When you’re starting a small business, tracking your financial transactions to record profit and loss as accurately as possible will give you a clear view of your profitability. This makes finding the accounting software as one of the first actions you should take.

There are hundreds of accounting systems on the market today–so which is right for your business? You may need to create invoices, run financial reports, or identify and follow up on past-due balances. The number of employees and your industry will also be a factors considered.

To help you find the best accounting solution, we’ve conducted research on a wide range of management software and put together a collection of our top picks for accounting software.

There is a vast array of accounting softwares and financial management solutions, sometimes called bookkeeping software, on the market today, with specialized functionality for almost any industry or size of organization.

Moreover, the specific type of accounting can differ between programs—project, fund and fixed asset are examples.

Add to this variety the constant change of standards, compliance requirements and technology platforms, and the process of selecting small business or enterprise accounting software gets tricky. This buyer’s guide is intended to make the process much more bearable.

Here’s what we’ll cover:

What Is Accounting System Software?
A Comparison of Top Accounting Solutions
What Does Accounting Software Cost?
Overview of Accounting Features
What Type of Buyer Are You?
Market Trends You Should Understand
Benefits & Potential Issues
Recent Events You Should Know About

What Is Accounting System Software?

Accounting software is software used by businesses to track financial statements, cash flow, invoicing, bank accounts, and purchase orders. A core package includes the following accounting features:

Spending statistics in Quicken

These systems occasionally come with specialized functionality for particular business sizes, the self-employed or freelancers, small businesses or enterprises.

Because the accounting solution serves a critical business process, it’s often a central component of an organization’s enterprise resource planning (ERP) system.

A Comparison of Top Accounting Solutions

There are many popular accounting solutions on the market, and it can be hard to know what distinguishes one product from another and which is right for you.

To help you better understand how the top accounting systems stack up against one another, we created a series of side-by-side product comparison pages that break down the details of what each solution offers in terms of pricing, accounting features, ease of use, customer support and more:

What Does Accounting Software Cost?

Accounting software costs can begin around $9 per user per month, or more than $1,000 for an advanced system with more users. Depending on the vendor and your business needs, the software can be deployed on-premise or provided as a Software-as-a-Service (SaaS). You can review the pricing of 16 popular accounting products in our Accounting Software Pricing Guide.

Overview of Accounting Features

Core accounting	Core systems assist with the basic functions necessary to balance a business’ books, including general ledger functionality, the ability to track accounts payable (A/P) and accounts receivable (A/R), fixed assets and bank reconciliation. Every business requires these core functions to manage its finances. Accounting software isn’t meant to replace a bookkeeper, but rather provide them with a user-friendly online accounting solution and streamline their work come tax time.
Project accounting	This type of system helps project-oriented businesses maximize job profitability and efficiency by tracking detailed project costs. Businesses can examine past job costs and estimate future costs to choose the jobs that will achieve adequate profit. It tracks by project factors such as invoicing, time tracking, and expense tracking to improve decision-making.
Fund accounting	These solutions support nonprofit and governmental entities in tracking their business finances and spending of funds. Nonprofit organizations can track their expenditures of donations or grants to make sure they meet fund provider requirements. These systems also allow government entities to make sure they meet unique Governmental Accounting Standards Board (GASB) regulations.
Inventory management	This type of solution helps companies track inventory levels to maximize profit, avoid overspending and minimize the costs associated with inventory depreciation. The right system keeps inventory information up-to-date by tracking product levels as well as orders, sales and deliveries. The Generally Accepted Accounting Principles (GAAP) stipulate specific ways to account for inventory to ensure proper reporting of value for inventory that has depreciated or undergone other changes. Software with inventory management capabilities ensures this is done correctly.
Billing & invoicing	These systems automate the collection of payments from customers to enable timely and consistent collection with minimal human error. There are many different types of billing and invoice systems designed to support the wide range of industries, business models, payment processing and operational scales. There typically are add-ons for multicurrency and ecommerce support, sales tax calculations, credit card payment processing, balance sheet tracking, and bank feeds.
Budgeting & forecasting	Users can leverage budgeting and forecasting solutions to project a company’s financial outlook from historical data and estimate future conditions. These systems are typically used in businesses that must consolidate multiple departmental forecasts and budgets, and are most helpful where multiple variables drive the ultimate forecast.
Fixed asset accounting	This type of system tracks fixed assets by providing a central database of important asset information, including location, check-in and check-out, due date for return, maintenance scheduling, audit history, cost and depreciation. Depreciation schedules are a core element of this specialty.
Payroll management	Payroll systems help businesses track and process employee payrolls. They also compose and print paychecks, automatically withhold and pay government taxes and generate the necessary legal and tax reports on a regular basis. Automated payment reminders for required fees help businesses avoid legal penalties.

