There are many different accounting software products available in the open market. Choosing the right package can be a confusing and daunting task if you are uncertain about what you should be looking for. With so many accounting software products to choose from the question of business requirements is becoming ever more important. Any business that is looking to invest in accounting software needs to think about what their requirements are before starting to look at specific products. By doing this thinking the small business owners give themselves a better chance of getting a product that matches their business requirements and cost budget. Unfortunately many owners of small businesses are unaware of their business requirements and more specifically the makings of an accounting software system.
This article is designed to describe the core and non-core modules that make up an accounting software solution. This will help you start to think about how accounting software products are made and which modules you require and which you don’t.
What are the Core Accounting Software Modules:
General Ledger – This is the part of the accounting software that creates the company books. It effectively takes all of the financial activity of the business and summarises into a simple to understand set of accounts. This is very valuable for quick and simple end year financial reporting.
Accounts Payable – this is the opposite of accounts receivable. It is an accounting module that allows the user to track transactions to suppliers for goods and services purchased. In order to manage finances well it is critical that outgoings are checked and well managed.
Accounts Receivable – in essence this tracks money that is payable to you and helps you process the receipt of payment. This type of module is essential in any business taking money. As cash flow is the life blood of any small business collecting owed money is the most essential part of business. Hence this accounting modules importance!
Inventory System – Gives general information of the quantity of stocks within the business and where they should be located. I would say this is only core for a retail business or businesses in based on selling physical stock. (If you are a services business or an electronic trader this module is not required.)
What are the Non-Core Accounting Software Modules:
Payroll – This accounting module allows a business to be able to successfully manage the payment management to staff within the business. Everything from wages, bonuses, holidays, time in lieu is able to be dealt with quickly and effectively in one system. This is obviously very useful for businesses with a large scale employee base.
Electronic Banking – This gives you the ability to link you accounting software solution to your business bank account. This allows you to have up to the minute accurate financial information in your accounting software but also allows you to make financial changes in one place
Fixed Assets – This acts as a register for you to store all of your fixed assets and equipment. This module simply allows you to keep on top of what assets you have within your business and what equipment is used.
Time Billing – Able to track the time spent and expenses occurred on each client. Very useful for service related businesses that need to keep a tight grip on time spent per client.
Job Costing – This is very useful for project based businesses. It allows you to store all of the expenses, income and profitability of all jobs taken on by the business. It can be very difficult when a business is taking on several multiple jobs at any one time to separate the profitability of each job. But it is very important to do so in order to ensure that the business continues to take on profitable business and limit non profitable business.
It goes without saying that the more of these modules an accounting software system has the more expensive it will be. It is therefore very important to ensure that you only purchase an accounting software solution that fits your business. There is no point paying for payroll within your accounting software solution if you have no staff or inventory management if you are a service trader. Think carefully about both your business requirements and the modules that you require and you will get a good product that will drive value in your business.