Growth brings change, and outgrowing your current accounting system is a clear sign that change is necessary. But with so many options to choose from, how can you be sure a new system will fully meet your needs?
Finding the right fit is all about asking the right questions. Start by creating a checklist of requirements and preferences based on how you want to use the new system. What functions should the software provide, and how should it sync with other systems? Some organizations prefer to integrate all financial functions in one system, while others opt to sync single-function tools with a system that tracks the organization’s financials. Think about:
- Inventory management
- Bank accounts
- Do you want to connect them to the system?
- If not, how do you prefer to feed banking information to the accounting system?
Next, begin looking at the different solutions available on the market. Get granular as you assess each option, and consider how its features impact daily tasks. Is the system designed to meet the needs of organizations like yours?
- Create a sample chart of accounts that’s representative of your business and ensure that the software can handle it appropriately. Your new system must comply with rules and regulations that impact your organization as well as offer adequate flexibility to provide management with clear visibility into company financials.
- For nonprofits, evaluate how well the system can adapt to your formatting preferences for statements, donations, pledges, grants and other communications. Can it print with the proper titles? Can it track restricted funds separately?
- If payroll functionality will be integrated with your new system, can it handle all the tax requirements that apply to your particular organization?
- Does the system have a review process, or is that performed outside the system?
- Can recurring transactions be automated to save time?
- Can reconciliations be performed separately for cash, credit cards or other forms of payment?
Transitioning to a different accounting system can represent significant cost in terms of financial outlay, time and disruption to the organization. It’s prudent to choose a system that meets current needs while also accommodating future growth, so you don’t have to go through the same thing a year or two down the road. That said, there’s no reason to pay for a robust, feature-rich system that offers more than you’ll ever really use. For each system on your short list, ask yourself the following questions:
- Is the system too sophisticated or not sophisticated enough? Be Goldilocks here—hold out for “just right.”
- What is the monthly cost, including everything the organization will need to fully implement and use it?
- Do you need third-party assistance to implement the system? If so, be sure to factor in that additional cost. Often the cost of implementation support is money well spent; someone who knows the software and understands your organization’s needs can get you up and running faster, with more complete customization to help you get the most out of your new software.
- Do you need special features or modules that will raise the overall cost of the system? For example, nonprofits might require features like use of class, dimensions or locations to allow reporting needed by donors, banks, regulators, internal management, boards of directors and others.
Ready, Set, Go!
Once you’ve settled on the perfect accounting system for your organization and have it in place, be sure to leave time for testing. Spending the time to adequately test functions, integrations and syncing before you change over will help make the transition go smoothly once you do make the switch.
If the system replaces older software, you’ll want to establish a cut-off date in the old system and perform reconciliations between the two systems. This step is important to ensure that all information flowed over properly.
Your accounting software has a big impact on day-to-day efficiency and controls access to key data that informs business decisions. Sound choices here will pay off for years, so it’s critical to ask the right questions and assess options thoughtfully. For help choosing and implementing your next accounting system, turn to the experienced business consultants at HBP.
Written by Kelly Coutee; Supervisor