What Type of Buyer Are You?

Before evaluating your options, you must determine what type of buyer you are. Over 90 percent of buyers fall into one of these three categories:

Growing small-business owners. These businesses are on the verge of upgrading basic systems, such as QuickBooks, to more robust small-business accounting systems that will support premium functions (such as demand forecasting, intercompany accounts, increased data storage and others).

Growing businesses upgrade their systems for a range of reasons. Industry-specific functionality will become important when a small company reaches a certain size threshold.

Enterprise buyers. These buyers represent businesses and organizations that need the functionality of a full enterprise resource planning (ERP) suite. Usually, these systems will include functionality for multi-company consolidation, international operations and foreign currency and other concerns relevant to large entities.

Seamless integration is usually more important than specific features; however, there is considerable differentiation in both of these areas, and buyers should examine both. SAP and Oracle, two of the largest vendors, have some of the most feature-rich systems on the market.

Best-of-breed buyers. These buyers are focused on specific functions. For example, nonprofit organizations need to look specifically for accounting software for business that can perform fund accounting. This method tracks funds in such a way that different grant providers can see the right report on how each fund amount has been used.

Meanwhile, in education, universities and colleges often need software specific to higher ed, for example to track the disbursement of financial aid.

Construction companies or engineering firms, on the other hand, usually need a system that can break down costs by each project, location and other characteristics. For best-of-breed buyers like these, accounting features are often more important than integration.

Benefits & Potential Issues

The key benefits of financial management systems are clear: better visibility of costs and expense management, improved inventory tracking and real-time purchase orders, which leads to more financially responsible decision-making. In addition, systems can generate financial reports in a variety of ways to summarize this information cleanly for the right audience.

For example, nonprofits can generate reports specific to a particular grant provider, detailing exactly where every cent of the funding ended up. This allows an organization to be accountable to investors, donors and lenders, maintaining trust and avoiding financial damage. These systems also allow companies to ensure compliance with reporting standards and federal requirements.

There are a number of issues that should be avoided when selecting a solution. Buyers in certain vertical industries must make sure the appropriate modules are included in the system they purchase. For example, engineering firms and construction companies should choose a system with a project accounting module.

Another issue is a company’s rate of growth; the buyer should consider how fast the company is growing at the time of purchase. This way, the company will not grow out of a system immediately after investing considerable time and funds in the selection and implementation processes.

Market Trends You Should Understand

As you evaluate accounting software packages, consider these current market trends:

Software-as-a-Service (SaaS). SaaS, or cloud accounting software, is picking up speed as buyers realize the advantages of lower upfront costs and quicker implementation time. NetSuite is a prominent example of a SaaS system: In fact, it is available only as a SaaS offering.

Mobile apps. Mobile applications are gaining popularity across the board, and accounting is no exception. Check to see how each vendor is innovating on this front and ensure their mobile app is compatible with the Android, Google, Mac or iOS devices you use.

Increased specialization by industry. Increasingly, consumers are demanding more industry-specific features, and vendors are listening. Products that were once “horizontal”—such as Sage MAS 90/200, QuickBooks and Microsoft Dynamics—are increasingly adding new vertical features to cater to buyers’ specific industries. Make sure to keep a lookout for features that fit your particular industry when investigating tools and solutions.

Business intelligence. Interest in business intelligence is on the rise. Business intelligence takes the massive amount of data collected and organizes it into reports designed to support business improvement.

Many vendors are now integrating business intelligence into their ERP accounting and financial management systems.

Recent Events You Should Know About

Oracle acquires Netsuite. In July 2016, Oracle purchased Netsuite, further expanding the already impressive reach of its cloud platform.

Netsuite’s financial management solution has become a key player in the small and midsize business (SMBs) accounting market, while Oracle is well-known in the enterprise space.

It will be interesting to see how this merger will impact customers in the long term—in the interim, users should expect more integrations between NetSuite and Oracle products.

Sage adds chatbot and AI to cloud accounting software. Initially launched at the Sage Summit conference in 2016, Sage officially released its chatbot with its Sage One software in January 2017.

The chatbot, Pegg, uses artificial intelligence (AI) technology to provide businesses with a “virtual accounting assistant.” With Pegg, users can track receipts, submit expenses, see which customers are behind on invoices and more.

Zoho launches customized payment solution: Zoho Checkout. Zoho’s newest addition to their financial suite is a customizable online payments solution designed for businesses of all size.

Users can build and brand a secure payment page, connect with a payment gateway and collect one-time and recurring payments from customers. Zoho Checkout is available in both free and paid plans, with capabilities increasing as plans scale.

Reference

Complete List of the Top Accounting Softwares Available