Best Accounting Software

Accounting software helps businesses of all sizes streamline and automate finance management processes, ensuring accurate records and increasing operational efficiency across basic recurring processes such as invoicing, general ledger (GL) reconciliation, accounts payable (AP), and accounts receivables (AR). Depending on the scale of the product, accounting software can include more advanced features such as financial consolidation, fixed asset depreciation, and multicurrency support.

While all accounting tools include basic features for financial management, there are significant differences in functionality between different products. It is therefore vital to understand how robust a solution is by evaluating how its features can help a business with their specific needs. Requirements for accounting software can vary per company size and industry, as well as the geographic presence of the company.

What Types of Accounting Software Exist?

There can be vast differences between types of accounting software. Accounting programs can be very generic, providing essential features that any company can use or extremely sophisticated, including industry-specific functionality for medium and large companies. The delivery model and the way the modules of the solution are delivered are also relevant.

Suite vs. best of breed

Accounting systems can be used to manage any aspect of business finances that involves payment, but many are just the barebones: AP and AR. Suite systems often offer many modules that integrate inventory management, expense tracking, time tracking, payroll, etc., and make reconciliations between these accounts easy and automated. Companies that are more specialized may make better use of a system that caters just to their needs. For example, a service provider may only need a general ledger that includes time tracking information; an accounting system that also manages expenses might best serve a consulting firm.

Cloud vs. on-premises

Cloud accounting systems offer a software as a service (SaaS) pricing model and work inside a browser. On-premise tools are installed on hardware owned and maintained by the customer.

• Cloud: Most new accounting tools were born in the cloud; their pricing models are usually based on the number of users. Cloud-based solutions are easy to implement, don’t require hardware investments, and allow users to pay over time based on usage. Often, cloud tools have difficulty providing robust offline functionality that will enable users to complete actions and access accounts while disconnected from the internet. The cloud is usually a better option for small business accounting due to its lower cost.
• On-premises: Many vendors that offer on-premises solutions also provide a cloud version of their software. Most customers who use on-premises tools purchase a perpetual license based on the number of users and pay an annual maintenance fee. On-premises systems might be client-server tools that require software to be installed on each user’s PC or could otherwise be browser based. On-premises tools require IT support for installation and maintenance and also require investments in hardware. These systems may offer added security and usually can be customized without vendor involvement.

Based on the size of the company

Small business accounting teams will often seek out a less expensive, easy-to-use interface that covers typical use cases such as billing and invoices. These might be single-entry bookkeeping with simple, standard financial reporting capabilities, but most are typically cloud based and include mobile apps, offering a level of convenience to the harried small business owner. Larger companies will need software that can handle many complex accounts requiring input from multiple roles. These should have more rigorous reconciliation measures because higher volume and more complexity means a higher likelihood of mistakes. Additionally, audit trails and security measures help larger companies ensure the integrity of accounts maintained by many different employees.

Based on the industry

Tax codes, regulations, and best practices vary across industries. Buyers will need to determine whether a product that specializes in meeting the standards of their industry is the best solution or one versatile enough to be customized to their needs. This may apply to companies of all sizes, from small businesses to large corporations.

All accounting solutions include features for GL and chart of accounts (COA). Since GL and COA make up the foundation of any financial system, an accounting solution cannot be used without them. Other features, such as AP and AR, are also included by default, but not all accounting solutions offer the same level of support for them.

More advanced features, such as budgeting and forecasting, are included in accounting solutions for medium to large companies and are usually not included in accounting software for small businesses. These features can also be delivered as point solutions that can be used with any accounting system, but they include out-of-the-box integrations with the most popular accounting solutions.

The best accounting software includes robust core features and is flexible enough to allow companies to integrate with other solutions for advanced features.

General ledger (GL) and chart of accounts (COA)

• Journal entries: Journal entries increase user efficiency by auto populating based on previously entered information, schedules future entries, and allows journal entries to be uploaded from an external source.
• Tags and dimensions: This feature gives the ability to tag all transactions in the general ledger with customizable dimensions, classes, categories, etc. These dimensions should be available on any transaction, in any module in the system, and able to be reported upon.
• Audit trail: An audit trail provides an automated, chronological tracking of activities that have affected a specific operation, procedure, event, or record.

Accounts receivable (AR)

• Invoice customization: The layout of the invoice template is fully customizable, and users can add or remove fields, which helps to optimize the invoicing process by personalizing templates.
• AR automation: AR automation helps the user be more efficient by populating default customer data, setting up automated payments from clients, and automatically matching customer receipts to outstanding transactions.

Collections automation: This feature automates the tedious process to help drive collections.

• Payment reminders: Reminders automatically email advance reminders or past due notices according to days past due, along with keeping a record of notes for each customer.
• Send invoices: Easily create, send, and track invoices and reduce time spent on manually sending and receiving payments. This feature also helps ensure that each payment is accurately recorded.
• Balance sheets: A balance sheet is a financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.
• Cash flow statements: Cash flow statements are financial reports that include cash made or lost by the business through operations, investments, and financing.

