Finance & Accounting Software

Everything you need to know


This buyers guide will help you understand the key features of finance and accounting software, the business benefits and challenges of using it, and accounting industry trends. It will also identify the users who most commonly use accounting software.

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Everything you need to know

This buyers guide will help you understand the key features of finance and accounting software, the business benefits and challenges of using it, and accounting industry trends. It will also identify the users who most commonly use accounting software.

Here's what we'll cover:

  • What is accounting software?
  • Key accounting software features
  • Application categories and types of buyers
  • Example of an accounting solution
  • Accounting software market trends
  • Benefits and potential issues of accounting software

What is accounting software?

Accounting software is specialized application software that automates accounting and finance-related tasks. The software stores and analyzes accounting transactions within various functional domains of accounting and finance that relate to accounts payable, accounts receivable, general ledger, payroll, tax management, invoice and expense management, and other domains.

Key accounting software features

Below is a list of core accounting features:

FeaturesDescription
Accounts payableFinancial reports and dashboards help you keep tabs on invoice management and on the total debit billing transactions your business owes to suppliers and creditors.
Accounts receivableUses financial reports and dashboards to track the total amount of money that your suppliers or clients owe you.
Cash flow managementHelps in budget forecasting and bank reconciliation by monitoring cash flow in bank statements and in check and credit card transactions.
Tax and compliance managementFiles taxes according to IRS requirements by calculating your tax obligations based on your small business revenue and business classification as S-corp or C-corp.
Payroll managementHelps your payroll department manage your staff salaries and tax deductions and calculates total salary based on the number of days worked.

Application categories and types of buyers

Here are some common ways accounting software can be applied:

Application categoryDescriptionTypes of buyers
eCommerceeCommerce businesses can overcome the challenge of large volumes of online receipts by integrating with an accounting solution that processes accounts payable. Accounting software can help streamline larger volumes of customer receipts and invoices through detailed dashboards and reports.Customer relationship management (CRM) managers
Retail operationsPoint of sale (POS) systems are vital for retail, helping organize the huge volume of financial data generated by financial transactions, including data related to inventory management and sales tax.Retail operation managers
Fund managementAccounting solutions help nonprofit organizations track donations expenditures and grants to meet fund provider requirements.Non-profit managers
Individual and corporate tax filingBusinesses can use accounting solutions to calculate tax transactions, file returns, and store tax-related forms in a database.Self-employed

Example of an accounting solution

QuickBooks Online is a cloud-based accounting solution that manages key accounting and finance tasks related to expenses, invoices, and financial reports on desktop and mobile. Key features include:

  • Customizable invoices: Create brand invoices with customizable form entry fields.
  • Tax estimation: Helps to calculate tax estimates for business on a quarterly and annual basis. The solution also integrates with TurboTax for filing federal taxes.
Quickbooks Online Edition

Dashboard of QuickBooks Online (Source: GetApp )

Accounting software market trends

Some of the recent trends in accounting software include:

  1. Increased integration of cloud-based accounting tools with third-party software
    Integrations with non-accounting tools help users focus on specific finance areas such as compliance or tax management by integrating a CRM software with the tax or compliance module of an accounting software.
  2. Shift toward mobile accounting
    Mobile apps sync with the information in an on-premise accounting solution to provide up-to-date accounting reports and dashboards. With mobile computing, finance and accounts managers can capture or scan invoice and receipts through mobile phones and store them in a cloud-based database for processing accounts payable.
  3. Application of advanced automation technologies such as AI and machine learning
    Artificial intelligence and machine learning are examples of leading automation technologies that have been widely leveraged to streamline accounting tasks, such as replacing manual data entry of balance sheet and ledgers. Similarly, machine learning has been applied in predictive analytics to calculate long-term cash flow to avoid bankruptcy.

Benefits and potential issues of accounting software

Benefits

  • Real-time updates to financial information presented in dashboards and reports
  • Reduced manual data entry
  • More accurately forecast cash flow
  • Prevent fraud and adhere to compliance

Potential issues

  • Having to purchase a complete accounting suite instead of a specific module
  • Limited flexibility to add more users to an accounting solution based on the pricing tier
  • Steep learning curve for the technical aspects of the software, often with limited customer support