By Nic Redfern, Finance Director, www.knowyourmoney.co.uk
SMEs of all sizes across all sectors can simplify their finances by having the right accounting software. However, deciding which particular platform is best suited to your organisation can be a difficult and time-consuming task as there are so many elements to consider. Not only do software providers themselves differ, but most of them also come with different levels of service, ranging from the basic accounting essentials to in-depth financial management tools that can process large amounts of complex information.
As each business is unique with its own specific needs, a software solution that works for one may not necessarily work for another. Finding the right software for your business can help you to manage your finances more efficiently and make more informed decisions, but how do you begin to choose which accounting platform is most suitable?
Consult your accountant
When you begin to look at different accounting software options, it is a good idea to get the input of your accountant. Even if you manage most of your accounts yourself, getting the advice of a professional can help to make sure you don’t miss anything important. They can advise on what components a platform should provide to make sure you have all the tools and information you need to manage your accounts.
Getting input from your accountant is particularly crucial if they are the ones that deal with the majority of your accounts! It is important they can choose an accounting software that they are comfortable using, as well as finding one that key people in the business can use too. Some platforms are targeted more at accounting professionals while others are targeted more at business owners or managers with less experience in dealing with accounts.
Determine what features you need
Nowadays, most businesses use cloud-based accounting software instead of an offline, device-based package. Cloud-based tools allow you to access your accounts anywhere from any device as the data is stored securely and remotely on internet servers, making them the platform of choice for virtually every business.
The size and type of a business will affect which accounting software is best, as some platforms are specifically designed for a certain sector or for smaller/larger organisations, while others have a more general use. Businesses that provide a service will also need different features and tools than a business selling products.
All accounting software platforms tend to offer a basic set of services including: income and expenditure tracking, invoicing, filing of expenses, monitoring of cash flow and profit, and creation of financial reports. Other, more advanced, elements may be included on some packages, such as time tracking, payroll, stock inventory, forecasting, VAT and tax calculations, customisable templates, and the ability to work with international accounts and foreign currency. Automated functions, such as payment alerts, automatic reordering, and other notifications may also be of interest to SMEs.
Multi-user access is another key element to look for when choosing your accounting software. SMEs are likely to find an accounting platform even more useful and effective if it allows different users to access certain sections of the software, such as the sales department to log invoices, and heads of departments to log expenditures.
Look at pricing
This will often be the main concern for most SMEs, but they should be cautious about immediately choosing the free or cheapest options. The very basic accounting software packages will be cheaper, but these often come with certain restrictions such as capping the number of users, invoices and transactions, which limits their utility to a growing business.
SMEs need to consider their full business needs, work out what they need their accounting software to do for them, and find a package that suits them accordingly. However, although they don’t want to miss out on features that they need, they also don’t want to pay a higher price for tools that they will never use. As a result, it is worth taking some time to investigate the different accounting softwares and the different packages to make sure you find the one that’s right for you.
When looking at prices, SMEs should also consider any hidden costs, like set-up fees and if you need to pay extra for certain features. It is also a good idea to think about how your business may develop and look at the costs of any upgrades if you think you may need to expand your accounting tools in the future.
Consider future prospects
It is crucial that SMEs look beyond their current needs when choosing their accounting software. As the business grows, their accounting software will need to be able to grow with them, otherwise they will need to look for a new platform to accommodate their needs which could be time-consuming, complicated, and costly.
It is much easier to stay with the same software that everyone at the business is comfortable with, rather than changing after a year or more. So, SMEs should look at the scalability of the accounting platform and see if it’s possible to add upgrades and features if/when needed in the future, to avoid the complication of needing to get used to a new tool when in the process of expanding.
Many accounting tools now have the facility to integrate with third-party systems, including bank accounts, CRM and e-commerce systems, and HMRC. Connectivity between your accounting software and other systems allows you to automate tasks and send/receive data from different places, rather than manually making changes on the separate platforms.
Because this integration can simplify and streamline many business processes, it is worth looking at which tools connect with the systems your business already uses. For example, some business bank accounts include basic accounting software which may be sufficient for a small, simple business (but perhaps not more complex organisations). Receipt Bank is a popular tool many businesses use alongside their accounting software. It integrates with most packages, reading invoices and other documents and inputting the information into your accounts, reducing the need to add it manually.
Since the UK government implemented the Making Tax Digital scheme, a lot of accounting software is now compatible with HMRC to allow businesses to submit their tax and VAT information directly. SMEs should certainly check that their software of choice has this facility as the government aims to get all businesses using these digitised methods, resulting in a faster and more efficient way to send accurate information to HMRC.
Many accounting software platforms also come with a mobile app, if this is something that appeals to your SME.
In an ideal world, accounting software will be a great asset to a business and won’t present any issues. However, there is always a chance that businesses will hit a problem or something will go wrong, in which case they would need to contact the software provider to sort out the issue. Because of this, an SME may want to see what the tech support is like, so they can be sure of a good service should they have any difficulties.
Ultimately, after researching the above points, the best way to determine which option is best for your business is to make the most of any free trials. Once you have found a software that seems ideal for your needs, it is only by testing it out for a period of time that you will know for sure if it is right for your business. You can test its usability and see how easy it is to work it, and so determine whether it will be an asset to your operations.