2019 Accounting Trends for Software Buyers Revealed

by:
on June 4, 2019

If you haven’t perused the accounting software market in a while, you might not recognize it. New players have emerged in recent years, offering highly specialized and feature-rich platforms for businesses of all stripes.

This is, by and large, a positive development. Yet with so many options to choose from, inexperienced buyers can easily overpay, purchase the wrong system, or expect more from the software than it can actually deliver.

To avoid these fates, remember:

By analyzing the behavior of other accounting software buyers, businesses increase the likelihood of successful system selection and implementation, positioning your business for sustained growth and positive financial outcomes.

That’s where this report comes in.

In 2018, Software Advice talked to more than 3,000 prospective buyers from a variety of industries, each with unique challenges and functionality preferences. After analyzing a randomized set of more than 300 of these interactions, we accumulated a wealth of data-driven insight into accounting trends for 2019.

Buyers crave the advanced functionality of more specialized systems

The days of one-size-fits-all accounting solutions are history; today, businesses can deploy highly specialized software with functionality that fits the unique needs of their organization. This, our data shows, is the primary driver behind their purchase decisions.

accounting software buyer pain points

Rudimentary accounting solutions lack the sophistication necessary to compete in the current and future business climates. Whether it’s task-based automation or customizable financial reporting, buyers are finding their current systems lack the features needed to streamline and optimize their accounting processes.

The accounting software market has evolved to the point where older systems seem inadequate, outdated, inefficient, or unscalable for growing organizations. The good news is that modern, tech-driven accounting software addresses most of these paint points in one fell swoop.

When evaluating accounting software vendors, look for products that use new technology to address the specific challenges and objectives of your organization. The needs of manufacturers, for instance, differ from those of freelance accountants—and all software purchases should reflect that.

Financial reporting is coveted across the business spectrum

Among our buyer sample, core accounting features such as general ledger, accounts payable, and accounts receivable were almost universally requested (which makes sense; they are core for a reason). But things get interesting after that.

accounting software buyers top requested features

Financial reporting, the top requested feature, includes things like balance sheets, cash flow reports, and profit and loss statements. By identifying and evaluating key performance metrics, these reports offer deeper insight into the financial well-being of the business. Outdated accounting systems—and especially manual methods—can’t offer the same benefits.

Another frequently requested feature, billing and invoicing includes the automatic creation and distribution of invoices, as well as the collection and processing of incoming client payments. Recent developments in AI and machine learning make routine processes near-instantaneous, freeing up resources for more complex tasks and analysis.

Accounting software’s budgeting and forecasting functionality also leverages AI, albeit in a different way: using historical data and trends to predict financial outcomes and plan budgets.

Emerging technology is the obvious recurring theme here. Buyers clearly recognize the benefits of recent technological advancements, reflected in their desire to upgrade to a more advanced, intelligence-driven accounting solution.

Efficiency is driving purchase decisions

An analysis of buyers’ current methods revealed a wide range of strategies, from software to spreadsheets to having no system at all.

accounting software buyers current methods

Unsurprisingly, QuickBooks tops the list with a quarter of buyers currently using the industry-leading platform. But the reasons for seeking alternatives to QuickBooks were decidedly varied. While a number of businesses sought more advanced functionality, others had simply outgrown the product, had contracts up for renewal, or just wanted to see what else is out there.

The majority of buyers sought to replace their existing accounting software, but a significant chunk—35%—confessed to using manual or spreadsheet-based methods. Organizations without preexisting accounting software fell into one of two categories: either they were a new business just getting off the ground or, more tellingly, they handled all accounting processes manually (with some even resorting to paper-based methods of yesteryear).

These strategies of yesteryear might still work for some, but most buyers we talked to acknowledge the inefficiencies of such traditional tactics, drawn instead to the automation-driven solutions on the market today.

Users prefer cloud-based systems to on-premise

Cloud-based deployment options are more prevalent and attainable than ever before, with fewer required resources and barriers to entry than on-premise solutions. Our data reinforces this trend, showing an overwhelming preference for cloud-based accounting software.

accounting software buyers deployment preferences

On-premise software isn’t without benefits, however. Established businesses with in-house IT departments will find peace of mind in having more control over infrastructure and the security of their accounting data. Entrusting your data to a third-party software provider isn’t ideal for some, even though there’s no evidence to suggest it’s any more vulnerable or susceptible to theft.

But for small businesses especially, the cloud’s promises of increased agility and a more approachable software-as-a-service (SaaS) pricing model make this hands-off approach especially enticing. The buyers we talked to resoundingly favor on-the-go accounting data—a preference that will be even more universal as mobile access and IoT-supported devices continue to pervade the modern business environment.

The buyer market is segmented and diverse

The demographic makeup of these buyers was diverse, to say the least. The top industry segment garnered only 15%, demonstrating accounting software’s widespread appeal to any organization dependent upon financial outcomes (i.e., just about all of them).

The fact that nonprofit organizations top this list is significant, however. Nonprofits face a unique set of accounting obstacles—tax exemptions, regulatory compliance, a dependence on accurate and reliable bookkeeping—that make process-based nonprofit accounting software a necessity.

When analyzing business size and number of users, the results were less surprising. Small and midsize businesses dominated this particular study, with only 12% of organizations claiming more than 500 employees. The preferred number of users was also relatively small, with more than half of buyers, 52%, seeking access for just two to five users. Freelance and solo accountants also represented well, with 14% requiring only a single user.

Accounting is a highly specialized trade; more often than not, accounting departments are relatively small and their processes self-contained. This stands in stark contrast to more universally adopted systems such as ERP software, which hosts a wide range of applications from across the organizational spectrum.

Bottom line: No matter the size or trade of your organization, there’s an accounting software solution for you.

Methodology

Our advisor team speaks with thousands of buyers who contact Software Advice. For this report, we analyzed a randomly selected 385 phone interactions with small to midsize businesses between January 2018 and December 2018.

These findings exclusively represent those buyers who contacted Software Advice for guidance on accounting software selection, and may not be indicative of the market as a whole. Chart values are rounded down to the nearest whole number.

Have a question about this report? Email me at zach.hale@softwareadvice.com.

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