The bookkeeping responsibilities associated with a small business are often complex and time-intensive. Accounting software can be an excellent alternative to manual bookkeeping that saves time as well as reduces costs by lessening and even eliminating the need for external services and resources.
Choosing the appropriate accounting software for your small business is no simple matter either. In fact, it requires a delicate balance: on one hand, you never want to pay for unnecessary features, but on the other, you need to leave room for growth. With that in mind, here are ten core features to consider.
Usability is a broad term that covers a wide range of aspects, such as user interface, built-in help and knowledge base, integration support, connectivity, security, customer support and even price. The ideal accounting platform has layered sophistication, which means that it supports the advanced user but doesn’t overwhelm the neophyte. In other words, it lets you grow into it. This level of refinement isn’t the norm, so research and test-drive carefully before deciding.
2. Payroll Management
Payroll is a responsibility that all companies must deal with. Many companies choose to outsource, but that option typically isn’t cost-effective. The better option is to have payroll management as a feature of the accounting software. A payroll mechanism must calculate and deliver wages, benefits and taxes with precision. It’s also crucial that this subsystem be automated because employees, vendors and the government rely on it, and missed deadlines can result in significant penalties.
3. Time Tracking
A time tracking component allows the business to monitor the amount of time spent on tasks. At its most basic, time tracking allows for time sheets, which are necessary for a business that has employees and contractors who punch in and out via a time card. Time tracking also allows for more detail-oriented assessments of time usage, which can help small businesses identify wasteful activities as well as responsibilities for which they’re undermanned.
4. Inventory Management
Inventory is the stock of goods that a company maintains primarily for the purpose of resale but also for the purposes of repair and internal usage. Therefore, even companies that aren’t involved at all in a retail supply chain can still make effective use of inventory management tools. Consider that office supplies are among the greatest sources of internal inefficiency for the average small business.
5. Billing and Invoice Management
Invoice tools allow a small business to create standard and custom invoices for products and services, and they allow the business to manage the invoices from vendors. A billing and payment component enhances invoice management through tracking and automation. Due to limited cash flow, one of the greatest challenges a small business faces is late payment for services rendered. Through automation, this system protects the company’s rights and ensures that nothing falls through the cracks.
6. Point of Sale
Nearly all businesses that provide goods or services to consumers require a point-of-sale (POS) system. By having the POS system integrated into the accounting system, it can complement and be complemented by other components, including inventory management, time tracking and so forth. To appreciate the benefit of such a relationship, consider that inventory management could automatically reorder when current stock falls below a threshold based on data provided by the POS.
7. Analysis and Reporting
A small business has a wealth of data at its disposal, but compiling and organizing it in a usable way is difficult. Therefore, it’s very important that a computerized accounting solution be able to log, filter and query data at the very least. Most businesses will also require an analysis and reporting layer on top of those rudimentary features. A robust system should, for instance, automatically produce quarterly reports as well as daily cash flow snapshots on demand.
8. Cloud-based Solutions
Prior to 2000, more than 75 percent of all businesses in the world were still using a paper-based accounting system. Now, less than 25 percent are. World business is now witnessing a similar shift with cloud-powered accounting. Cloud-based solutions offer a number of advantages: inherent redundancy, cost-efficient expansion and reduction, remote access and convenient sharing.
The cloud does bring with it some additional concerns, including security and downtime. Not all cloud solutions are created equal, however. MYOB Exo, for example, has an impeccable reputation for uptime and security, and it’s a particularly popular option among small businesses because it requires only a small monthly fee and doesn’t require up-front costs or long-term commitments.
9. Plug-and-Play Framework
Plug and play (PnP) is a computing concept referring to the capability of adding and removing components with ease and as needed. Local accounting software, server-based software and cloud-based solutions can all be based on a PnP foundation. A great advantage of this approach is that the small business can adjust the accounting solution as the needs of the company change.
Finally, small businesses should consider an accounting solution that includes a database of common business forms. The top solutions will also have the ability to generate forms and to auto-fill forms based on any data that is available to the accounting system.
About the Author:
Michael Pendred is Managing Director of Horizon Business Systems, a leading provider of Accounting Software Solutions in Perth, Western Australia. Find Michael on Google+.