10 essential steps to choose the right accounting software package for your business

Accounting software is supposed to make it easier to run your business, but too often it is a source of frustration and expense. The proper program will help you manage cash flow, analyze sales and improve efficiency while the wrong program can throw your financial records into a tailspin that will cost you both productivity and money to recover from. Therefore, it is important to select the right accounting software package from the hundreds of products available. Here is a simple 10-step guide to buy the right product that meets your needs perfectly without costing you a fortune.

Clearly define your needs for the accounting software
Prepare a list of the challenges you'd like the software to address and separate it into two categories; Needs and Wants. The “Needs” list should consist only of the features absolutely necessary in order for the software to work for your company. Your “Wants” list can be much broader and features should be listed in order of importance, encompassing all of the capabilities that will make life easier. For instance, you may need a segmented general ledger in order to track performance for individual divisions, but it may be just a Want to close out the quarter for each division at separate times.

Determine your budget for the software
Calculate how much you can afford to spend, including any new hardware needed as well as first-year implementation and support. The cost of the software is important, but it is equally crucial to know what your recurring costs will be. Can you make do with a general accounting application or will you need extensive customization? Database consulting and customization is generally $100-$200 per hour depending on the platform and the experience of the consultant so the further down your list of Wants you go, the more expensive the software implementation will be.

Shortlist software products and vendors
Equipped with your needs list and a preliminary budget, you should be able to quickly eliminate many products based on a lack of features or too high of a price tag. There are many sites listing available accounting software packages and allowing you to search by features or platform. Many of these sites also include pricing information, making it much easier to quickly whittle down your list of potential vendors. Choose 4-5 packages that look like a good fit based on factors like specialization in supporting your size or type of business, longevity, depth of product line and breadth of support for the product. Focus on companies that are clearly designing products with one eye on the future. This is evident if they are building products that will easily integrate with other software packages and they are using platforms and technologies that are supported by industry leaders. Choose a platform that has a broad base of users (like Microsoft Access or Visual Basic) so you won't have trouble finding resources to keep it running down the road.

Compare features of the shortlisted software products
Which packages offer the most features from your “Wants” list? Even if they are not within your budget now, you may be able to purchase add-on modules down the road. What product enhancements are planned? Are they features that will be useful to you and how quickly will they become available? Often you can negotiate a discount on additional modules prior to their official release.

Identifying the "finalists"
Most software companies will allow you to download demos of their software or request a demo on CD. This will allow you to familiarize yourself with the interface and see how some of the key functions work. Look for good design and clearly marked functions. Is it easy to figure out how to enter an order? Can you easily switch functions and does the software allow you flexibility in creating new records or do you have to follow a strict data entry procedure? This is a true test of which products are going to be a good fit. You can rule out products that are under- or over-qualified for your business and narrow down the 2 or 3 products that you are comfortable with.

Get input from internal users
The people who will use the software are often your best resource in making decisions. Ask your order entry specialist about the limitations of your current system; does invoicing take too long resulting in decreased productivity? What other features would your internal users like to have? How would they save time and increase profitability? This will quickly point to any inefficiencies in your current package and alert you to the features you should look for in potential packages. Additionally, this has the added benefit of speeding internal buy-in when you do begin implementing your new software. Employees will be much more receptive to a package that improves their workflow.

Make the decision on the product
You've gathered the information and tallied the votes from your internal users. Now you're ready to make your final selection. Before doing so, make sure that you feel comfortable with the product as well as the vendor. If the salesperson is too pushy or you feel that they are not able to provide you with the information you need, don't be afraid to ask to speak with someone else. It is important that you feel comfortable with your decision because you will be spending money and, more importantly, time in implementing your new software.

Select the implementation service provider
You may be able to find service providers through referrals from other business owners and friends, particularly if the package you've chosen is written in a widely-supported database like Microsoft Access. However, even when this is the case, it is often a good idea to request some referrals from your software vendor. In many cases this may save you money by introducing you to a consultant that is already familiar with the product you've selected and can reduce the time required to get you up and running. It is vital to work with someone you can communicate easily with to set expectations and budget at the beginning so that costs don't spin out of control.

Final evaluation
Review the information you received from the vendor and the implementation service provider to ensure that the products you are purchasing dovetails with the services you have planned. This will ensure that there are no gaps once you get to the implementation stage and will give you a chance to finalize your upfront costs as well as project your ongoing costs for training, support and maintenance on a yearly basis.

Establish Your Timeline
Plan your implementation carefully to avoid your peak busy times and to allow for system redundancy to ensure that none of your data is lost during the transition period. Many businesses feel compelled to change accounting systems at the beginning of the fiscal year, but often this means implementing your new system at the end of a fiscal year when most businesses are focused on sales and business performance. Most accounting systems will allow you to begin implementation at any time without any loss of data or additional work. Don't feel rushed to do it at the end of the year; schedule it for a less stressful time and let your implementation service provider work with you to ensure a seamless transition from your old system to your new one.

The transition from your old system to a new system may not be as painful as you think as long as you have a strategy for tackling the job. Your finances are the lifeblood of your business, so choose wisely but don't overspend for features that you may never need. A little planning now will save you time and money in the long run. Most importantly, the right software will pay for itself quickly by increasing your efficiency and putting the information you need at your fingertips.

This is an excerpt of an article from Comtech Solutions which was published by Accounting Software 411

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