How To Choose An Accounting System Print This Page

Why Change at all?

Deciding whether we need to change or not is an important decision.

Who should consider choosing a new accounting system? Do any of these describe you and your Organization?

  • Your company has always used manual accounting. And now you feel need to have accurate and fast flow of information.
  • You are a fast growing company and need a system that can grow with you?
  • Your company has out grown your current system.
  • Your process has changed the way you do the business.
  • You want to switch to an e-business solution with an integrated financial backend.
  • Your Company is geographically dispersed now and you need fully web-based solution.

Deciding to change is always difficult. It’s comfortable to use something that’s known and understood. There is usually fear involved (or at least a strong apprehension) with switching to something new and unknown.
But when you have challenge to grow, you have to face and accept changes. Comfort doesn’t always cut it – especially when it comes to the financial health and long term success of your business.

What a good system delivers

Properly installed and implemented accounting software can contribute many benefits to your organization, including:

• Better decision-making capabilities

Sound accounting software can provide both a snapshot-in-time look at your organization, as well as the detailed reports and other data necessary for long-term strategic planning.

• Improved cash flow

Cash management is essential for all businesses. Integrated billing, inventory, accounts receivable and accounts payable allow you to manage that valuable cash more easily and efficiently. Better cash management provides your organization with more options for revenue-generating campaigns and long-term growth.

• More accurate information

With fully integrated accounting software, you'll not only have more information at your fingertips, you'll have more accurate information. Unlike a manual accounting system, where a great deal of time is spent cross-checking figures recorded in different ledgers (and where the potential for errors dramatically increases)—in a good computerized accounting system, information is entered only once and is used throughout the system.

• More control

Integrated accounting software provides real-time access to your organization's critical financial information. This provides you with greater control and the ability to more efficiently manage the components of your business.

• A foundation for growth

The right accounting software can help you as your organization grows: expanding as your business expands, allowing for additional users and offering the kinds of reports and other business intelligence data required.

Do this for better decision

The challenges to successfully choosing, installing and implementing new accounting software are many. But so are the opportunities—to gain greater control of your organization's financial affairs, to make better decisions, and to improve cash flow, among others.

The reminder of this guide describes the six steps to successfully selecting accounting software:

1. Involve the right people
2. Define the challenge
3. Choose a consultant
4. Implement the system
5. Post Implementation Concerns

1. Involve the right People

Your accounting software generates information used throughout most of your organization. That's why choosing new software shouldn't be delegated to a single department or manager. Participation across functional groups will help you select, implement and use the best possible solution.

There are, in general, five groups of people who should be involved in the selection process:

System Users

These are the people who will use the software daily. They need the software to be user-friendly, logical and efficient.

System Managers

Managers supervise the system users. These system managers must understand the financial information and reporting needs required by upper management,
and then direct system users about how to effectively use the system.

System Customers

Financial information customers can be found throughout the organization, in every department and at any level. These people rely on the reports, summaries and other data generated by the accounting system to make decisions and otherwise manage their particular group or department. System customers may not necessarily understand accounting fundamentals, but they do require the information supplied by the software.

System Sign-offs

These are the people who must give final approval to acquire the system. Typically this group includes representatives from Information Systems (IS), accounting and the executive management team. The company president or CEO may play a prominent role in selecting the system, or may delegate this task downward.

IS Staff

Representatives from the organization’s IS staff should be closely involved in the accounting software selection process and typically play key roles in the software’s installation and ongoing upkeep.

2. Define the challenge

Understanding your business's financial information capabilities and weaknesses is critical to selecting the appropriate accounting software solution. The more you know about the challenges you expect the software to solve, the more informed decision you'll make.

Questions to ask

What are some of the challenges your organization currently is experiencing with its accounting system?
Questions you might consider include:

  • Which manual tasks would benefit the organization by becoming automated?
  • Where in the accounting cycle are you experiencing the highest productivity loss and the highest number of errors?

How are inaccuracies negatively impacting your organization?

  • What information/reports are being requested that currently cannot be created/delivered?
  • How could your accounting solution integrate with your e-business initiatives?

Make a list of the challenges you are currently experiencing. Then create a second list of what you'd like to do but are unable to do now. This information should become your core list of requirements when evaluating new accounting software.

Other Questions to ask

  • What information do I need to make strategic decisions?

This could include results from budgeting and modeling your business. It might include current gross profit by product, customer or salesperson. You probably want to predict which customers and products are growing and which arc declining. You may want to use financial ratios to measure your company's performance against competitors. Your general ledger can show key profit and cost center performance against budget to help you evaluate each group's effectiveness.

  • What do I need to accurately forecast and control my cash flow?

Because cash is the lifeblood of a business, forecasting cash flow should be a key element of your accounting system. Sales order and purchase order tracking will also be invaluable, since they provide advance information about future cash inflow and outflow. Other elements that effect cash, which must be accurately monitored, include manufacturing workflow, shipping, receiving workloads and the movement of materials.

