Decision Support Tools for Choosing Accounting Software
Bagranoff, Nancy A., Simkin, Mark G., The CPA Journal
Whether you are choosing an accounting software package for a client's business or selecting software for use in your own company, there are many reasons why this decision is important. One reason is the large number of choices available to small or medium-sized businesses. There are hundreds of packages to pick from, each with a vast array of features Decisions that involve many choices generally lend themselves well to decision support tools, and the accounting software decision is no exception.
The accounting software decision-making process is also important because the strengths and weaknesses of various packages differ. For instance one package might include the standardized chart of accounts you wanted, but does not support the custom-designed invoicing feature you also need. You want a package that satisfies your major needs. It is less clear how to make the tradeoffs among packages.
A final reason for the importance of choosing among packages is cost. Modem accounting packages are remarkably inexpensive to purchase, but deceptively costly to install and operate. The costs of training, vendor support, data conversion, and backups are almost guaranteed to dwarf the software's initial purchase price. The software decision could also affect future hardware purchases.
The high stakes in purchasing accounting software make a careful, measured approach to software selection critical. Decision support tools can assist in this process.
It is helpful to think of the software selection decision as a two-fold process. Your first step is to decide which features are most important. In the second step, you select the software that best matches these needs.
The features that you must have are usually dictated by the nature of your organization and can generally be determined by analyzing your existing accounting system. For instance, if you sell both products and services, you'll require software that can bill for both products and services. Similarly, if you require departmentalized accounting, you must have software that supports this. One caution here is not to trust someone else about vital features. For example, if you must have network capability or departmentalized accounting, check the software yourself or ask the vendor for references and contact them to verify features.
In addition to features you must have, you can also develop a secondary list of features you would like to have that are more a matter of preference and convenience. Examples include good user interfaces, speed, and vendor location. Advertisements are a good place to discover features that may be of interest.
While there are literally hundreds of features associated with any accounting software package, many are so common that they need not be part of the selection process. For example, most packages enable you to add accounts receivable customers "on the fly." Instead, you should focus on those features that are most useful to your own specific business. For instance, in a medical office with 50 doctors, you may need to track expenses for each doctor. Thus, a package that lets you create custom subaccounts is preferred over one that makes you specify every account in the chart of accounts.
Once you have made your lists, you will want to narrow your field of choices to five or so packages. The specialized accounting decision software discussed next can do this for you. Otherwise, you will need to learn about what accounting software is available and which packages have the features you need. For help, you can turn to trade journals which regularly evaluate accounting software for small and medium-sized businesses, trade advertising literature, demonstration disks, or free training sessions offered by vendors.
The likelihood is high that you will feel more comfortable with a final choice if you use some decision tools to help in this process. Three tools that can help you are: 1) decision support software developed expressly for accounting purchases, 2) generalized decision support packages, and 3) custom-developed models on spreadsheets. …