Accounting Software

What is accounting software?

Accounting software automates tracking and managing financial activities, including accounts payable, accounts receivable, payroll, billing, and general ledger. All the documents are stored in a centralized location and shared with users using role-based access controls. This speeds up bookkeeping processes with fewer errors and data inaccuracies for accounting managers. 

Some of the accounting software features include billing and invoicing clients and vendors for products and services; tracking unpaid invoices; managing expenses; reconciling accounts with bank statements; and preparing tax documents. The tool also enables financial reporting by analyzing past business data, providing an accurate view of the business's financial health at any given point.

What are the core features of accounting software?

• Financial reporting: Generate reports summarizing the business's financial data over a set period. These may include income statements, balance sheets, and cash flow statements. The feature also tracks revenue, costs, and profitability to analyze business performance and make informed decisions.

• Bank reconciliation: Compare the business's financial records with bank statements to spot any discrepancies. This helps detect errors, fraudulent activities, or unauthorized charges early on by identifying differences between internal record-keeping and external statements.

• General ledger: Record all financial transactions and track entries in the form of debits or credits. The feature provides a complete record for every account to prepare balance sheets, income statements, cash flow statements, etc., supporting accurate financial reporting.

What are the benefits of using accounting software?

• Reduces accounting errors: Accounting software automates complex calculations and processes, significantly reducing the chances of human error in expense tracking. This accuracy ensures financial data is reliable for decision making. The tool verifies data for duplicate entries or omissions, which can lead to incorrect financial statements, ensuring accurate bookkeeping.

• Provides real-time financial data: Accounting software grants access to real-time financial data offered by accounting software enables businesses to identify trends or issues for timely strategic decision-making. The tool’s analytics dashboard provides critical financial information, such as revenue, expenses, and cash flow status, which can be summarized into reports with charts, graphs, and other data visualizations.

• Simplifies tax compliance: Accounting software simplifies tax compliance by automatically calculating the due taxes based on the business’s income and expenses. It also keeps up-to-date with the latest tax laws, reducing chances of error in calculations or non-compliance risks. Moreover, it can generate comprehensive reports needed for filing taxes, saving valuable time during tax season.

What are the potential issues with accounting software?

• User interface: A complex user interface in accounting software might lead to difficulty navigating the system and performing tasks efficiently. This could result in errors, missed entries, or inaccurate reporting. It can also significantly increase training time for new users, reducing overall productivity within the business’s financial team.

• Cost tracking: Accounting software is designed to track financial transactions accurately. However, several factors, including data entry mistakes, incorrect categorization, outdated data, currency conversion, integration issues, and software bugs, can lead to cost-tracking errors. This may result in inaccurate financial reports and statements. It may further lead to substantial monetary losses or legal issues. Therefore, maintaining accurate cost records is vital for the healthy operation of a business.

• Customization options: Limited customization options in accounting software might not allow tailoring the system according to specific business needs. This can lead to inefficient financial reporting or tracking of unique financial metrics relevant to the business. Hence, the chosen accounting software must allow enough flexibility in the form of features, add-ons, or integration.

How much does accounting software cost?

Most accounting software products are priced on a "per month" basis, and their entry-level pricing plan ranges from $9.75 to $99+*. An enterprise product that’s priced higher may include additional accounting features such as project tracking, expense claiming, built-in eCommerce, project tracking, and inventory management.

*The pricing included is for the entry-level/lowest-priced offerings found on vendor websites as of August 17, 2023. 

What is accounting software used for?

Accounting software is mainly used to manage financial data efficiently, from bank reconciliation to balance sheets. However, this software can have multiple use cases based on the data being fed into the system and the tool's features leveraged. Some of them are:

• Expense monitoring: An accounting tool enables overseeing financial activities and identifying insights into a business's financial health. The tool categorizes expenses, tracks cash flows, generates reports, maintains accurate accounts, detects discrepancies, and aids in budget management. Additionally, it can be used to simplify tax filing and auditing for financial transparency and control.

• Invoice payment management: Handling invoice payments is crucial for accounting managers and business accounting software simplifies the processes using automation. The tool automates recurring invoices, customization, and cash flow management. For any due payments, the tool allows setting automated reminders with the payment link. It further centralizes billing, invoice tracking, expense tracking, and payments in one place to enhance accessibility during audits. 

• Budget spending: Accounting software can be used to monitor and control spending by preparing a comprehensive financial report with past expenditure patterns in preferred currencies. Based on these insights, the software helps forecast future costs, ensuring budget compliance. 

Which software tools integrate with accounting software?

Accounting software integrates with various solutions to simplify payment processing, extract data, and manage inventory. We looked across thousands of reviews from accounting software users to identify the products that users frequently mention they integrated with their accounting tools:

• Quickbooks or Intuit Quickbooks Online is a suite of accounting and payroll software that can be used to extend the existing accounting solution capabilities. These include payroll management, customer and vendor management, and inventory management.

• Salesforce is a customer relationship management (CRM) software suite for small business accounting managers to remotely manage their interactions with clients and vendors, sales processes, contact management, and more. 

• PayPal is a payment processing platform that allows users to make and receive payments via online transfer, debit card, or credit card. Integration with business accounting software enables sending and receiving payments to and from clients and vendors and setting alerts for due or delayed payments. 

• Shopify eCommerce platform allows users to build a digital catalog and sell products and services online. Integration with accounting software enables managing digital transactions and online inventory. 

• Xero accounting and bookkeeping software offers a mobile application for Android and iOS devices that can be leveraged to extend the existing cloud accounting software capabilities for on-the-go access to financial data and accounting tasks. 

*We identified these integrations mentioned most often in verified reviews of accounting software published on GetApp within the past two years.

Considerations when purchasing accounting software

• Evaluate the report generation capabilities: Report generation is crucial in accounting software as it allows businesses to analyze financial data efficiently. Comprehensive reports aid in making informed decisions, tracking performance, and forecasting trends. The clarity, accuracy, and customization options of these generated reports can significantly affect the business’s understanding of its finances.

• Identify multi-currency and multi-language support: Multi-currency and multi-language support in accounting software is essential for international businesses. This feature allows seamless transactions across different currencies, automatic conversion rates update, and communication with clients or customers in their preferred language. All to facilitate smoother global operations and compliance with international regulations.

• Assess the ease of tax preparation and auditing: The ease of tax preparation and auditing is vital when selecting accounting software because it can significantly reduce manual efforts, time spent on these tasks, and potential human errors. A system that simplifies these processes ensures accurate tax calculations, avoids penalties for non-compliance or late payments, and makes audits smoother with easily accessible data.

Sources

Products evaluated for the pricing calculation were taken from GetApp's accounting software directory. The pricing ranges exclude freemium versions of the products. The features highlighted were identified based on their relevance and the percentage of products in GetApp's directory that offer them. 

Disclaimer

This accounting software buyers guide was authored by GetApp's content team. We develop our guides using the author's expertise, insights from 2M+ unique user reviews, and our proprietary data science algorithms to identify trends in user sentiment, preferences, and priorities. Some text was generated with assistance from artificial intelligence tools.