Accounting Software

What does accounting software do?

Accounting software is used to gather information and report on a company’s financial capability. When used, it is vital in keeping a business’s administration running smoothly. Even if the company is smaller, it is still crucial to have the right accounting software for business-specific needs. Some of these important accounting tasks includes incoming payments, expenses, invoices, and transactions. This type of software is necessary to track a company’s financial health and it allows analysis on the business’s performance moving forward.

Different types of accounting software

It is important to choose the option that would work best for your business. There are some basic aspects to consider such as cost, usability, and extra features. Would it be more beneficial to choose the more inexpensive option or instead get the one that costs extra but has additional features? If an organization has a large team of employees that will be using this software, perhaps a cloud-based system that can be used anywhere would be better.

After determining budget and user accessibility for the accounting software, a business needs to choose what type of software is needed for their tasks. There are four general categories that these fall under: spreadsheets, commercial off-the-shelf (COTS), enterprise resource planning (ERP), and custom software.

  • Spreadsheets: This option is more popular amongst smaller businesses, where they can keep track of finances on electronic spreadsheets. It does not cost much, and it is easy to change to what your company needs. The most common spreadsheet-based accounting softwares are QuickBooks and Microsoft Excel. One thing to consider with spreadsheet software is that mistakes can happen when inputting data incorrectly, or in the wrong place. Something like this would result in incorrect financial statements, and thus would impact the business. Companies with fewer overall transactions would best benefit from this type of accounting software.
  • Commercial off-the-shelf (COTS): This is the most commonly used type of accounting software. There are many versions available and they are categorized by industry. They include extra features that help to identify any possible errors made so the business can worry less about any incorrect financial statements being made. Depending on the COTS software, onsite assistance might be needed to answer any questions that arise throughout the use of this program. Otherwise, some products include online support directly on the software’s website.
  • Enterprise resource planning (ERP): On the more expensive end of accounting software comes this product. It is used meant for large companies who need all of their information integrated into one database. This eliminates the extra support needed for a business running account software.
  • Custom accounting software: If an organization has very specific needs and cannot be confined to the features of any COTS or ERP software, they will have it custom made. This is the least used option for accounting packages, as it is often in need of constant maintenance.

Integrating with current software

Once the type of accounting software is chosen, a business needs to figure out how to integrate that package with the programs currently used. To do this, different applications can be used to help the integration process. Depending on the company, IT support for integration purposes may be needed.