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There is a vast array of financial management solutions on the market today, with specialized functionality for almost any industry or size of organization. Moreover, the specific type of accounting can differ between programs - project, fund, and fixed asset are examples. Add to this variety the constant change of standards, compliance requirements and technology platforms, and the process of selecting a solution gets tricky. This buyer’s guide is intended to make the process much more bearable.
Here’s what we’ll cover:
Business accounting software keeps track of the financial transactions within an organization. A core package includes general ledger, accounts receivable, accounts payable, payroll, and reporting modules. These systems occasionally come with specialized functionality for particular types of businesses or companies. An example is fund accounting for nonprofit organizations and government entities. Because it's a critical business process, it's often a central component of an organization’s enterprise resource planning (ERP) system.
|Core Accounting||Core systems assist with the basic functions necessary to balance a business' books, including general ledger functionality, the ability to track accounts payable (A/P) and accounts receivable (A/R), fixed assets, and bank reconciliation. Every business requires these core functions to manage its finances.|
|Project Accounting||This type of system helps project-oriented businesses maximize job profitability and efficiency by tracking detailed project costs. Businesses can examine past job costs and estimate future costs to choose the jobs which will achieve adequate profit. It tracks by project factors like labor, overhead, materials, and equipment to improve decision-making.|
|Fund Accounting||These solutions support non-profit and governmental entities in tracking their development and spending of funds. Non-profit organizations can track their expenditures of donations or grants to make sure they meet fund provider requirements. The system also allows government entities to make sure they meet unique Governmental Accounting Standards Board (GASB) regulations.|
|Inventory Management||This type of solution helps companies keep the correct inventory levels to maximize profit, avoid overspending, and minimize the costs associated with inventory depreciation. The right system keeps inventory information up-to-date by tracking product levels as well as orders, sales, and deliveries. The Generally Accepted Accounting Principles (GAAP) stipulate specific ways to account for inventory to ensure proper reporting of value for inventory that has depreciated or undergone other changes. Software with inventory management capabilities ensures this is done correctly.|
|Billing & Invoicing||These systems automate the collection of payments from customers to enable timely and consistent collection with minimal human error. There are many different types of billing and invoice systems designed to support the wide range of industries, business models, payment methods, and scale of operations.|
|Budgeting & Forecasting||Users can leverage budgeting and forecasting solutions to project a company’s financial outlook from historical data and estimates of future conditions. These systems are typically used in businesses that must consolidate multiple departmental forecasts and budgets. The systems are most helpful where multiple variables drive the ultimate forecast.|
|Fixed Asset Accounting||This type of system tracks fixed assets by providing a central database of important asset information, including location, check-in and check-out, due date for return, maintenance scheduling, audit history, cost and depreciation. Depreciation schedules are a core element of this specialty.|
|Payroll Management||Payroll systems help businesses track and process employee payrolls. It also composes and prints paychecks, automatically withholds and pays government taxes, and generates the necessary legal and tax reports on a regular basis. Automated reminders to pay required fees help businesses avoid legal penalties.|
Before evaluating your options, you must determine what type of buyer you are. Over 90% of buyers fall into one of these three categories:
As you evaluate solutions, consider these current market trends.
The key benefits of financial management systems are clear: better visibility of costs and expenditures, which leads to more financially responsible decision making. In addition, systems can generate reports in a variety of ways to summarize this information cleanly for the right audience. For example, non-profits can generate reports specific to a particular grant provider, detailing exactly where every cent of the funding ended up. This allows an organization to be accountable to investors, donors, and lenders, maintaining trust and avoiding financial damage. These systems also allows companies to ensure compliance with reporting standards and federal requirements.
There are a number of issues that should be avoided when selecting a solution. Buyers in certain vertical industries must make sure the appropriate modules are included in the system they purchase. For example, engineering firms and construction companies should choose a system with a project accounting module. Another issue is a company’s rate of growth; the buyer should consider how fast the company is growing at the time of purchase. This way, the company will not grow out of a system immediately after investing considerable time and funds in the selection and implementation processes.
There’s a lot happening in accounting business software these days. Market trends like widespread adoption of cloud-based accounting software for business, increased specialization by industry and more are driving new demand. Vendors are responding by developing more capabilities and by offering industry-specific applications to meet the needs of accounting software users in any industry. A few vendors are garnering recognition for their success to that end. We’ve highlighted a few here for you to consider when performing business accounting software reviews: