Taking the step to implement accounting software for your business can be daunting, especially if you aren’t familiar with accounting terminology and concepts. But the benefits are well worth the initial effort. Using software that matches your business needs can save you time, money and stress. Better yet, advanced data reporting and analytics functionality can give you the information you need about your business's finances to make better, more informed management decisions.
If you are already using an accounting software platform you might be looking at switching to a platform that better suits your requirements, but comparing the pros and cons can get confusing. And sometimes it feels a lot easier to stick with the devil you know, right? But it is worthwhile making sure you are using the platform that is going to give you the best return on investment and support your business growth.
Based on our experience setting up and managing the books for our clients, we have broken down the key factors to consider when picking an accounting software platform that is going to be right for you. This article answers the questions:
Why use accounting software?
Ultimately, using an accounting software platform is going to mean you need to spend less time managing and chasing up financial transactions or information, which is going to save you a lot of time, money and stress.
The added bonus is that most platforms provide some level of reporting and analytics that will give you new insights into your business finances, helping you make better decisions as you move forward.
Here are the main benefits of implementing accounting software for your business finances:
- Simple, fast, and automated data entry
- Fewer errors and inaccuracies in financial data
- Simplified tax compliance through built-in tax codes and calculations
- Access to real-time data instead of waiting for quarter/year-end processing
- Built-in advanced analytics and reporting to help make sense of your data and make better-informed decisions
- Less reliance on your accountant to provide and interpret financial data
- Reduced accounting fees through access to integrated, up to date and accurate financial records
- Reduced operational costs through automated processes
- Easy to scale upwards as your business grows
There are four main options when it comes to accounting software that is suitable for small-medium businesses across all industries. Yes, there are a bunch of other options out there but these four are the ones that offer browser+mobile solutions (not just phone based apps), and have a large market share (meaning they will most likely still be around in 5+ years and are continually investing in improving their solutions).
One of the first companies to provide accounting software for non-accountants, MYOB were a little slow to jump on the cloud-based software revolution. But they have invested heavily to catch up and now MYOB have three products for small-medium businesses
- MYOB Account Right - full-featured accounting software designed for small to medium-sized businesses which want the flexibility to work online or offline. It's designed to run on Windows, not available for Mac.
- MYOB Essentials - online-only, browser-based accounting software designed for new and smaller businesses. Because it's browser-based, you can run Essentials on either Windows or Mac.
- MYOB Essentials Payroll - Payroll only solution supporting Single Touch Payroll processing for up to 4 employees. Also browser-based.
An Australian company, Reckon was the original provider of Quickbooks. In 2012 Reckon and Intuit split, and Reckon released its own cloud-based accounting software called ReckonOne.
They also offer Reckon Payroll as a standalone Single Touch Payroll processing solution. Both solutions are online, browser-based.
Xero entered the market as the first completely cloud-based platform, and with a focus on seamless integration with bank accounts it quickly gained ground against the traditional MYOB and Quickbooks/Reckon solutions. Xero has invested heavily in developing over 800 business apps to promote seamless integration of data between accounting functions and other activities within a business.
After splitting from Australian firm Reckon, Intuit released their own cloud-based accounting software, Quickbooks Online. They also offer Quickbooks Self Employed as a more basic solution for sole traders (only available via an app, no browser functionality) and Quickbooks Payroll.
Honestly, all of the options out there will cover off your core accounting functionality - accounts receivable, accounts payable, balance sheet, tax etc. But there can be a lot of variability across the different solutions in terms of advanced functionality, how easy they are to use, mobile functionality and price.
Based on our experience, there are four key things you need to think about to help choose the solution that is going to be the best fit and deliver a return on your investment.
Your personal preferences and behaviours
It might not seem like the obvious first thing to think about, but your personal characteristics play an extremely important role in choosing the right software.
