Selecting new accounting software requires more time than most businesses realize. To complete the proper amount of research and assessment of various programs, most business owners should expect to spend weeks, not months, instead of days or hours. However, once the right solution is identified, the improvements that it can help the company realize are often well worth the time spent selecting the software.
One of the first things you’ll do when selecting new accounting software is to look at the processes that your business currently uses and see if there are ways to use software to make those processes more efficient. Many companies use the implementation of new financial software as a good time to also change some processes to gain more efficiencies from the new software’s extra features. If you consult with financial software reviews, you’ll see that the market for accounting software is roughly divided in to four segments: entry-level, small to medium scale business, small to medium scale enterprise, and enterprise resource planning.
A brief overview of each segment follows.
Entry level software is designed to work best with small businesses (those with 20 or fewer employees and less than $5 million in sales). Roughly 5 million companies in the US meet the profile for those that are best suited for software within this segment. This is the largest group of companies and is often the reason that accounting software guides exist – to help smaller businesses choose new software.
Small to Medium Business (SMB) software is designed to work best for companies with $5 to $100 million in sales and no more than 100 employees. This is the second largest market segment and estimates say that about a half a million companies in the US could benefit from new software designed for businesses of this size.
Small to Medium Enterprise (SME) software is the next step up and is designed for even bigger companies – those with up to $500 million in sales and up to 500 employees. Approximately 17,000 US based companies fit this profile.
Enterprise Resource Planning (ERP) software is designed for the largest companies and can accommodate well over 500 employees and billions of dollars in sales. The number of companies that fit in to this segment is fewer than any other segments, although some estimates have claimed as high as 17,000.
These segments are only roughly defined guidelines for looking for new software. These are not rules that must be followed. Some businesses that fall in to the the SMB category may find that ERP software is actually best for their applications due to it’s additional flexibility or other features that the company may need. In this case, they should opt for the ERP software.
When selecting software, make sure you know what you require from the new accounting package and keep those requirements in mind. This will allow you to avoid purchasing modules or features that you do not need in the new software. Overall, software designed for larger and more profitable companies come with more capabilities. In some cases these capabilities can be beneficial, but it is also important to note that this is not always true. At times, additional capabilities that are not used can actually slow down the software.
At the same time, purchasing software with too few capabilities can also create problems. If you purchase software without a module that you need, you may be forced to use an outside application to run that process, which can cause headaches as well as present problems with compatibility that can add costs to the overall project.