Running your business keeps you busy enough; add your finances to the mix, and things get even more complex.
Yet your day-to-day accounting tasks are a critical aspect of your success. Properly tracking your revenues and expenditures allows you to keep more of your hard-earned money in your company. It also helps you effectively plan for the future. That’s why some manufacturers turn to accounting software to help manage their financial picture.
With so many options on the market, how do you choose the best product for your business? We’ve put together some key points to keep in mind during your research.
What would you like your accounting software to do for you? Some businesses might just need basic functions like accounts receivable and payable. Others might need it to run payroll, track inventory or perform other more complex functions.
You should also consider your yearly revenues and revenue streams. The more money your company makes (and the more ways it’s made), the more robust a product you’ll need. You will need to consider your projected growth as well. Choose a product scalable enough to expand or add more features and capacity.
Finally, consider the number of employees who need access to your accounting software. Are you the only one who performs accounting duties, or do you have a separate staff for that? Licenses are generally priced according to the number of users allowed.
Get Input From Your Accounting Staff
These employees will be your software users, so it’s critical to get their opinion. Granted, there will be a learning curve as you roll out the product you ultimately choose. But you want that process to run as smoothly as possible. There’s no better insight than the thoughts of those who will actually use the accounting software.
Most products will provide demo versions (or actual demonstrations) for you to try out. This gives a better idea of actual usability than merely reading a list of features or looking at screen caps.
The traditional method of storing data on a physical server has made way for cloud computing in recent years. This is when information is managed and processed on remote servers rather than your own equipment.
Cloud computing offers added flexibility and aids collaboration and disaster recovery, but it does have its drawbacks as well. Make sure to compare the pros and cons of cloud-computing before choosing your accounting software.
Also remember that the data you store can be sensitive (for example, credit card numbers and client information). So whatever you choose, make sure your software—and its data storage method—have the proper security protocols.
Software products generally have monthly or yearly plans for technical support. The more you pay, the more levels of help the plan likely includes. For example, a basic service might cover email requests and access to FAQs or forums. A more premium plan, however, could also include live phone support, on-site visits and other enhanced methods of help.
Keep in mind that technical support should cover all phases of your purchase—before, during and after implementation. They should also help tailor the software to your company’s specific needs.
MRP System Support
You might want to consider accounting software that supports or incorporate an MRP (material requirements planning) system. This measures the amounts of raw materials you need for your manufacturing process and when to buy them. Such a system helps with efficiencies and profitability by eliminating the waste of surplus parts and materials.
Once you have an MRP system, make sure the data being entered is as accurate as possible. The information coming out of it is only helpful if there is good data going in.
Once you have an idea of what you need, it’s time to look at price. Thankfully, accounting software doesn’t have to be expensive. In fact, there are even free options! However, these products usually come with restrictions (such as a limit on invoices) or subject you to advertisements. Such limitations often outweigh the savings. So unless yours is a very small business that intends to stay that way, you’ll want to pass.
Most small- to mid-sized companies do just fine with accounting software in a moderate price range. Many options under $50/month include functions like invoicing, payroll (for a small number of employees), multiple user access, inventory tracking and more. These products won’t bust your budget, and they can likely expand to match your company’s growth.
The next step up is enterprise-level accounting software. These options are generally much more expensive and will be tailored heavily to meet your specific company needs. They also require a pretty heavy time commitment from your company to get the software up and running. Some implementations can even take years.
Enterprise-level products are generally meant for large, complex corporations with multiple departments, divisions and revenue streams. If that doesn’t describe you, stick with a more moderately-priced system and you’ll be set for a while.
Brush Up Your Financial Literacy
Accounting software can certainly make running your business easier. That said, you should understand some basic financial concepts to get the most out of a product’s features.
This holds true even if you have accounting staff members who will be the primary users. After all, you’re the one ultimately responsible for your business’s financial performance. Having this knowledge will help you monitor the work being done with the software.
As you can see, there’s a lot to consider when shopping for accounting software. It can be a daunting task on top of everything else you have going on in your business. The time you take, however, will be well worth it when you find a product that does what you need!
You can also consult James Moore’s manufacturing CPAs to help you make this important decision. We have clients that use a variety of accounting software products (each with pros and cons) to run their businesses. So we’ve seen what works and what to avoid. We’re happy to help you assess your own situation so you can make the best choice for your business.
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