Six out of 10 accounting software shoppers try to balance their books using manual tools like pens and spreadsheets. Believe it or not, that’s what we learned after analyzing 5500 leads from shoppers looking to buy accounting software between January 1, 2016, and February 12, 2018.*
To be fair, accountants have a history with spreadsheets. For example, Microsoft Excel supports basic accounting like budgeting, balance sheets, and financial statements. It also released live collaboration features last year. And then there’s the small fact that Excel is part of Microsoft’s ubiquitous Office 365 suite.
Before you select AutoSum, consider some drawbacks. Manually entering data in Excel is a process that’s prone to human error. Live collaboration in the desktop version of Excel is possible, but only for users with an Office 365 subscription that have upgraded to Version 1707 Build 8326.2058 or later. So, if your accountant doesn’t have an Office 365 subscription, they can only access your finances using Excel Online in a browser.
Perhaps most importantly, you might have to manually shift through all data in Excel to find the numbers you need. This isn’t the most fun-let alone the most efficient- way for your business to spend tax season!
Now for the good news: Cloud-based accounting software can ease these headaches. Its features automate many tasks that are manual in Excel. Crucially, many cloud accounting tools are also building new tech like AI into their features. But with seemingly endless apps out there, how can you find the best one for your business?
Below, we’ve included some accounting software evaluation tips based on our survey of accounting software buyers.
Our research revealed that Sage Intacct and Microsoft Dynamics GP were the most-requested tools from teams looking to buy accounting software. Both tools are enterprise research planning (ERP) software, which offers accounting and other business functions (like procurement and project management).
As the name suggests, ERP software supports larger teams that must scale several aspects of their business at once. If your own business has less people, business needs, and money to spend, an ERP system might not be best for you. Luckily, you have other options.
If you’re searching for accounting software, start by writing down which cloud-based apps your team already relies on. Then, filter your search for accounting software based on which tools integrate with most of the apps that your team already uses.
For example, let’s say your team uses Salesforce to manage customer relationships. Rather than finding new software to manage sales and accounting, you can filter your search for accounting software that integrates with Salesforce.
This gives you a smaller starting point based on what you need your software to do most -work with the tools that your team already uses. It also keeps you from getting locked into spending too much on a new, multi-purpose tool with more features than you need.
Before you buy new software, consider your company’s current size and how you expect that to change over several years. When we asked accounting software buyers what their biggest pain points are, they gave a clear answer: “Outgrown current software.”
“Outgrown current software” is the biggest pain point mentioned by respondents, followed by:
Budgeting and reporting
Inventory and expense management
Integrations with other applications
Not every cloud accounting software tool supports teams of all sizes. For example, Wave is one of our most popular accounting apps based on user reviews. But it was also built to support small businesses with nine or less employees. That means you will need a new tool when your business-and accounting needs- evolve.
To avoid this pain point, shop for accounting software that has several product tiers. As one example, QuickBooks Online offers four plans for small business accounting. Its cheapest plan is for self-employed freelancers that file a Schedule C as sole proprietors. On the opposite end of the spectrum, QuickBooks Online’s Plus plan supports teams of diverse sizes that manage 1099 contractors.
If you expect your business to grow over the next few years, you can choose accounting software to scale with your team. Our research revealed that companies with two to five employees are willing to spend $99 per user per month, while those with 21 to 50 employees are willing to spend $200 per user per month.
If it looks like your team will grow from nine to 39 employees within two years, base your accounting software evaluation on this projected growth. This will help you research tools that offer several plans with diverse price points and features that support growing teams.
You might not feel like you need new software- but you likely need a faster way to track invoices, produce profit and loss statements, and work with your accountant. That’s why accounting software features should play a key role in your accounting software evaluation.
“General ledger and reporting” and “analysis and tracking” are the most required features for accounting software, followed by:
Cash and expense management
Accounts payable and receivable
Not sure which features matter most for you? Start by making a shortlist of what you want accounting software to do. If you know why you need to use it in the first place, you’ll get a clear picture of how the right tool can help you grow your business.
Once you know how new software will add value, narrow your search by searching for tools with features that will help achieve these goals. If you shop with a “features first” approach, you’ll eliminate options that aren’t the right fit (such as choosing billing software when you need a tool for more holistic accounting).
Once you’ve taken these first steps, you’re ready to find the best software for your business. GetApp’s software selection scorecard was built to help you own the software shopping process. Start by selecting your:
Features, ranked from low to high priority
Once you’ve chosen these, you can compare the top four accounting software tools that match your needs side by side. Features are broken into 10 categories, and you can compare the four tools on a per-feature basis. Our goal is to shave hours off of an arduous process and help you get back to building your business.
*The data in this article comes from an analysis of call notes based on interactions with over 5500 respondents preparing to buy new accounting software. All conversations were hosted by Software Advice - GetApp’s sister company - between January 1, 2016, and February 12, 2018.