How To Choose Accounting Software
The foundation of every business is their accounting software. Selecting the right accounting software is so important to your business; you should put a great deal of time and thought into the package you purchase.
Why is the accounting software so important; because every single transaction that takes place in your business will run through your accounting software. This means your accounting software has to be fully integrated with your general ledger, sales orders, purchase order, inventory, accounts receivable and accounts payable. If you don’t’ have all these working together in one integrated system you will never be able to fully know what’s going on in your business.
I see many businesses run their sales through a point of sale register/program and then transfer the total sales figures into a standalone accounting software. This defeats the purpose of having a computerized accounting system. For example, a system like this will never adjust and keep accurate inventory information. Without accurate inventory information on hand, the general ledger inventory account will never be accurate and your books will never be in balance. When your books aren’t in balance it’s impossible to tell how much money you’re making or losing. You’re running your business by the seat of your pants.
So what do you have to look for in an accounting system for your business? If your business is only service related (accountant, doctor, etc) where you bill only for your time, an off the shelf software package like Peachtree Accounting will suffice for you and be relatively inexpensive.
However, if you deal with inventory, then the number one rule is; do not consider ANY off the shelf software. Why? I’ll get to that in a minute.
The second rule is; do not cut costs. Expect to pay more than you perhaps anticipated. You are not going to get the software you need to run your business to its full potential for a few hundred dollars
The third and probably most important rule is to purchase accounting software that stores its information in an “open database” such as SQL Server, Oracle, MySql, etc.) An open database means you can access ALL your data that is in your accounting software using simple tools like Microsoft Excel and Access (usually by an ODBC connection for you technical types).
If you have more than 5 users, you’re going to need the power of the open database design. These types can handle hundreds of users easily. As a rule, off-the-shelf software will slow down to a crawl when you exceed 5 users.
This answers the question of why you should not buy any off the shelf software because none of them like Quick Books, Peachtree, etc. will allow you to directly access your data using the simple tools I just mentioned. This is because they use a “closed database” design. In essence, locking you out to retrieve the specific data you need.
Now we have to answer “why is this important”? The answer is simple. All accounting programs come with a suite of “canned” reports. These reports provide you with only the information the software programmers have decided you need to run your business to its full potential.
The truth is, it’s impossible for any accounting software program to provide you with all the reporting information you need. Impossible! Even if they provide you with tools to create your own reports, you are still limited to accessing only part of your information. However: if you use an accounting software based on an open database design then you will have access to 100% of your data and be able to do reporting and analysis at levels the closed database programs can only dream of.
The future of all business in the 21st century is based on the analyzation of data. In a nutshell a business owner should be able to get the answer to any question he or she has about their business just by pressing a few keys on their keyboard. I want to state this again. ALL BUSINESS OWNERS SHOULD BE ABLE TO GET THE ANSWER TO ANY QUESTION ABOUT THEIR BUSINESS JUST BY PRESSING A FEW KEYS ON THEIR KEYBOARD.
Only accounting programs that have open databases will allow you to do this. If your current software cannot do this then you should immediately consider a change, because; to compete in this world of computers and technology, being able to get the answers to your questions is going to determine who lives or dies in the business world. It’s the 21st century with a whole new way of doing business.
An organization’s information gathering abilities and how fast they can adapt to change today will determine tomorrow’s winners and losers. If you want to survive and prosper you must embrace change and use the tools of tomorrow.
An Accounting Software To Consider
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Just a quick comment to thank u 4 your interesting page article. Do u know where I could find more on the subject? well done. Emily x