Accountancy software: A buyers guide

It’s very simple: businesses that don’t control their finances tightly are in serious danger of going bust.

Ocean, a successful mail order catalogue business, was a nicely profitable company turning over around £10m, but within a few months lost control of its finances, stopped paying some key suppliers – who consequently stopped supplying goods – and thereby turned profits into losses. The company itself went bust, though the assets of the business were bought out by another mail order company which continues to trade as Ocean.

Having the right accounting system for your business is not sufficient to ensure financial control, but is necessary. There are a wide variety of software solutions out there, some with variable add-on options, suitable for all sorts of company from small businesses with simple accounting needs to medium-sized, more complex businesses. As certain types of system are better suited to certain types of businesses, clearly, the key is to get the right one for your company.

THE KEY FEATURES

There are a number of features you need in an accountancy system, such as standard financials, general ledger, receivable and payables, profit and loss balance sheets, and invoicing. Sales order processing, inventory management, multi-currency, e-commerce transactions, CRM (customer relationship management) and network capability will be essentials for larger organisations, but these are usually sold as modules.

The most basic systems currently on the market offer single-user access and proprietary databases, while the more sophisticated systems use SQL server (a network-based database package you’ll need to buy separately), which results in faster processing power and multi-user capability.

You can upgrade to more substantial versions of a given supplier’s system, though each step up is quite involved and time consuming. You’ll need a reseller for this: these are not packages to buy off the shelf and install on your own the way you would a new version of Microsoft Office. Resellers are specialists at installing accounting software systems, and will provide consultancy advice on system suitability, installation support (including designing the reports you want from the system) and training. This can take anything from three days to several weeks depending on the complexity of the system.

Most packages are pretty intuitive and the tendency to use a Windows-based platform means your accounts staff should find most aspects of available packages familiar. Online training is also available for the more popular packages, as well as classroom-based training.

ESTABLISHING YOUR REQUIREMENTS

If you are considering a new accountancy software system, it is probably driven by a need – perhaps for more management information, or more users, or more speed. In order to get a clear sense of your accountancy system requirements, you should review your overall business. “You have to be clear in your own mind why you need a new system. It can be for technical reasons, the processing is too slow or you may have changed your hardware platform,” says Paul Booth, technical manager of the Institute of Chartered Accountants of England & Wales (ICAEW). “Or you may have opened more offices and need something that will run in several locations on a network. The key factors for change are a need for better functionality, better reporting and analysis, and web trading integration.”

Stephen Temple, director of accounting firm Mazars, says: “The most important thing is to do an internal assessment of what you need from the business, the type of transactions, IT platform, e-commerce strategy and how you want the business to grow.”

If you handle e-commerce transactions, you will need to purchase specialist software. Microsoft and NetSuite both have their own e-commerce solutions. Other suppliers work with software developers offering products for different programmes.

Stability and security are key issues and as your main point of contact will be the software reseller it is important to establish precisely how they work. Temple stresses: “You should control software upgrades as opposed to letting the reseller have unlimited access to your network. Best practice is for the supplier to have access only to a test environment so that you can test the upgrade before applying it to your system even though this may be more expensive.”

It is advisable to involve your auditor or accountant in the selection process, as they can provide input about the type of system they think you need. Presenting accounts in a compatible format can reduce accountancy fees. Booth says: “It is helpful to have a system an external accountant is already familiar with and this could make the bills smaller. The accountant is likely to know the pitfalls.”

THE MAJOR PACKAGES

There are a number of different ‘families’ of accounting software systems; each offering different packages from basic to sophisticated. It is worth choosing the one you think will best fit your needs in the medium term, at least, because upgrading within a family is far easier than changing from one to another, in terms of data conversion, set-up (charts of accounts and reports and so on) and user training.

There are too many packages for us to describe them all here, however read on for descriptions of the main players:

ACCESS ACCOUNTING

Access has been around for a long time and has a substantial user base globally. Its database-driven packages use Windows, and range from one to 500 users. Its entry level Foundations XP for up to three users costs £400, while Horizons, for 10 concurrent users, costs between £1,000 and £3,000.