Your Accounting System Checklist: 12 Functions to Look for When Vetting New Software

Identify the features your new accounting system needs and make sure the ones you’re considering can deliver them

Key Takeaways:

• General ledgers create the master accounting record.

• Accounts payable help you manage bills to vendors and others.

• Accounts receivables manage invoices you send to clients.

• Payroll helps you manage employee payments and taxes.

• Project accounting lets you separate financial details for different projects.

• Fixed assets help you track and manage capital assets.

• Budgeting and forecasting helps keep your business on track.

• Multi-entity financial management is critical for businesses with an international presence.

• Fund accounting helps nonprofits manage grants, funded projects, and more.

• Tax management tools help with sales and corporate tax.

• Reports and analytics bring together all the details.

A new accounting system is an investment in your business, and you need to ensure that you select the optimal software for your situation. Every business has different accounting needs, and as your business grows, your needs will change. You want a system that meets your needs today but can scale as you grow.

This 12-point checklist is designed to help you determine which features you need with your new accounting system. It goes over some of the most popular modules on business accounting software, takes a brief look at their functions, and explains what type of businesses they help.

1. General ledger

The general ledger is part of every type of accounting software. It brings together all the revenue and expenses you enter in other parts of your software to create a master record of your financials. It also helps with budgeting, forecasting, and creating cost analysis reports.

Here are some of the features to look for in a general ledger:

• Chart of accounts

• Transaction processing

• Month- and year-end closing

• Custom financial statements

• Custom sub-ledgers for different departments, locations, etc.

• Recurring transactions

• Drill-down capabilities

You should also look at the general ledger’s control features when you’re choosing a new accounting system. Look for the ability to limit access for certain users if you plan to have multiple people use your software. You may also want to look for the ability to create custom documents and ledger structures.

2. Accounts payable

Your new accounting system needs the ability to handle accounts payable. Accounts payable is where you manage all the payments you owe to vendors, landlords, utility companies, creditors, and others.

Here are some features to look for as you select your new accounting system:

• Reporting Analysis

• Audit trails

• Approval workflows

• Search filters for invoice management

• Automated data extraction, indexing, and validation

Manual entry of invoices can work perfectly for small businesses, but if you process a lot of invoices from suppliers, you may need to upgrade to an accounting system that includes automated AP capabilities. Also, look at the system’s ability to deal with multiple currencies if you have international suppliers.

3. Accounts receivable

The Accounts Receivable portion of your accounting system helps manage the invoices you send to clients. Some of the tools you might look for include:

• Customer master file

• Customer relationship management (CRM)

• Online invoicing

• Cash receipts

• Debt collection options such as sending automated reminders on late bills

• Recurring revenue management

• Automated bank account reconciliation

• Deferred revenue recognition

Look for automated capabilities. Automating basic tasks such as reconciling your accounting records with your bank account records saves time and reduces errors.

4. Payroll

Payroll software helps you calculate employee payments, taxes, and benefit deductions. It can also track and manage paid time off, sick pay, and payroll reports. There are standalone payroll tools, or you can look for payroll software that integrates with your new accounting system.

5. Project accounting

Project accounting helps you track the financials for specific projects. Some of the features you may need include:

• Project management tools

• Quotes, orders, and budgets

• Income and costs

• Billing and invoicing

• Capital management

• Time and expense management

• Budgeting

• Job variation

• Project forecasting

You need project accounting capabilities if you want the ability to track and assess the costs and profitability of different projects with your new accounting system.

6. Fixed assets

Fixed assets tools record the type of assets your business owns and their value. You can enter when you acquire and dispose of capital assets. You can also create budgets and forecasts related to capital expenditures and generate depreciation reports.

Advanced capabilities allow you to track assets with barcodes or tags, organize maintenance schedules, and assess tax benefits.

7.  Budgeting and forecasting

Budgeting tools allow you to create budgets, while forecasting tools use past data to predict future expenses. You can also compare new budgets to past budgets to see how you have improved at cost management and accuracy.

8. Multi-entity financial management

Your new accounting system will need multi-entity financial management capabilities if you run several business entities around the world. This is easier with tools that can handle multiple currencies and help you stay compliant with a variety of tax regulations. You also need the ability to generate reports and meet the audit requirements of multiple government bodies.

9. Fund accounting

Fund accounting modules help you track financial details related to grants, pledges, and donations. This information can be critical if you need to generate compliance reports. You may also want to look for the ability to create funded programs and handle sponsored project management.

11. Tax management capabilities

Tax management tools can help you with all kinds of tax-related issues. There are tools that calculate sales tax rates, track sales tax collected, and generate sales tax returns. Look for the ability to assign different tax rates to different types of items, and make sure the system updates automatically when tax rates change.

There are also tools that help manage small business tax deductions. They arrange business expenses in the correct categories for your tax return and calculate your tax obligations on a quarterly basis, so you know what to expect.

12. Reporting and analytics

Reports give you a snapshot or an in-depth look at your company’s financials, and they are essential for helping you understand where your company is struggling and where you can grow. Your new accounting system should be able to generate these reports:

• Profit and loss statements

• Balance sheets

• Accounts receivable aging

• Accounts payable aging

• Revenue by customer

Look for an accounting system that offers the ability to share reports easily and to create both static and dynamic reports. Drill-down features let you click on digital report data for more information, and you may want to choose a system that lets you limit access to these types of features.

Contact Franco Blueprint for help implementing your new accounting system

We provide assistance with new accounting system implementation, and we also offer CFO and controller services, assistance with company formation and compliance, and more. Contact us at Franco Blueprint today to set up a consultation and find out how our services can help improve the success of your business.