Accounting and finance software is often an intrinsic part of business operations, regardless of the type of business you are in. You could be a small business or a hospital or a manufacturing plant, and you need a finance software to help in controlling expenses, analyzing trends, allowing for effective and efficient management actions.
You can find two major types of accounting and financial software: generic and industry specific. Generic software is also called “off the shelf” and is usually the best option for small business because of its low cost upfront. If you need customization, it can often be done at an affordable price. Examples of this type of software are the general Quickbook versions, Peachtree, and Great Plains.
Industry specific software offer more features, but it is usually more expensive to buy and maintain. It offers more options and scalability, where you could add to it as needed. Many times industry specific accounting software includes not only the financial piece, but other utilities as well. For example, financial software used by Jewish temples may include the ability to send out mass mailings, organize seating arrangement in High Holidays, and manage classes in Sunday School.
A major significance of accounting and finance programs is that they help management in making better decisions. For example, if management is considering purchasing a large equipment, data from accounting programs can give crucial information, such as how much money the firm has in the bank, tied in investments and how much it owes already to other vendors.
The fact that accounting and finance programs work fast and can give reports right after data is entered, is significant to a business that can review current data and act on that, instead of waiting for information that may be outdated when it is ready.
Accounting and finance software has certain functions that are standard on most programs, such as organization of data. Programs organize data a certain way to facilitate reporting and search capabilities. For example, if you ‘re looking for information on a vendor, you go to the accounts payable part of the software and look for that vendor there with no time wasted combing through piles of paper or messy computer files all over the place.
Certain programs have only a certain function. Some programs only do billings, while others only manage fixed assets. F9, for example, is a finance software that only reports on data stored on other systems. It’s an “add on” to other accounting programs, making reporting more flexible.
Software can be expensive, not only the cost of the program, but also the annual maintenance contracts. Many vendors sell licenses limiting access to program to so many people at same time. A small business may start with a user or two, but may need to get more licenses as the business grows, increasing expenses.
An indirect cost of using an accounting and finance is the cost of training. Not just the training itself, but of the learning curve employees must go through, not being as efficient and effective as they could be–especially in the few days or weeks after the system is up and running. Expect delays and mistakes to happen during that time.
When reviewing accounting and finance programs, keep in mind that a system will not replace actual accounting knowledge. It may speed up the process and make it more clear, but still the basic knowledge of accounting should be present for the system to be setup and to work properly. Another consideration is to make sure that the software has been tested and it is not rare. Do not buy software that may be cheap, but you may need to beta-test it, that is, the software is not really fully finished and there are bugs to report and to fix. This may be time-consuming and it may not be worth your time. Get references from people who are using the program before you commit to one software or another.
Xigasho: by Sheila Shanker, Demand Media