- Does just the word accounting make you want to run and hide? Xero is more user friendly for non-accounting people
- Are you a bit ‘old school’ and comfortable with accounting concepts and ledger-based systems? MYOB might suit you better
- Do you need to be able to capture and access data on the go? Quickbooks and Xero offer the best mobile functionality
- Will you be relying on your accountant/bookkeeper to interpret your financials? Or do you want to be more directly in touch with your business financials? Xero and Quickbooks rate the highest for their interface and reporting/analytics features.
Your price point
Pricing is one of the key points of differentiation between the different players. And to some extent the price reflects the suite of features included. If your accounting needs are basic and your budget on the lower side, you would want to look at Reckon or Quickbooks. If you need a complete accounting package that offers more features and is easy to scale up as you grow, Xero is where you should be looking. Really, MYOB is overpriced for the functionality it offers.
If you are looking at less expensive options, just be warned that Quickbooks can start to get expensive as you move upwards into the more advanced plans and Reckon’s suite of features is not as complete as the others which may become a challenge if you are looking to grow and expand in the near future.
Other software applications you want to integrate with your accounting data
Gone are the days when your accounting system was the primary operational tool. Nowadays, your operations are more likely to be managed through a point of sale, booking/scheduling or e-commerce system.
If this is the case for your business, now or maybe in the near future, you need to choose accounting software that supports seamless integration between other business systems and accounting data. MYOB and Quickbooks are working to expand and improve their integrations, but Xero is definitely the market leader in this area.
Consider if it would make sense to connect your accounting data with these other systems
- Point of Sale
- CRM (customer relationship management)
- Email marketing
Who else will need to access or use the data
Most solutions offer multi-user access where you can control who can see/edit data, and what data they can see/edit. Some of the potential users of your accounting software might be:
- Acc Receivable/Payable Officer
- Business Partners
If nothing else is standing out as an obvious choice, you might just want to go with the same accounting software your accountant uses so they can more easily access the data without having to export/import. More and more accountants are preferring Xero, although many still use MYOB or Quickbooks.
Some solutions/plans might charge extra for allowing multi-user access, or cap how many other people can have access to your data so it pays to double-check the specific inclusions for the plans you are considering.
Based on our evaluation of the four main software options for small-medium businesses, we have put together this table that compares the key features.
Most often we recommend our clients use Xero. Full disclaimer, we are Xero Gold Partners which means we get 'rewarded' for bringing new businesses onto Xero accounts. The reason we signed up to be affiliated with Xero is that we believe it is the best all-round solution that also delivers superior features in data integration and mobile access. Our partnership with Xero also allows us to offer our clients discounts and additional services.
Having said that, we recognise Xero might not be the best solution for all our clients, and we are experienced and qualified in using the other three main platforms as well as a number of the smaller ones. Our aim is to take the overwhelm and stress of bookkeeping and financial compliance away from you, using whatever software and systems will bring the most benefit to your business.
Ease of Use
Whether you are starting from scratch to move from manual processing to automated online accounting software, or shifting from one platform to another, we are here to offer a full suite of end-to-end support solutions to get your finances organised. Some of the tasks we can perform using your accounting software include:
- Assessing which accounting software is best fit for your requirements
- Setting up your files/account from scratch
- Transferring data/files from another application
- Education/training for you and your staff to be able to set up and/or use the software
- Data entry, invoicing, reconciliations and regular upkeep
- Payroll processing
- BAS preparation and lodgement
- Generating reports
- Interpreting reports/analytics - or training you to use this data to inform your planning and decision making
Taking the step to level up your business bookkeeping and financial management is a big one - the technology and requirements can seem daunting and overwhelming. The good news is that we have helped many small business owners just like yourself take that step. And sometimes all you need is a little guidance and advice from someone who has been there, done that all before. The benefits of using accounting software to streamline your bookkeeping tasks are absolutely worth the effort. Not just in cost savings and efficiencies, but in reducing the stress that comes with managing it manually.
So, if you are looking to move toward implementing accounting software for your business, or want to chat about your options to improve your current system, book in for a free, no obligation consultation with Dream Admin Managing Director Tennille Skelly.