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How to Pick the Right Accounting Software

Jul 2nd 2015
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These days, accounting software selection starts with one main debate: cloud versus on-premises. I intend this brief guide to help you wade through this question as well as others along the decision process.

There are many factors that are important, but when you are considering cloud versus on-premises, take a look at these four important and often problematic issues to figure out well before you have purchased the accounting software.

1.     What capabilities does the product have beyond G/L?

2.     ERP platforms are not all the same, note the key differences.

3.     What integrations or connectors are available?

4.     Usability, how easy is it to learn?

Cloud-based accounting software is being adopted widely over on-premises tools like QuickBooks Pro, a fact that remains across all business sizes. With cloud-based products, it has become easier to pick and choose discrete products to handle different parts of the financial value chain. It has made automating processes easy, like importing bank data and eliminating the need for manual data entry.

A wave of change is starting to build, as a number of cloud products designed for small businesses have emerged, such as Xero, Wave, Kashoo, and others as well as cloud products from QuickBooks, AccountEdge, and Sage. Similarly, in the mid-market and enterprise segments, cloud vendors like Intacct and NetSuite are currently threatening the ground occupied by legacy-installed ERP systems from Microsoft, SAP, and the like.

As evidence of this change, Intuit CEO Brad Smith recently reported that “for Intuit's FYE 2014, for the first time more new QuickBooks users chose the online version than the traditional desktop version. Contrast that with our income tax preparation products where that shift happened seven or eight years ago.”

While cloud-based financial products will not have all the functionality, they can easily be hooked up to a best-of-breed payroll system or expense management system. It is also relatively straightforward to integrate with an off-the-shelf business intelligence tool to produce automated visualizations of key financial metrics, like accounts receivable days, debt to equity ratio, ROI, and return on capital.

See the chart below to help you narrow down a list of software based on the size of your business and whether your future needs require cloud and ERP suites:

comparison chart of accounting software

About the author:
Alan Cooke is the research director at TrustRadius, a community of professionals that shares software reviews, software discussions, and best practices. The group recently analyzed 700 in-depth user reviews of 18 accounting software products. One key finding was that 75 percent of top-rated accounting software for small businesses are cloud-based products, while 50 percent were in the midsized company segment.  More details on their research can be found in their "Buyer's Guide for Accounting Software 2015." Contact TrustRadius for more information.

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