Choosing a Modern Accounting System
What Does Modern Accounting Software Do?
Probably a lot more than you think…
Choosing an accounting system for your organization is not easy. The available options are growing in number. With more and more sophisticated features and myriad add-ons built to integrate with accounting programs, they’re growing in function too. This is not a bad thing; this is a wonderful thing – so long as you can arm yourself with the right knowledge and/or advice to make the correct selection and then, subsequently, to implement the change.
A good system today, set up correctly, can facilitate unprecedented levels of automation. Having systems that reduce staff involvement in administrative tasks gives smaller companies a considerable competitive edge.
Modernization of a company’s accounting system and processes can actually mean lower fees for accounting and bookkeeping companies. This is why many are reluctant to inform their clients regarding the possibilities today’s systems open up – fear that income will drop. Ultimately, however, it is an accountant’s responsibility to offer the best advice they can to their customers; those who don’t guide clients toward the best systems will, over time, lose out to firms that are offering more. The winners will be looking after more clients, in a different way. With a higher proportion of their client-base being successful, growing companies, supporting them through their growth and change is the way accounting firms offer the best value.
Adopting a well organized, modern system is increasingly important when your organization is growing in size or complexity – or if you have any ambition for it to do so. Manual processes drain productivity. In companies where numbers are processed and crunched by individuals with any other responsibilities, it’s rarely true that they are remaining “up to date” with the analysis. Therefore, that data is being used as regularly as it could be; in companies where staff members are allowed to dedicate enough time to these reporting tasks, they are undoubtedly an unnecessary cost.
Even if in-house accounting staff are keeping up with the flow of financial information (something we’ve never seen), those staff members’ time can nowadays be used far better on something else. The data can be analyzed and presented automatically. If your company is growing right now, you or your staff analyze financials yourselves and you genuinely feel that you’re using your financial data effectively, the growth means that there will come a time at which you struggle to analyze the amount of financial and operational data you’re gathering – or where you simply aren’t using as much as you should.
Add to the data gathering argument the fact that modern systems and increased efficiencies facilitate our giving more to our clients AND reduce our costs – allowing us to compete on value AND price. The truth is, a growing number of your competitors – those who have adopted modern accounting systems, are now automating and streamlining many of their processes – and the conclusion is simple: It’s in your best interest to do the same.
So, what should a modern accounting system offer? In our view, there are four attributes a good system possesses…
1. Automation of Financial Processes:
A modern set of books, or ledger, should give you more than a standard chart of accounts. The data within should be in a format so that each item can be automatically classified. This allows you to manage, analyze, and present your financial information the way your business needs, without adding complexity to your chart of accounts or spending time working on spreadsheets, compiling reports.
Any modern system should easily allow the automation of simple financial processes such as:
- Accounts receivable (order to cash)
- Accounts payable (procure to payment)
- Financial close
- Time and expense capture
- Fund accounting
- Project accounting
- Revenue recognition and management
Your modern accounting system should adapt to your optimal business structure and varying workflows rather than limit your business flexibility. Manual processes involving dedicated staff don’t do this – twice the work is twice the work. A good system is designed to handle tens or thousands of processes daily, so as you grow you won’t be forced to re-implement more software or have someone write custom code so you can adapt.
3. Business Insights:
A modern accounting system, either on its own or in conjunction with well-designed add-ons, can provide in-depth, real-time insight into your business. This allows you to capitalize on new business opportunities, quickly recognize staff requirements, cash-flow issues, general trends, seasonal influences and more. Without dedicating staff time to gathering information, a good system allows owners and managers benefit from having a picture of the financial state and performance of their organization. Big strategic decisions can be made with the clarity given by big-picture summaries. While smaller managerial decisions can be made after drilling down to the detail in the underlying transactions.
4. Global, instant access:
All of the best modern accounting systems are now cloud-based. The period of fear and trepidation is over, so if you haven’t moved your systems into the cloud, you can’t consider yourself “on the pace”. As we’ve seen with all of our clients – and our own company too – any time or productivity that could be lost on occasion through issues with internet connectivity or servers is massively outweighed by daily gains: Lower IT costs, always being technologically up to date (subscription, rather than repurchasing, in an ever-evolving world), lower overall risk of catastrophic IT issues and, of course, improved productivity. Cloud systems allow flexibility to choose the best available software solutions, as developers focus on ease of integration with the leading accounting systems; you choose the component parts of your systems to meet the needs of your company as it evolves and grows.
One final thing a company may need, when deciding upon an accounting system, is the correct organization to work with on selection, implementation and integration of appropriate solutions. Make sure you get a thorough consultation and that the company you choose is committed to finding the combination of products that best meet your needs, and subsequently to making sure you reap the benefits.