  • What information do I need to manage my assets?

Accounts receivable and inventory are often the principal financial assets of a business. Most of your company's cash is tied up in these assets, so small swings in the amount of either of these two can have a huge impact on your cash flow. Your payback from exerting more control over your assets is easily visible and immediately apparent.

  • What should 1 automate to grow?

Many businesses automate for the wrong reasons, or computerize functions that offer little payback. First, apply your resources to the areas with the most benefit to your bottom line. You can determine these areas through careful study and analysis of your information system.

  • How flexible can we be?

It makes sense to consider accounting software that has been created specifically for the general size of your business. Even following that general guideline, however, realize that few organizations use accounting software "as it is." Most businesses customize one or more aspects of their accounting software. Those organizations that are most adaptable and attempt to integrate the most customization and flexibility will receive the most out of their accounting software solution.

You shouldn't have to change the way you do business to suit your accounting package. Make sure the accounting solution you choose is flexible enough to adjust to your business requirements.

3. Choose a consultant

It's possible that your organization has the internal staff to successfully implement your new accounting system. It's more likely, however, that you don't have the people or time resources—or expertise—to devote to analyzing, purchasing, installing and maintaining a system.
A company who provides consultancy in both Business affairs (e.g., Information system development, Taxation and other business affairs, etc.) and Information technology (e.g., choosing right software and Analysis services for customized solution development, etc) can help considerably. Consultants have special expertise – they’ve been through the purchasing, developing and implementing process many times. And while they charge fees, they can help your organization in four significant ways:

  • Analyzing and isolating your business needs & problems.
  • Evaluate and select the best accounting system for your organization.
  • Determine the hidden costs of solution. e.g., upgrade of existing hardware or purchase of new hardware, etc.
  • Save time and money during system installing and subsequent training.

Get the most out of your new system based on the system’s capabilities and your organization’s requirements.

Choosing a right consultant is very critical. As it is the company who is to analyze your needs, select or give assistance in development of right software and proper implementation and training of your staff to operate that software. Following considerations should be taken in mind when selecting a consultant:

  • The Consultant should have good knowledge and experience of business affairs.
  • The Consultant should have expertise and experience in Software development and implementation.
  • The Consultant should have complete knowledge of world’s leading business software. So that if any of such software fulfills your needs, you choose that software. Choosing a proven solution always reduces the risks.
  • The consultant should have goodwill and assurance of providing after sale support Continuous support is the most important factor in choosing an Accounting system. It includes upgrading the system, training of new employees, further modification in the system, etc.
4. Implementing the system

Once you have chosen a solution, and it has been developed or purchased, it’s time to install the solution. If you have done your homework, this is most exciting part of the process. Please note, however, it can be frustrating time as well! It will take time to safely install the new software without damaging or otherwise invalidating your existing system. Inevitably, there will also be a few kinds of works out.

What is the best way to make the implementation process smooth and successful one?
Follow these guidelines.

Prioritizing your automation

Weather you have chosen ready made software or have decide for a customized development, it should be implemented in such a way that it affect the daily operations minimum. To achieve that goal, software should be implemented in steps. We suggest automation in the following order.

  • General Ledger,
  • Account Payable,
  • Account Receivable,
  • Inventories,
  • Payroll,
  • Fixed Assets, etc.

A well planned implementation of software will reduce friction from the employees and they will happy with change.

Provide good training

Even the best software can be a nightmare to the organization if people are not properly trained to use it. People are the key to success of any accounting software program. Good staff training is essential and provides the information, practice and involvement needed to get the most out of software.

Note that different people within an organization will have different skills and levels of experience with computers; one training class will probably not be right for every system user. Ask your consultant or software vendor for a training plan that will get everyone up to speed (at his or her own level) quickly. Keep People informed

Frequent review meetings during the implementation phase will also help people become familiar with the new system. Don't surprise users—let them know when changes will occur. As well, keep your management team involved during the implementation process through meetings, attending the training, etc.

Don't go too fast

Rushing the implementation can cause mistakes and unnecessary tension. Time your installation and implementation of the new software as close as possible to your organization's slow time of year. When you are ready to convert to the new system, attempt to do so during a weekend, to minimize business interruptions. You may even consider converting to the new system on a module-by-module basis or running in parallel with your existing system for verification purposes.

Alter job titles to reflect increased responsibilities

The implementation process will almost certainly present one or more employees with a chance to perform exceptionally or exceed what their role has been in the past. Extra work—evenings, weekends—may also be required. Reward these efforts with a spot bonus and/or a promotion.

  • Post implementation concerns
  • Ask your consultant for support plan
  • Plan for ongoing review and evaluation of the system.
  • Document all changes and customization made.
Copy Rights 2006. All Rights® Reserved By Wistech Solutions