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With online, or web-based accounting, software an organization’s financial data is hosted by the vendor. In this software-as-a-service (SaaS) module, data is stored on secure servers with automatic back-up and redundancy capabilities. In recent years, these programs have become highly customizable: businesses only pay for the services that they consume. This flexibility, along with the lack of capital investment requirements, attracts small and medium-sized businesses especially.
Because of the hundreds of online accounting programs, it can be very difficult to decide which one is best for your business. This buyer’s guide is designed to help you navigate the online business accounting software market. Here’s what we’ll cover:
Accounting solutions track the financial transactions within an organization. Typical features include general ledger, accounts payable/receivable, payroll, and reporting modules. Specialty systems often have additional features dedicated to a particular market. These include fund accounting for nonprofits, commission calculations for sales-oriented businesses like real estate, rate analysis for banking, or claims scrubbing for medical practices.
Online accounting systems are specifically designed to be used through the Internet, rather than being installed locally onto the company computers. This reduces information technology requirements like server hardware, backups, and maintenance, and shifts the expenditure from being a large up-front capital cost to a much smaller, but ongoing, monthly or annual fee.
There are two types of accounting software online: browser-based, SaaS and application service providers (ASPs). SaaS solutions are designed for the user to access the information through an Internet browser like Internet Explorer, Firefox, Chrome, or Safari. This allows the information to be accessed from anywhere, and it always looks exactly the same. An ASP is a client-server system, where the business installs a small software “client” onto their computers. In both models - SaaS and ASP - all of the data is hosted by the vendor on a remote server. Most ASPs are also “web-enabled,” meaning that a web-browser can be used if necessary, though it will come with a few disadvantages since it is not designed for that purpose.
Online financial software falls into three main categories:
These are the best online accounting software solutions and vendors to consider, categories by program type:
|These types of buyers...||Should evaluate these systems...|
|Enterprise resource planning (ERP) solutions||NetSuite, Epicor, Microsoft Dynamics GP, SAP, Royal 4|
|Basic programs||HIntacct, Accumatica, Lawson S3|
|Fund solutions||FastFund, Serenic, Accufund, Sage MIP Fund|
The accounting business software market is constantly shifting. In addition to experiencing greater adoption of web-based software, some vendors are expanding their solution offering to try to meet industry-specific needs. Leading vendors Intacct, NetSuite PSA and Acumatica continue to expand their portfolio, and we’ve highlighted some of their recent announcements here:
A web-based accounting system has a number of significant advantages over traditional on-premise software platforms:
Although web-based solutions don’t require the same investment in hardware as traditional software installations, subscription costs can accrue over time. The longer the software stays in use, the more the user pays, and after a few years the costs may exceed whatever would have been paid for an on-premise system. This is especially true for larger organizations that have the capital and IT infrastructure to make an on-premise system more cost-effective.
Another issue to consider whenever purchasing any new product is to ensure user buy-in. If people feel like they’re having new software “forced” on them, they’re more likely to resist its implementation. Therefore, it’s important to get them excited about the benefits of the new program. A great way to do this is to involve them in the selection process, either inviting them to the demos directly or, if there are too many users for that to be practical, at the very least surveying employees for their opinions on the features they’d want in a new program.