Sounds familiar? If it does, your company has a significant emergency on its hands. Before the advent of electronics, the situation above was not too unusual (although companies in this condition would usually not survive very long). In the 21^st century, with a plethora of finance and accounting software this situation should be all but eliminated. But how to choose?

Ease of Set-up

One of the most important aspects of an accounting and bookkeeping software is how easy it is to initially set up. Some software will come pre-configured with a standard chart of accounts and ready to use, while some require a more extensive set up. If the software allows for a pre-configured set-up which complies to local laws and regulations, it is usually the best method. If that is not the case, it is recommended to set-up manually. Other than chart of accounts, the ease of setting up aspects like bank connections, share structures, employees, products and pricing, and others, have to be considered before choosing a solution.

Invoicing

Despite being an accounting software, it is recommended that the solution contains invoicing capability. Setting up customers as well as products and pricing will be necessary. But once done, functions like sending invoices electronically as well as receiving customer payments will be enabled, making receivables management significantly easier.

Paying

Similar to invoicing, paying suppliers and vendors should be added. This step is only necessary if the software is to be used to payments. Since most vendors work with automated payments via bank account or credit card, paying suppliers through the accounting software is not mandatory. However, if payments are made through the bank, it is recommended to have a bank account connected to the software to facilitate bookkeeping.

Bookkeeping

Keeping up with the books is fundamental to managing the financials of a business. Categorizing different journal items should allow aspects like tax selection, attachments, and reconciliation with bank accounts. It should also permit manual updates of journals, if necessary. Third party access should also be available in the case where bookkeeping is done by external bookkeepers and accountants.

Timesheets

One of the biggest expenses of most companies is payroll. And to do payroll, some companies require tracking of employee’s worked time. This in turn requires a timesheet solution. And although not mandatory, it is recommended that the function be either embedded or connected to the software.

Payroll

Running payroll is usually necessary for a company to function. Outsourcing payroll is an option, in which case the payroll function is unnecessary. If payroll is outsourced and not connected to the accounting software, manual inputs will be required, creating a risk of human error. It is therefore recommended to select an accounting software that either has a payroll fuction or is connected to a payroll app. This in turn also facilitates payroll tax tracking.

Taxes

One of the most important aspects of an accounting software is to facilitate tax management. Whether payroll taxes, sales taxes, or income taxes, automation is paramount. It is therefore recommended to choose an accounting software which can at least generate tax reports, but which should also allow direct declarations and payments. This will not only prevent errors but will also significantly accelerate management.

Reporting and Analytics

Any respectable accounting software should have built in reports. With all the financial data a company generates, structured reports provide invaluable insight on the health of finances. These reports should at the very least include standard financial statements such as profit and loss, balance sheet, and cashflow statements. Reports such as margins, ratios, and aging invoices will also help with managing the company’s finances.

Automation and Connections

Last but not least, the accounting software should permit internal or external connections. If an all-in-one solution such as Odoo is selected, build in connections to other apps allow tracking of several different financial aspects in one location. If on the other hand a standalone solution such as QuickBooks is chosen, APIs and external connectors should be enabled to draw data from operations management software. The software should also allow automated reconciliation of accounts as well as occasional reminders for compliance tracking.

Takeaway

Choosing an accounting solution is usually the first things new companies do. But this choice should be made while considering future functionalities and not only the basic offering of the software. The software should be easy to set up and provide invoicing, paying, bookkeeping, timesheets and payroll, taxes and reporting functionalities. It should also permit automation and connections to other apps. Contact the specialists at Mondro to discuss which accounting solution is best suited for your needs!