Back when you first put that “Open for Business” sign on the door, you didn’t ask a lot from your accounting software.  You probably selected an inexpensive application that performed general accounting functions and was user-friendly.  Now, your business has gown and your needs have changed.  Employees and managers have been hired, inventory has increased, your bank is asking for more information, and you have added other software to track data.  Is it time to change your accounting software?

For most businesses, the realization is typically that its current accounting software no longer meets its needs in the areas of:

Capability
Perhaps your bookkeeper is spending additional time modifying reports to make them useful for management or the ability to integrate with other software - importing and/or exporting data - is cumbersome.  You now have a need for project costing, inventory control, vendor management, or e-commerce.

Capacity
As your business grows, so does your team.  You now have additional users of your accounting system, the need to share information, and divisional managers who require real-time management information.

Controls
Strong internal controls are essential for businesses.  Controls are established not only to help detect errors or fraudulent activities, but also to protect those individuals using the system.  Many inexpensive, lower-end applications provide users with no method to assure that transactions are permanently recorded and cannot be modified without the ability to identify any change - an “audit trail.” 

One of your more challenging tasks will be to identify what accounting software will meet your needs - both current and future.  Your choice should assist you in simplifying your business practices and decreasing manual accounting operations.  The software should contain features that will help you now and serve you as you grow.

What is the right application for your business?  To answer this, you need to have a detailed understanding of your business practices and the processes used to accomplish such tasks as paying bills, managing inventory, invoicing, and payroll.  Today’s accounting software is designed to meet the needs of your business and you need to determine which application is appropriate for you. 

An in-depth analysis of all components of your processes will help identify critical tasks as well as those that can be accomplished by a new accounting system.  Needs and desires of those using the system should also be solicited.  From this analysis, you will be able to define what your business requires from an accounting software application. 

Once you realize you have outgrown your accounting system, learning what accounting software options are available will provide a solid foundation for making a decision.  Searching the internet is a good first step in identifying the features/attributes each application has to offer.  Understanding how features are classified will help determine which options work best for the size of your business.  There are also trade shows and magazines available to help you make a more informed decision.

Costs
Like every other aspect of your business, the cost of a new accounting system must be considered.  Low end accounting systems may cost as low as $40.  These are typically self-installed, easy to use software that are unsophisticated and most likely lack a strong control structure.  Conversely, high end systems can cost as much as $100,000 or more and can be as sophisticated as needed.

When considering how much you are willing to spend on a new accounting software, other aspects, such as installation and training costs, add-on modules that may be available, vendor technical support costs, annual maintenance fees, and future upgrades should be considered.

In addition, you may want to research software manufacturers.  Check their stability, technical support track record, and a list of products or technical support services that may be discontinued.  If a product is scheduled to be discontinued and you didn’t learn of this before you purchased the product, it could be costly in the long run.  In addition, you may want to consider the resources that will be expended if a manufacturer has received poor ratings for its customer and technical support.  Down time and frustration from poor technical support can cause additional stress on your staff that can lead to inefficiencies that weren’t originally anticipated.  Manufacturers often list current businesses that are using their products.  It may be worth your time to contact some of these businesses to see how satisfied they are with the services they have received from the manufacturers.

Conclusion
Recognizing that you have outgrown your accounting software is the first step in finding a new system that will better meet your business needs.  Finding the right system can be an overwhelming task considering the number of options that are on the market today.  Identifying your needs and matching software will allow you to make a qualified, informed decision.