Checklist of Accounting Software Evaluation

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Nishit Jariwala

Senior editor

Parul Saxena

Chief editor

Last updated: July 19, 2021

Horizon

Horizon : No. 1 In Accounting Software

Financial management software is undoubtedly one of the most crucial parts of running any business. It increases productivity by streamlining processes such as accounting, management, and payroll. So it is important to keep the software up to date and evaluate it at regular intervals to make sure that your business is running at peak efficiency.

Looking for Accounting Software? Check out SoftwareSuggest’s list of the best accounting software solutions.

There are a lot of factors to consider when evaluating your accounting software. For e.g. Does your accounting software have the most recent features and functions? Are your users generating good reports with the software’s reporting tools? Is your system integrated or do you need to enter the same data multiple times? Can you find the relevant data easily? Is data analysis easy?

Answering these questions will let you know if you need to change your accounting software. Here in this article, we discuss various factors that will help you in evaluating your accounting software.

The foremost topics for accounting software evaluation

  1. Report generation
  2. Business process
  3. Modules and functionality
  4. System integration
  5. The total cost of ownership

Report generation

Report generation is crucial for your business as it gives you a complete picture of the internal workings of your organization. The typical factors to evaluate here are:

  • How much data is to be entered manually vs. how much data can the software extract on its own?
  • What different report formats are available and the extent to which you can customize the formats?
  • Does the software include graphical reports generation along with textual ones? What are different types of graph available for use?
  • How easy is it to generate a report? Does it require special training? Do the users require help regularly?
  • Does it have the ability to do what-if analyses? To what extent? How difficult is it to do these analyses?
  • Are the reports easy to change with corresponding changes in business operations?
  • Does it have the ability to generate simple as well as complex reports?
  • Can the software generate reports according to specific requirements pertaining to government regulations and standards?

Business process

Knowing how much of your internal business processes are formed around the limitations of your online accounting software is important for the evaluation of your current software. Keep these points when evaluating your business processes vs. the software required business processes.

  • Have your processes changed over time? To what extent? Can you improve them further with new software?
  • Are your existing processes implemented at their highest efficiency? How much redundancy can you eliminate if you improve your software?
  • Is there excessive paperwork in your organization? How much can be eliminated with new software implementation?
  • Are different departments in your business using different kinds of processes? Would a software implementation to standardize the process increase organization?

Modules and functionality

Modules are functional units of the software. Each module performs a specific function. The number of modules available in your software determines the number of tasks it can perform. Further, each module is to be evaluated for the functionality it offers. The key factors regarding module and functionality evaluation are:

  • Does your current software provide all the modules you need?
  • Do all modules offer the latest functionality?
  • How much change can the modules accommodate? Do you need more modules to fit your future organization plans?
  • Do you need 3rd party applications to complete tasks performed by the individual modules? Does the software have all the functionality needed by the user to complete a specific task?
  • Is there sufficient training available for your employees to use all of the functionalities provided by the software with expertise?

System Integration

When different software are used to do different tasks, it becomes necessary to integrate them all into one system. Due to limitations of the software, some data might have to be entered multiple times. This increases the time required to do tasks involving different software. When all software can talk to all other software, the system is said to be fully integrated. Some key evaluation points here are:

  • Do all applications run on the same platform? Do users need to constantly switch to use different applications? Are the software available on different platforms?
  • Is there an export option available or do users have to re-enter all data into different software?
  • Does all your data lie on separate islands? Is all your data accessible by all your applications?
  • What are your priorities in terms of saving time through integrated software suites or getting specific functionalities through different applications?

The solution for the companies facing these problems is Tally ERP which provides integration Services –with other products and devices.

Total cost of ownership

The total cost of ownership, or TCO, is widely used as an analytical and tool for software assessment and replacement. TCO analysis is time-consuming, based on assumptions, and sometimes hard to quantify. The following components should be considered as you evaluate the TCO of your existing applications.

  • What type of software license do you have? Could you benefit from a different type of license?
  • What are the costs of the implementation of the software? This includes costs of installation, configuration, training, data conversion, and documentation.
  • Is the hardware supported by the new software? Is your hardware outdated?
  • What are the fees for software support?
  • What are the costs of operation? These include costs of supply, maintenance, backup, and upgrades.

Accounting Software Evaluation Checklist

Report generation  Current  Option A  Option B  Option C
1. Data is fragmented across systems
2. Difficulty in data extraction
3. Difficulty in generating reports
4. Support for graphs
5. What-if analyses capabilities limited
6. Can accommodate change in business model
7. Reporting complexity flexible
8. Support for regulatory reporting
Business Processes
1. Processes built around software
2. Inefficient processes
3. Too much manual paper work required
4. Multiple manual approval required
5. Processes standardized
Modules and Functionality
1. Functionality unavailable
2. Module functionality limited
3. Requirement of third party applications
4. Support for business model change
5. Training on modules and functionality
System Integration
1. Applications installed on different platforms
2. Multiple entries required for different systems
3. Data present in disjointed clusters
4. Strategy for best in market applications
Total Cost of Ownership
1. Software price
2. Implementation costs
3. Hardware upgrade costs
4. Maintenance and service costs
5. Operational costs

Conclusion

There are a lot of reasons why a business might want to evaluate its accounting software. The accounting software evaluation itself is a tedious process. We have reviewed few key areas which will make your evaluation process easier and help you find software like Tally which has grown from a basic accounting software package into a simple yet sophisticated business management software.

There are solutions available in the current market that can help you solve any problems you might have encountered. Today’s financial management software can enhance reporting flexibility and efficiency, streamline business processes, offer a complete suite of modules that includes more extensive functionality, provide open technology to support better integration with other systems, and improve an organization’s bottom line through a reduction of the total cost of ownership.

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Blogger, entrepreneur, designer, photographer and a dreamer are just a few words to describe Nishit - an engineer by chance and an entrepreneur by choice. Entrepreneurship is not a career decision for him, it is a lifestyle choice he made when he was only 17.

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