and reporting capabilities can help business leaders assess the financial strength of the organization, while also providing them with the reports, charts, and data that can bring them valuable insights.

Accounting software can measure all kinds of performance indicators of financial health, including quick ratio, current ratio, net working capital, debt-to-equity ratio, and inventory turnover among others.

Evaluating and Selecting the Right Accounting Software

Evaluating and Selecting Accounting Software To Streamline Financial Processes

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Efficient accounting software can streamline processes including payroll, accounting, and management. However, it is important to evaluate the accounting software based on important factors before choosing one for your organization.

Identify Organizational Requirements

It is important to choose software based on the organizational requirements so that you do not pay for the features you do not require but acquire all the important features that you need. For instance, 

instead of going for the fancy features that are of no importance, it is important to choose accounting software for the product line, business, and important processes and procedures (for instance software for scanning invoices).

Reports

Financial reports are essential for decision making, forecasts, and for providing a complete picture of the organizational position at any point in time. You can evaluate accounting software for its report generation capabilities based on aspects including:

  • The report formats available and the options for customization.
  • The degree to which reports can be automated or require manual entries.
  • Whether the software can provide graphical reports (and the types of graphs).
  • Whether the report can be generated without any training.
  • How easily can the reports be changed based on the operations?
  • The software capability for generating complex reports.
  • Whether the software can generate reports based on standards and regulations.

Business Process

The best accounting software can also improve the current business processes while streamlining them. You should choose accounting software based on its capability to reduce redundancy in the procedures and the paperwork, among other factors and aspects.

Another aspect for evaluation can be the degree of standardization the new accounting software can provide to your organization, in case the different departments are using different software tools.

Modules

Modules impart functionality to the software, where each of the modules of the software tool is utilized for performing a specialized function. The more useful modules your software will have, the greater number of tasks and activities it can perform and the more valuable it can be for your organization.

Sometimes special training may be required for the staff and employees to use the different modules of the software. You should ensure that the accounting software you choose possesses all the latest features and functionalities while also providing accommodations based on the future growth plans of the organization.

Also, the modules and their functionality should enable the users to complete specific tasks. You should check the requirements for third-party applications.

Cost of Ownership

Looking for a more favorable cost of ownership can impact the software choice you make. However, you should ensure that you choose software that brings to your organization all the necessary features, modules, and capabilities.

While cost can be an important factor, you mustn't compromise on the overall usefulness of the accounting software and ensure that it can serve its purpose. Some of the factors that may impact the cost of ownership of accounting software may include:

  • The type of license required for the software (there may be different options available and the most affordable one should be chosen).
  • Cost of implementing the software (including expenses related to data conversion, training, installation, configuration, and documentation among others).
  • Cost of hardware required for accommodating the accounting software and using it. Outdated hardware would be replaced.
  • The fee/cost attached to the service or support for the software.
  • The total cost of operating the software. It may include the cost of maintenance, supply, upgrade, and backup.

Conclusion

Accounting software streamlines different financial processes while also impacting profitability and revenue positively. However, it is important to choose the best software based on the needs of the organization, cost of ownership, report generation capability, business process, growth plans of the organization, modules, and functionality, and other important aspects, for maximum benefit and greatest return on investment.

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Alex 9K
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