Accounts payable (AP)

• AP automation: AP automation helps to streamline invoicing by auto populating invoices with recurring or predefined vendor values.
• Purchase orders (PO) processing: PO processing supports purchase orders and provides purchasing personnel, management, and AP with the visibility needed to streamline the procure-to-pay process.
• Payment processing: Payment processing gives the ability to manage, track, and report on numerous payment types, as well as customize and automate complex purchase to pay workflows.

Cost management

Companies use cost management features to capture, classify, and analyze different types of costs to determine how much they spend on each product and service they deliver. The final cost of a product or service, as well as the overall profitability of a company, can be influenced by many factors, both internal (waste or misallocation of resources) and external (market fluctuations).

Cash flow management

Cash flow management is used by companies to collect, manage, and use cash. Since cash management doesn’t only refer to cash but also to any assets that can easily be converted into cash, this module can also be used to track the liquidity of the company.

Reporting and KPIs

General financial reporting offered covers all of the standard financial statements and meets the basic needs of the business. Other standard reports usually included in most accounting tools are AR aging reports, inventory valuation, cash flow reports, and so on.

Mobile apps or mobile-friendly reports are critical for managers and business owners who require the ability to access their accounting system anytime, anywhere.

Additional features of accounting software

These features are usually not included in accounting solutions for small businesses because they aren’t always required. There are exceptions to the rule, and many vendors provide add-ons, point solutions, and integrations with software to complement their offerings.

• Multi entity or consolidation: This feature allows for multi ledger and multi-tenant architectures, automated consolidations, inter-entity transactions, and eliminations.
• Recognition rules: Recognition rules automate the recognition of revenue and expenses by defining recognition templates.
• Reconciliations: Transactions are imported from source systems, and automated matching features reconcile a majority of transactions. This includes user-flexible, user-defined matching, and grouping rules to help reduce the time needed to produce accurate reconciliations.
• Time and expense and payroll processing: The processing of payroll and time and expense includes automated time and expense approval, reimbursement, and reporting. Payroll integration with an external payroll provider can help automate the recording of payroll.
• Custom reporting: Custom reporting offers functionality for reports to be created by the user to cater to specific requirements. 
• Budgeting and forecasting: Budgeting and forecasting features allow the user to create and revise an unlimited number of budgets, and plan and forecast scenarios. Basic budgeting can be useful for companies of any size, including freelancers and small businesses, while forecasting is a must-have feature for enterprises.
• Dashboards: Dashboards provide an easy to read, often single-page, real-time user interface, showing a graphical presentation of the current status and historical trends of an organization's key performance indicators (KPIs) to enable instantaneous and informed decisions.

Platform

• Customization:  Customization allows administrators customization capabilities to accommodate their unique processes. This usually includes the ability to create custom objects, fields, rules, calculations, and views.
• Workflow capability: This feature automates a process that requires a series of steps that typically require intervention by several different users. Administrators can write rules to determine who and when a user needs to complete a step. Additionally, the feature for sending notifications to users when they need to take action is also included.
• User, role, and access management: Access management gives the ability to grant access to select data, features, objects, etc., based on users, user role, groups, etc. Some solutions provide advanced access rights such as the option to allow users to only view or change a part of sales or purchasing invoices.
• Internationalization: Internationalization enables users to view and transact business with the same content in multiple languages and currencies. Sometimes local regulations may require specific formats and detailed information to be included on invoices and other financial documents.
• Output document generation: Output document generation allows administrators to create templates that enable users to quickly generate dynamic documents in various formats based on the data stored in the application.

Integration

• Data import and export tools: These tools give the ability to input, modify, and extract data from the application in bulk through a structured file. Accounting vendors provide their own tools or third-party applications for data import and export.
• Integration APIs: These types of APIs specify how the application communicates with other software. APIs typically enable integration of data, logic, objects, etc., with other software applications.
• The breadth of partner applications: Partner applications typically provide complimentary, best-of-breed functionality not offered natively in a product.

There are various benefits of accounting software that can help track and organize financial data, producing an accurate, real-time look at business finances. It also contains features like automatic invoicing, which saves time by automating tedious accounting tasks, and more advanced features or add-ons like payroll, shipping inventory, and project management that can streamline other aspects of a business. 

Data accuracy: The software increases data accuracy by removing the risk of human error in calculations.

Compliance: Accounting solutions help maintain government compliance by enhancing the activities that impact regulatory standards.

Automation: Accounting automation speeds up the entire accounting process through automated calculations and streamlined workflows.

Data organization: The organization of data allows data to be accessed in a central location.

Reporting: Reporting gives the ability to quickly pull together various accounting reports.

File sharing: File sharing efficiently conveys accounting data to various departments across an organization.