Your company is expanding faster than anyone anticipated, and you’re opening new locations all the time. But as you scale, you can’t help noticing your entry-level or legacy accounting software isn’t keeping up.
Recording expenses that apply to multiple entities means logging in and out of a dozen different databases. Compiling consolidated reports at the end of each month takes several days. You know you need a better solution, but you don’t have the capital for a large enterprise accounting system. How can you find the best accounting software for your medium-sized business while staying within your budget?
Consider these five essential factors.
Your current accounting needs
You’re searching for a new solution because you’ve outgrown what you have, so the right functionality is critical. Start by considering your company’s current accounting practices. For instance:
• Do you share costs, customers and vendors across entities, requiring a shared chart of accounts?
• Are you doing business with countries that have different currencies you need to convert?
• Do you have a subscription business that requires automated billing and revenue recognition?
• How often do you compile financial reports for individual entities or consolidated reports that account for all of them?
• Who receives those reports? Do they need full access to the software, or just read-only access?
The impact of your projected growth
Thinking small won’t serve your business — it will only keep you feeling stuck. You don’t want to invest in a solution you’ll outgrow too quickly, or you’ll find yourself back to searching for something better a year from now. As you evaluate your options, consider your long-term plans with your leadership team. That means reflecting on questions like:
• How many new locations or entities do you expect to add in the next three years?
• Do you plan to enter a new market or increase private equity investments?
• Is your company impacted by seasonal changes, such as needing to hire a large number of temporary employees?
• Is your leadership team looking into any major moves, such as going public, acquiring new businesses that would change its financial reporting requirements?
Consider what other capabilities you wish you had now that could increase productivity or help your team gain deeper insights into your company's performance.
In a survey by Deloitte and the Institute of Management Accountants, 75% or respondents said they still rely heavily on manual accounting processes. How much time could you save by automating routine tasks like invoicing and expense approvals?
The true cost of accounting software
Even the best accounting software for mid-sized businesses varies significantly in terms of price.
Solutions can be a few hundred dollars to over $1,000 per user per month, according to the 2020 Accounting Software Pricing Guide from Software Advice. And not all vendors are transparent about what that price includes. For instance, some market themselves as cloud software when they are really a variation of a legacy on-premise system hosted in a data center. That usually means you’ll have to pay more for data hosting and annual updates. As you evaluate your options, make sure you ask the right questions, including;
• Is the system you're considering a true cloud accounting software, or will there be an extra cost to host your data in a data center?
• Does the solution include all maintenance and upgrades?
• Will you need to pay other independent software vendors for integrations?
• Can you add or subtract users or add-on features before the contract period ends?
• Is training included, or will you need to hire a consultant to help your team learn the new system?
• Is ongoing support included?
When in doubt, always ask.
The vendor’s security practices
More than half
of organizations have experienced a data breach caused by a third-party vendor, at an average total cost of $4.24 million
Before working with a new software vendor, ask them to outline their security policies in detail. Make sure to ask:
• Whether they’ve conducted a cybersecurity risk assessment
• How they maintain data privacy
• How they store data and backups
• Whether they encrypt data in transit and at rest
• How they manage access to their network and their software
• How often they conduct penetration testing
• How often they perform software updates
• What they’ve done to audit their own security controls
Kara M. Curtis, a CPA and audit manager at the firm Heinfield Meech
, recommends having a written agreement with your vendors regarding their security practices and not allowing any vendor to access more information than they need.
Some software vendors offer discounts on per-user fees after a certain number of users. Others may provide discounts if you purchase their solution through a value-added reseller or partner, or if you already use another system that integrates with theirs.
It’s also worth asking if your organization is eligible for discounts as a nonprofit
Reconcile your bank book without breaking the bank
As you budget for cloud accounting software, look for one that has all the functionality you need without over complicating your workflow or requiring expensive add-ons or upgrades.
Gravity Software is an affordable cloud accounting software
for medium-sized businesses designed specifically to support multi-entity accounting.
Built on the Microsoft Power Platform
, it integrates seamlessly with Office 365 and applications such as Bill.com. The platform allows you to easily create personalized workflows, add fields and create reports that help you make the best decisions for your growing business.
You can manage accounting, investments, inventory and purchasing exactly the way your company operates. You can also add more advanced features to manage customer relationships, fixed assets, subscriptions and revenue recognition.
And if you’re already a Power Platform user, you can take advantage of discounted pricing.
Choosing the right software for your growing business doesn’t have to be daunting. By asking the right questions upfront, you can invest in a solution that will support your growth for years to come.